Following a cleaner path to growth

EMERGING MARKETS Developing countries are looking to move away from the fossil-fuel model of development, but it won’t be easy, writes Mike Scott

One of the biggest stumbling blocks to progress in international climate talks has always been the refusal of developing countries to commit to binding emissions cuts.

“You – the industrialised countries – caused this problem,” their reasoning went, “so you can sort it out. We’ve got other things to worry about, like moving our people out of poverty by growing our economies. And for that we need to burn fossil fuels like you did.”

One example of this came in the run-up to last year’s United Nations climate talks, when China stated that its greenhouse gas emissions would continue to rise until its average income was five times its current rate of $5,000 per capita. Xie Zhenhua, China’s chief climate negotiator, said that emissions had peaked in the West when average income was $40,000 to $50,000 – China’s would peak at about half that level.

The developed countries, particularly the United States, respond to this by refusing to commit to cuts themselves unless emerging economies, particularly China, do the same because they fear it will lead to higher costs and job losses. Result: stalemate.

However, as the international community fumbles its way towards a comprehensive global climate treaty, which is due to be signed in 2015, things may be set to change. The group of least-developed countries, impatient at the glacial rate of change, has just announced it will accept binding targets to cut emissions in the hope of shaming both the developed world and large emerging markets, such as India, Russia and Saudi Arabia, into stepping up their own ambitions.

Part of the problem is that the high-carbon route to development is one where the technology, the knowhow, the availability of resources and the financing are all well understood, says Mark Kenber, chief executive of The Climate Group.

Fossil fuel facilities have also been much cheaper than clean energy sources, such as nuclear and renewables, in the absence of a strong carbon price. However, solar, wind and biomass power are either at or close to cost competitiveness with traditional energy in some parts of the world. The cost of solar panels fell some 75 per cent in the three years to 2012 and a further 23 per cent during the last year, while wind turbines are 27 per cent cheaper than in 2008, according to Bloomberg New Energy Finance.

As smart-grid and energy-storage technologies develop, low-carbon energy systems will become more viable.

At the same time, a host of other sustainability issues have emerged – the news that Chinese air pollution contributed to 1.2 million premature deaths in 2010, for example – meaning that developing countries are looking at other ways to fuel their growth.

“I have no doubt that China will have a considerably more modern and efficient power system than Europe and the United States in the next 20 years,” Mr Kenber says. “Emerging countries will be able to install renewable energy capacity much quicker than in the West.”

Fossil fuels will continue to play a huge role for all countries, developing or developed, says James Cameron, chairman of Climate Change Capital. But, he says: “If a country has an opportunity to build a different kind of energy system, served by a wider range of fuel sources, including renewables, it should do it. Provided you can get over the capital costs of building the system, you will have much lower operating costs and you will be protected from fossil-fuel price fluctuations, so your economic growth will be more stable.”

Many economies are already making the choice to use resources more efficiently, he adds  “This is not something that is being wished up in London and imposed on countries in Africa or Asia. They are doing it because it makes sense.”