Competition and private property rights unleashed capitalism in the 19th and 20th century by enabling unprecedented economic and population growth. This growth was based on a lottery prize – the discovery of coal, oil and gas supplies (Sombart 1928). Humankind used to eke out a diminished existence in the northern hemispheres until well into the 18th century. People depended on the flow of solar energy. Food, fodder, heating and mechanical energy were drawn from biomass production, water cycles or wind power. Insufficient food production, wars and diseases repeatedly set back the economy to the subsistence level. The discovery of coal and its deployment in industrial steam engines suddenly endowed humankind with huge amounts of stored solar energy. These assets liberated people from the whims of nature and enabled building up a physical capital stock.
The combustion of fossil resources in the global industrial metabolism came with a hidden cost – the conversion of the atmosphere into a free CO2 waste disposal site. Today we know that the storage capacities of this disposal site are limited. Depletion of the atmosphere might cause dangerous and potentially catastrophic climate change. Thus, climate economists play the role of a spoilsport by demonstrating to humankind that its “carbon debt” might outweigh the fortune of resource supplies. What was once considered a lottery prize now turns out to be a burden.
IS CLIMATE PROTECTION DESTABILIZING THE FOUNDATIONS OF MODERNITY?
Will the abandonment of coal, oil and gas set back humankind to subsistence levels? More than once the Intergovernmental Panel on Climate Change (IPCC) has been accused of destabilizing the very foundations of modernity. Large companies have mobilized strategists to discredit climate change by likening it to an attack on the modern liberal civilization. A simple correlation is ingrained in the historical memory of humankind: all nations that overcame poverty and became rich via industrialization used coal, oil and gas. No prosperity without fossil energy sources!
However, if it is true that overconsumption of fossil energy sources will melt off ice shields, dry out the rainforests, acidify the oceans, result in more frequent floods in Bangladesh and dry up harvests in Zimbabwe, then developing countries are facing an apparently tragic decision: either induce dangerous climate change or engage in dangerous emissions reductions; either pursue climate change mitigation without economic growth or economic growth without climate change mitigation.
As this suggests, a central question of global climate policy is whether decoupling wealth and emissions is feasible. Some observers in the environmental movement are hoping that market mechanisms will inevitably and automatically mitigate climate change. They argue that the limited supplies of coal, oil and gas will lead to increasing resource prices that in turn will induce a rapid switch to renewable energy sources and energy efficiency. This, however, is an illusion. Up to 15,000 billion tons of CO2 are still stored underground, mostly coal that can be used for generating electricity, heating houses, and even for using coal-to-liquid processes to produce transport fuel. Hoping for a rapid, relative cost decrease of renewables is dangerous since this hope might deter further climate policy efforts. Renewables have indeed experienced large cost reductions in recent years, but their share in meeting global primary energy consumption is only about 12 percent, with half of that coming from traditional biomass (IPCC 2011). Without dispute, prices for fossil energy sources will rise at some point and costs of renewables will decrease. The question is: Will this structural change come about in time? The answer from almost all scenario calculations reviewed in the IPCC Special Report on Renewables (IPCC 2011) is: no.
Therefore, in order to achieve effective climate change mitigation, dedicated policies are needed to constrain global emissions. Scenario calculations show that with a cost-efficient transformation of the global energy system – and the exploitation of energy efficiency measures, renewable energy, as well as carbon capture and storage technology (CCS)1– the global GDP loss could be limited to a very few percentage points (IPCC 2011). However, mitigation costs will rise if certain technologies such as renewables, in particular bioenergy or CCS, are not available (Edenhofer et al. 2010a). The next IPCC Assessment Report, due in 2014, will deliver a comprehensive overview of the current research on these questions.
THE ATMOSPHERE AS GLOBAL COMMON
The prosperity of the 21st century will be determined by the sustainable management of the global commons. This is a new challenge for the future of our economic system. Even if everybody benefits from a sustainable usage of global commons, there are incentives for free-riding. With every nation thinking this way, individual shrewdness turns into collective stupidity. Some form of cooperation will be a survival condition for humanity.
The atmosphere is a global common-pool resource in its function as a sink for CO2 and other greenhouse gases. Currently, it is a “no man’s land” that is available to everyone free of charge. Oceans and forests are closely linked to the atmospheric sink through the global carbon cycle and absorb some of the anthropogenic CO2 . Interestingly, oceans and forests are also global common-pool resources that serve as important sources of biodiversity, exhaustible minerals and fish resources. However, the atmosphere and the oceans are threatened by excessive CO2 emissions, and the forests are being depleted by increasing food and bioenergy demand.
The climate conference in Durban in 2011 – yet another attempt to deal with these new scarcities – failed to nail down a binding roadmap for global emission reductions. Solving this issue is a challenge to the international community. This challenge can be outlined as follows (Edenhofer et al. 2011): In order to assure with medium probability that the temperature of the global atmosphere does not rise another 2 degrees – the current target – only about another 750 billion tons of carbon dioxide can be disposed into the atmosphere. A less stringent target allows for another few additional hundreds of billion tons only. With 33 billion tons of global CO2 emissions disgorged by the global energy system in 2010, it can be easily calculated that the atmosphere as a disposal site will be full in only a few decades. Hence, the use of fossil energy sources must be capped globally.
This will precipitate profound distributional conflicts. If climate policy means that a big share of fossil resources is left unexploited, this involves a devaluation of the assets of owners of coal, oil and gas resources. Moreover, the scarce atmospheric exploitation rights need to be equitably distributed between Africa, China, the US, and other world regions. The political process would also need to determine how many atmospheric exploitation rights the next generation would be entitled to. In light of all these difficulties, it is astonishing that there are actually even attempts to reach a global agreement.
Is the efficient and equitable use of commons bound to fail? Elinor Ostrom demonstrated that communities on a local level can in fact enforce effective rules of use (Ostrom et al. 1994). Whether this capability can be replicated at the global level remains unclear. However, it would be dangerous to wait for the establishment of a global government that could regulate the climate according to a fully worked-out scheme before taking stringent climate change mitigation measures. There will not be a world government in the near future. But the management of the atmosphere as a global commons does not require one. In fact, it requires nested, interlinked policies at the international, national, regional and local levels. Elinor Ostrom and others call this multilevel or polycentric governance (Ostrom 2011).2 The question is: Which level is responsible for which issues, and how they can be coordinated?
In order to set out the legal framework for national commitments the international level is indispensable. The principles of burden-sharing, the support of developing countries, and a deliberative, coordinated plan to prevent free-riding must be tackled at this level.3 At thenational level, subsidies for fossil-fuel consumption – worldwide around US$400 billion in 2010 (IEA 2011) – could be phased out and spent on boosting renewable energy technologies. At the regional level, regions like California, Australia, and several large Chinese provinces are planning on introducing emissions trading systems following the European model. Regarding the environmental integrity of these systems, the choice of the absolute emissions cap will be crucial. At the local level, cities could reduce their emissions by enhancing their urban public transport systems and transforming their building infrastructure. An estimated 496 billion tons of CO2 will be emitted over the next fifty years just due to the already existing energy and transport infrastructures (Davis et al. 2011). In other words, there is little scope for further fossil-fuel based infrastructures.
An intergovernmental agreement remains indispensable. Otherwise emission reductions in one region will always lead to increasing emissions in other regions. However, waiting for a global contract before starting to implement good prototypes would effectively stop the development of climate policy. Such prototypes can prove, especially to emerging economies, that emission reductions do not entail decreasing wealth.
We are only gradually beginning to realize that global common-pool resources are assets to humankind that should be managed as commons. Wasting them would be disastrous. We are trustees of these assets and thus, trustees for future generations. We have the duty to invest so as to increase or at least maintain these assets. However, the distribution of a fixed carbon budget between humans can be a zero-sum game in which the gain of one country is the loss of another one. This is why some observers are very pessimistic regarding the chances of a stringent intergovernmental climate policy. The zero-sum dilemma can only be overcome by beginning a prudent transformational process that can decarbonize the world economy.
MAPS OF KNOWLEDGE
In order to tackle this task we still lack necessary knowledge. We require a better understanding of economic growth patterns in industrialized and developing countries as well as in emerging economies. The development of “hard” infrastructures like electricity grids, roads and apartments as well as “soft” infrastructures like education and health services need to be better understood. In particular investments in durable hard infrastructure will define emissions patterns for decades (IEA 2011). We are facing the question how to build up urban infrastructures in China, India and Africa without permanently increasing global emissions drastically. The international division of labor between spatial agglomerations determines not only the export and import of goods and capital but also of CO2 and resources (Peters et al. 2011). How can we assure that international trade does not lead to the waste of regional commons? In order to tackle these problems we need to improve our understanding of how effective subsidiary and polycentric governance can work on multiple levels.
We need maps of knowledge, pointing out feasible pathways for a sustainable management of global commons and their dynamics of use while exploring risks and uncertainties in the light of different value systems. This is the intention of the recently founded Mercator Research Institute on Global Commons and Climate Change (MCC). The maps that MCC intends to produce in cooperation with its partners will neither replace travelling nor will they prevent us from the surprises that travelling entails. However, travelling without maps can easily lead into the swamp or, for that matter, to going round in circles.
Ottmar Edenhofer (Germany) is professor of the Economics of Climate Change at the Technische Universität Berlin and Co-Chair of the Working Group III of the Inter-governmental Panel on Climate Change (IPCC). He is designated Director of the Mercator Research Institute on Global Commons and Climate Change (MCC), and will continue to act as Deputy Director and Chief Economist at the Potsdam Institute for Climate Impact Research (PIK), where he leads Research Domain III – Sustainable Solutions.
Christian Flachsland(Germany) is researcher and designated leader of the research group “Assessment and Scientific Policy Advice” at the Mercator Research Institute on Global Commons and Climate Change (MCC).
Bernhard Lorentz (Germany) is President of the Stiftung Mercator, which co-founded the Mercator Research Institute on Global Commons and Climate Change (MCC) jointly with the Potsdam Institute for Climate Impact Research (PIK).
- Davis S.J., K. Caldeira and H.D. Matthews. 2010. “Future CO2 Emissions and Climate Change from Existing Energy Infrastructure.” Science (329)5997: 1330–1333.
- Edenhofer, O., Knopf, B., Barker, T., Baumstark, L., Bellevrat, E., Chateau, B., Criqui, P., Isaac, M., Kitous, A., Kypreos, S., Leimbach, M., Lessmann, K., Magné, B., Scrieciu, S., Turton, H., van Vuuren, D.P., eds. 2010a. “The Economics of Low Stabilisation: Model Comparison of Mitigation Strategies and Costs.” The Energy Journal (31)1 Special Issue:11–48.
- Edenhofer, O., H. Lotze-Campen, J. Wallacher, M. Reder, eds. 2010b. Global, aber gerecht: Klimawandel bekämpfen, Entwicklung ermöglichen. Beck 2010.
- Edenhofer, O., C. Flachsland, S. Brunner. 2011. “Wer besitzt die Atmosphäre? Zur politischen Ökonomie des Klimwandels.” Leviathan (39) 2:201–221.
- IEA – Internationale Energieagentur. 2011. World Energy Outlook 2011. IEA Paris.
- IPCC, 2011: O. Edenhofer, R. Pichs-Madruga, Y. Sokona, K. Seyboth, P. Matschoss, S. Kadner, T. Zwickel, P. Eickemeier, G. Hansen, S. Schlömer, C. von Stechow, eds. IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation.Cambridge, UK and New York, NY. Cambridge University Press.
- Ostrom, E., R. Gardner, J. Walker. 1994. Rules, Games, and Common Pool Resources. Ann Arbor. University of Michigan Press.
- Ostrom, E. 2011. “Handeln statt Warten: Ein mehrstufiger Ansatz zur Bewältigung des Klimaproblems.” Leviathan (39)2:267-278.
- Peters, Glen P., Minx, Jan C.,Weber, Christopher L., Edenhofer, Ottmar. 2011. “Growth in emission transfers via international trade from 1990 to 2008.” Proceedings of the National Academy of Sciences (108)21:853–8534.
- Sombart, Werner. 1928. Der moderne Kapitalismus. Historisch-systematische Darstellung des gesamteuropäischen Wirtschaftslebens von seinen Anfängen bis zur Gegenwart, Bd. III: Das Wirtschaftsleben im Zeitalter des Hochkapitalismus. München und Leipzig. Erster Halbband, Duncker and Humblot.
- 1.Editors’ note: CCS is a controversial emerging set of technologies that seek to capture large quantities of carbon emissions and transport them to sites where they can be pumped into underground geological formations and kept out of the atmosphere.
- 2.For more, see the essay by Helen Markelova and Esther Mwangi earlier in Part 5.
- 3.Prue Taylor advocates a reevaluation of the principle of the common heritage of humankind earlier in Part 5.