B (3:43)

It feels like it's watered down.

A (3:45)

Well, it's watered down, but it's enabling a lot more ambition than you would otherwise have. And so as of today, more than half of all of the greenhouse gases that are going up in the air, the countries responsible for those have already put their INDCs on the table. United States, European Union, China effectively has legally. It hasn't actually sent in the letter yet, but it said what it will do. But Russia, Mexico, Switzerland, a few others. Each week that passes, additional ones are coming in. Now if you assess those that are on the table already and then you ask, is it enough? That in and of itself is actually quite a difficult question because these commitments go up to 2025 or 2030, so no one expects us to solve the problem by then. We have to have a longer term trajectory out to 2050 and 2070. And by 2070 we need to have something approaching carbon neutrality. In other words, you can't keep on putting the stuff up there. You've got to have a neutral approach. So the issue is for 2025, 2030, are you doing enough to get on what we call a least cost path to 2 degrees? And the answer to that question is no. If you look at the amount of effort that would be required to get to the optimal path, it turns out that probably between 50 and 60% of what is necessary is on the table for that 50% and we're not expecting a whole lot more for the other. In other words, what would you expect that 50% to do if they did their fair share? And the answer is maybe 50, 60% of what's necessary. So is this good? Yes, because these are much more ambitious offers than we anticipated. I mean, Mexico's came in last week. Mexico will peak its emissions by 2025 and then see a significant decline.

B (5:40)

I mean, Mexico announced quite ambitious contributions.

A (5:42)

Contributions show very ambit countries like Sweden, Norway, European Union. I Mean reasonably ambitious United States, I mean, not bad at all. You think about it. They are committed by 2020 to lower emissions by 17% from 2005 and then in the next five years to lower it another 10% by 2025. They've committed to do between a 26 and a 28% reduction over 2005. That is actually, you know, much more impressive than many people had expected. So in some ways we've got a lot to be encouraged about. But the point is it's not enough.

B (6:25)

I just want to talk about those contributions that have been made and action that's taken place or pledges or commitments, whatever the word is you want to use from major developing countries, emerging economies. So Mexico we talked about, and then China as well. To what extent do you think that China is becoming a bit of a climate leader?

A (6:43)

I think China without question is taking climate change seriously. China's contribution as of now is to peak its emissions of greenhouse gases by 2030. Our suspicion is it will peak before then. It turns out that sounds. Well, that's not so impressive, is it? I mean, after all, to peak, you know, 15 years from now. I mean, gracious me, couldn't you do better than that? That that will require China to invest in renewable energy, electricity generation, which will amount to the more than the entire electricity generation capacity in the United States today from all sources, coal and everything. This is a, this is actually quite a big transition. And by then 2030, China will be on a radically different sort of energy trajectory. Now the really interesting things about China, you know, one hears about all the time about how many coal powered electricity generating plants are being built every week in China. It turns out last year coal consumption in China, and remember coal consumption in China is, is half of the entire coal consumption for the world. Coal consumption stayed level and started to decrease a little bit. And many observers believe that coal consumption may already have peaked in China, which would be, which would be remarkable. China, but we don't know that for sure. I mean, it could well go up, but it certainly will peak by 2020, we believe. China, China is already the by far the biggest investor in renewable energy. And if you add wind and solar.

B (8:32)

Together, how much of that is to do with the, the global public good argument that a clean environment is good for everybody and how much of it is to do with China's own self interests, which is that a lot of its people are getting sick because the awful air pollution in the country and does it matter if it's national interests that make them make a Global change?

A (8:53)

Well, I think it's preferable if it's national interests that drives it. And you're absolutely right. There are several reasons why it is in China's interest to peak its greenhouse gas emissions and to come down. One is because given it's the biggest emitter in the world, and given that it's one of the most threatened countries in the world by climate change, it simply is in its own interest to get the world to act. And it knows if it acts, others will act too. But above that, as you say, if you look at China's lost human well being and economic well being from air pollution, you're up to 6%, for example, of GDP in cities, you're losing another sort of 4% of GDP perhaps from congestion. And cities, as you know, in China, have been designed to spread widely, financed by selling land at the outskirts. And China is now sort of thinking very thoughtfully about, wait a minute, I mean, is this really the smart way to go?

B (10:03)

You've talked a lot there, really eloquently about the ability to reconcile economic growth with reducing the effects of climate change. But it's all about building stuff in efficient ways and infrastructure. There's also the benefits to development and climate from not building stuff, or for example, not cutting down trees or keeping trees standing, things like that. And this is something that we've worked on quite a lot here at the center for Global Development, a project called why Forests, Why now? Bringing to the fore the importance the vital nature of tropical forests for not just climate change, but also for development, making the point that by reducing deforestation and allowing those forests to regrow, you can mitigate 24 to 30% of annual carbon emissions. But also you protect local economies and you increase local economies. People who depend on forests earn more from those forests standing than from the agriculture that they would use the cleared forest areas for as well. Is this link widely enough understood, do you think, between ending deforestation, maintaining tropical forests and development, the link between climate change and development?

A (11:30)

I think you're right and no, it's not fully understood. And CGD's work here, by the way, is terrific and we strongly support and we're very encouraged with the conclusions that you're coming up with here. We've had difficulty saying, look, the name of the game is to not do things. If you're a development minister or head of state, you don't feel you've achieved much necessarily if you sort of stop doing something, particularly given there are very powerful vested interests wanting to keep chopping down the Forests. And it's important to recognize also that if you look, for example at why has Indonesia and Malaysia lost so much of the, the incredibly valuable tropical forest over the last 15 years, it's due to palm oil more than any other, any other thing. It's important to realize that actually the palm oil does earn some money. When you chop down trees, you sell the wood, you employ people to do it. And, and so not every local citizen will say, oh please, let's just stop doing this. It requires something more than that. But the plain fact of the matter is the gains from protecting the forest. And more accurately, saying protecting the forest and putting your new economic activities, especially agriculture, on lands that are degraded is a really winning offer. We've just done a mapping of the 2 billion hectares in the world that's twice the size of China, that used to be forest and now are very, very low productivity. In terms of economics, you know, they might have low productivity agriculture, but they might just have, you know, grasses or something like that. That's not really adding any value at all. Well, it turns out that not all 2 billion could be restored and certainly not immediately. But there is a goal now to restore 350 million hectares by 2030. Now, the way to think about protecting the existing forest is not to say, look, palm oil is wrong, therefore shouldn't expand anymore in Kalimantan, but rather to say, well, it turns out there are 6 million hectares of relatively degraded land that's not really yielding very high return in Kalimantan. And actually palm oil could be put there perfectly well, as long as one does the homework and we do a lot of mapping as to where it could be and so on. Now it requires, it requires different parties to come to the table. There's no silver bullet, it's a jigsaw puzzle rather than a gun. It requires the private sector, palm oil traders and purchasers to say, look, we insist on a certain standard. Now it turns out that the big Western demanders of palm oil, the Unilever, the Procter and Gambles, the Nestle's, for some years have been saying, now we do not want to purchase stuff that has come by chopping down the forest. Until now, we haven't really been able to measure that. We now have a system together with Google and other World Resource Institute, together with Google and 40 other partners that enables on everyone's iPad or everybody's smartphone anywhere in the world, down to a single hectare to see almost in real time, forests changing. And we know where all the palm oil concessions are. We know who's cheating? And so on. And we can embed that in the purchasing software of the oil palm companies. And so you've got some really interesting things where the big Asian players now Wilmar is now saying, look, we actually get it, we also want to do this. So technology has enabled us to get the right place. But then you also need the Indonesian government to come to the table and the indigenous peoples groups come to the table because 40% of the of the palm oil from Indonesia comes from smallholders. Well, smallholders can't, you know, there are thousands and thousands of them. So what kind of programs? And they have very low yields. What programs do you have to raise the yields of the smallholders? So on. So we are reaching the stage now where instead of having 15% of globally traded palm oil being certified, Paul Pullman, head of Unilever, was saying at Davos this year we could be up to 90% in the next five years. That kind of tipping point is out there and we need to work extremely hard. And that's why the work the CGD is doing and the World Resource Institute are doing is so important.

B (16:19)

Andrew Steve, we're nearly out of time, but I have one more question for you, and it's this. If there was one single thing that you could change or you could get the world to agree on tomorrow to change that would benefit the environment, what would it be?

A (16:37)

It would be that they would understand economics. There is a view out there that putting a tax on carbon would be distortionary and would cause all kinds of problems and would be bad economics. We have known since 1923 when Professor Piggo at Cambridge University taught us about, you know, wedges and pricing externalities, that actually it is very bad economics not to put a tax on carbon. The fact that we are now spending $500 billion a year to pay people to consume too much energy, and the IMF says if you really put the economic value that, it's $2 trillion a year is being wasted to encourage people to waste energy whilst we only put 100 billion a year to support renewable energy. That is nuts. And having removed energy subsidies, and we really hope the G20 this year in Turkey will really take some leadership on that. Having done that, we then need to say, okay, it is ridiculous that we keep taxing good things like work and income and profits, and we don't tax bad things like carbon emissions and congestion and pollution. We know how to do it, we should just do it. And it's an issue of good economics.

B (18:01)

Andrew Steere, President and CEO of the World Resources Institute. Thank you so much for your time.

A (18:05)

Thank you.

B (18:06)

Pleasure as ever. You can find out more about CGD's work on our website, www.cgdev.com. the work we're doing on forests and development is why forests? Why now? I'm Rajesh Merchandani, and thank you for joining me. And join me again, of course, for the next podcast from cgd, the center for Global Development.