Business as usual died in 2008. Publics understand that. Elites, on the whole, do not.
In the UK, our economy is now almost one sixth smaller than economists were saying five years ago it was going to be by now. Young people understand that they are the first generation for over 300 years who, as they look at their future, see a prospect that might well be worse than the one their parents contemplated a generation ago.
People know that something has gone seriously wrong. We need a new growth model that is less vulnerable to shocks; that rebalances from excessive debt and casino finance towards the creation of value in the real economy; and that greatly reduces the stress that a growing and increasingly affluent population puts on the resource base including the climate.
This is not a minor adjustment. It demands a substantial redesign of the economy and of the system of power relations that underpins the economy.
That is not how things look to many elites around the world. Some profit too much from the old system to countenance the thought of anything different. Others are imprisoned within an economic theory that under current conditions has lost its power to make useful predictions.
The struggle between incumbency elites and those who see the need for change will be the defining struggle of our times. It will demand a monumental effort to build a new consensus between those who govern and those who are governed; between the over 40s and the under 30s; between those who said “trust us” and those who are no longer willing to take it on trust that elites must know what they are doing. Going back to 2007 is not an option. Either we will strive successfully to build something better or we will suffer something worse.
Climate change and the response to it will be at the heart of this struggle.
Climate change is all about energy, and energy lies at the foundation of the economy. After all, the industrial revolution that gave rise to the modern economy was driven by a new found ability to harness the energy stored in minerals to satisfy our needs and desires. Transform the energy system and you transform the growth model.
A successful response to climate change will require the most far-reaching transformation of the energy system since the industrial revolution itself. It will be a story of electricity. We will need to use electricity in smarter ways to meet more of our needs, especially for mobility and heating. We will need at the same time to build an electricity system that is essentially carbon neutral in not much more than a single generation.
We know how to do this. We have the technology now. We have the capital now. And we can do this in most countries in ways that, far from doing short-term harm to the economy, will support rebalancing, modernise infrastructure, boost competitiveness and reduce our vulnerability to volatility and shocks in oil, food and other resource prices.
Insecurities over food, water and energy are coming together in a nexus of systemic risk. And the risk multiplier is climate change. In a high-carbon world locked into fossil energy, this nexus will become unmanageable. In a low carbon world, there will be less climate stress on food and water supplies, less competition for limited hydrocarbon resources and more political space to deal through diplomacy and cooperation with the tensions that remain.
Dealing with climate change, staying within 2°C, is not something that is desirable for the environment. It is imperative for security and prosperity. In that sense, climate change has never been an environmental issue and we have lost a great deal of time deluding ourselves that it is.
New forces stirring
How are we doing? The truth is that, by the only measure that matters, we have not even begun. In the real economy, we are locking ourselves further into carbon dependency faster than we are building a path beyond it.
Looking back, the approach to the Copenhagen climate summit in 2009 was the high point so far of political momentum. The tide has now gone out. Since then, the attention of leaders has been further distracted by the economic crisis and by big political transitions in some countries. I have never known a time, in 15 years involvement in the politics of climate change, when it has received less political attention than leaders are giving it today.
And yet, if you look carefully, new forces are stirring, and nowhere more than in China.
Here are some of the headlines: US$1.6 trillion of public investment under the current Five-Year Plan in strategic industries critical for the transition. China becoming a global leader in smart grids, electric vehicles, energy-efficient buildings, solar and wind energy, driving key technologies down their cost curves faster than anyone had believed possible. Low-carbon pilot zones, experimenting with bold low-carbon development policies encompassing over 300 million people.
The “China 2030” report, published this year by China’s State Council and the World Bank under the sponsorship of vice premier Li Keqiang is the most radical and compelling official prospectus for a new development model that has appeared anywhere since 2008. As part of a broader blueprint for a new development model, it argues that China’s national interest is to move now in building a low-carbon economy, to get ahead of the competition.
Meanwhile, the debate in the US is hostage to a deeper political, even cultural struggle that is raging for America’s soul. While it is in progress, the US cannot be a global leader on climate change. For all the positive things that are happening in some of its cities, states and corporations, it cannot summon the will at federal level to put in place the domestic programmes necessary to sustain a position of leadership internationally. Even if China and India were to take on legally binding carbon caps tomorrow, I doubt it would be possible to persuade the US Senate that the US should do so too.
The choice for everyone else is therefore whether to wait – essentially to give up on climate change, because waiting is the one thing there is no time for – or to press ahead so that those in the US who want to move forward can warn about the danger of being left behind in the race to transform the global economy.
I am confident that the positive forces at work in my country cannot be turned back. British business wants policy certainty not deregulation, and is ready to build a low carbon economy given clear policy signals.
But we will all be able to go faster if we feel that what we are doing is part of a common endeavor. That is why the UN climate negotiations are so important. The agreement reached last year at Durban has given us a chance to build by 2015 a legally binding framework that embodies our collective will to keep climate change within 2°C. That is what we now have to do.
Top-down agreement still essential
There are some who still say that a top-down legally binding climate agreement can never be reached. We should instead rely on voluntary, so-called bottom up approaches.
But nobody has ever suggested that voluntary activities should not be allowed. You don’t need a global agreement to do what you would have decided to do anyway. The real choice is whether or not this should be accompanied by a top-down, legally binding framework to set the pace and the level of ambition. If it is not, people will rightly conclude that governments are only willing to do what it is easy to do, not what needs to be done. They are not willing to guarantee the outcome, even while they claim it is imperative.
The problem is not one of architecture but of will. Copenhagen did not fail because we were wrong to aspire to binding commitments. The will was lacking to make them and it is what we now need to build.
This article is based on a speech given by John Ashton at the Asahi World Environmental Forum 2012 in Tokyo.