October 14, 2008
Humanity is living through its worst financial crisis since the Great Depression 1929-33.
A decade of complacency, self-deceit and appalling flaws of government regulation and oversight, above all in the USA but also in Europe, have been at the root of the financial disaster that has been unfolding for the past 18 months.
It has taken several huge bankruptcies and the prospect of a breakdown of the global financial system, followed by a disastrous recession before the political class in the USA and Europe has finally risen to the challenge. The 16 finance ministers and central bank governors from the most prosperous and financially powerful countries on earth had to intervene dramatically, with unprecedented tools and close to € 2000 billion of public funding to avoid a cataclysm.
Hopefully, they will succeed in steering clear of a systemic breakdown. Within a few years the wounds will have healed. The financial system will have survived, with even more leverage in the hands of fewer and more powerful banks, but subject to much stricter regulation and supervision by governments and possibly even international institutions. The damage will have been substantial in terms of asset destruction, pensions and jobs erased, but hopefully the market economy will emerge hardened and better secured.
In parallel, humanity is moving towards a cataclysm of infinitely bigger dimensions: the melting of glaciers, the rising of the sea level and dramatic climate changes that will endanger the survival of hundreds of millions of human beings on the planet.
For the past 20 years Humanity has followed the unfolding of this crisis with a mixture of fear and incredulity.
The USA, responsible for 25 percent of the global warming has been as negligent as on the financial front. Its political leadership has rejected any proposals for regulating carbon dioxide emissions as it has refused to heed the calls for regulating Wall Street and the mortgage market. China and India, probably the two most vulnerable countries to climate change, wiped away these dangers in their triumphant push for improving living standards. Only Europe has been cautiously preparing its continental “battle plan” for a substantive, though insufficient reduction of C02 emissions, meeting with tough resistance from its emitting industries – automobiles, power, cement etc.
We should draw at least five lessons from the way the financial catastrophe has been creeping in and is being met with.
First, crises do not erupt overnight. They are the result of long gestation periods, moving very slowly and almost invisibly in the beginning, before accelerating and finally turning into catastrophe.
During this period, lasting between years and decades, the rising chorus of warning voices goes usually unheard. Those responsible for acting, political leaders and top officials, prefer to ignore what it is going on under the surface. They find they have more “pressing tasks” to fulfil: attending conferences, making speeches, passing legislation, winning the next election etc.
For humanity being able to survive, political leaders will have to focus much more attention on a few vital long-term issues instead of getting lost in daily paraphernalia. That will require a patient learning process!
Second, the nature of the ongoing climate crisis is unique: when it reaches the “climax” or what climate scientists call the “tipping points”, it will be too late for humanity to act: The Himalaya and Alpine glaciers, Greenland ice, let alone Antarctic ice are not recoverable, unlike bank assets. They will be gone once and for all, and humanity has no other option to accept the dismal consequences: changes of unfathomable depths for all life on the planet.
Humanity therefore can simply not afford to wait. It has to act now in view of preventing a catastrophe in 50-80 years. This is the message that scientists have to inculcate into our political leaders.
Third, unlike the financial crisis, due to only a few hundred key actors, the climate crisis is result of everyday behaviour of 6.7 billion human beings, driving fossil-fuelled cars, consuming fossil energy for heating and cooling, etc.
To change these habits constitutes a gargantuan task that will take more than a generation. It is therefore necessary to change technologies and give the necessary incentives for such changes to happen quickly. But even with a fast track approach it will take two decades before the changes of technology and behaviour will exert a visible impact on climate change.
Political leaders therefore have to grasp that they must grapple with very long “lead time” and work today for the coming generations!
Fourth, the financial crisis has been caused and is consequently being addressed by the USA, with Europe as a junior partner. They have induced the G7, the IMF and subsequently all 185 IMF member countries to follow in their footsteps and prevent any collapse of major financial institutions.
Similarly these two are responsible for close to 40 percent of global C02 emissions. They should therefore also operate in tandem when it comes to taking decisive action against accelerating climate change. Unfortunately, this has not been possible during the last eight years, due to the obstinate refusal of the Bush Administration to even admit there was a problem.
Now there is hope as it looks likely that Barack Obama will become the next President in the USA. Unlikely his Republican rival, Obama has a clearly defined energy and climate strategy for the USA: put a lid on US C02 emissions by mandatory curbs coupled with emission trading, fixing stricter energy efficiency standards, in particular for the car industry, encouraging alternative energies, from wind to solar and nuclear. The EU will therefore have a partner! That opens the prospect and the obligation for both combined to convince the other major climate polluters, from Russia, to China, India, Japan etc. to come on board of an international alliance resolutely determined to avert disaster for the coming generations. This should be the overwhelming priority for US and EU foreign policy in 2009.
Fifth, contrary to the views of many lobbyists that an economic downswing is not the right moment for imposing tough environmental standards on power utilities, energy-intensive industries, house and car owners the EU should, on the contrary, proceed with the implementation of its triple 20 percent targets for 2020. It should even convince the new US Administration to shoot for a 30 percent reduction target of their C02 emissions, say by 2025.
Their combined efforts will result in an unprecedented investment boom for climate-friendly energy technologies. Funding should not be a problem. The financial crisis has demonstrated that governments possess an unrivalled capacity to tap huge financial resources when they have to. Just as they agreed to guarantee bank loans in order to overcome the credit crunch, they should be able to bait investors into alternative energies with all sorts of guarantees and subsidies.
Critical times require pragmatic approaches, provided they pay in the long term. The EU and the USA should therefore fix a bold and concrete target for 2030: make the power sector function with zero C02 emissions. That is technically and financially possible. It will revolutionise the power sector and induce the biggest power investment programme ever launched, with an impressive fall-out for employment and the sustainability of the earth bio-systems.
In conclusion: 2009/10 should not only become the turning point for the global financial crisis but also the start of a massive investment programme in energy conservation and new types of energy, thanks to a concerted EU-US climate strategy and the successful conclusion of an effective global climate convent in Copenhagen at the end of 2009.Author : Eberhard Rhein