Photo: MNB
Loretta Tóth
16/05/2023 06:00
– You have been dealing with climate change for more than three decades: as South Korea's first ambassador responsible for climate change and principal advisor to former UN Secretary-General Ban Ki-moon, you have been participating in international negotiations on climate change since 1991. Additionally, you contributed to the IPCC’s (Intergovernmental Panel on Climate Change) special report on technology transfer and received a personal copy of the Nobel Peace Prize 2007 awarded to the IPCC. How did it feel to receive this recognition for your persistent and effective work?
– I was one of the lead authors of the report for which the IPCC won the Nobel Peace Prize; the majority of the leading authors were researchers, professors or scientists, while I was a diplomat, so contributing to this kind of report was not part of my routine work at all. I was invited, not because I was a diplomat, but because I came up with a new idea that would significantly facilitate technology transfer between developed and developing countries. Technology transfer was and, even now, is a very difficult subject in the debate for global environmental issues at the UN conferences. The deadlock and stalemate still persists in technology transfer debate, because developing countries strongly insist on the need for technology transfer, while developed country diplomats argue that the governments of developed countries cannot transfer technologies that are in the hands of private companies. As a breakthrough idea, I proposed the transfer of publicly-owned technologies that are funded by the Government or public money. While privately-owned technologies have to be channelled through commercial transactions, publicly-owned technologies funded by public money can be transferred by the Government or public institutions as they hold the licensing powers. These initiatives of mine were regarded as innovative and as potential breakthroughs for the technology transfer debate, and this was the reason for being invited to contribute to the IPCC report.
– Today you are known to be one of the most prominent thinkers on climate change, having pioneered the concept of green growth. You argue that the green economy is not just about fighting for the climate and the planet, but also about economic growth, profitable exports, and new jobs at the same time. If it has so many advantages, why isn’t the concept more widely supported?
– A very good question. I pioneered the idea of Green Growth as a new paradigm in 2005 to present the mitigation of CO₂ as an opportunity for economic growth and job creation. Since then Green Growth has been gradually accepted by many countries and institutions around the world. South Korea, for example, put forward Green Growth as a national strategy to synergise climate action with economic growth. Furthermore, the Global Green Growth Institute was established in Seoul, the Green Growth Alliance was formed between South Korea and Denmark, and the Green Growth Knowledge Platform was created among the World Bank, OECD, UNEP. Unfortunately, however, the concept of green growth remained largely on the planning table. The reason for this is that, although the results of measures supporting green growth become tangible in the long term, the investments and measures that serve this need have to be made in the short term. And an over-obsession with immediate returns on investment prevents action to ensure long-term returns on policy measures related to green growth.
– Did these facts also contribute to your decision to open a New Climate Innovation Center at the Tashkent State University of Economics (TSUE) in Uzbekistan?
– Exactly, I am deeply impressed by the strong motivation and quick action of the Uzbek decision-makers to take advantage of the opportunities provided by the green economy by adopting innovative approaches for climate. Dr Sharipov Kongratbay, the rector of TSUE made an immediate decision with lightning speed to open the Climate Innovation Center after listening to my proposal. According to the plans, we will implement pilot programmes to introduce innovative policies based on the new climate economics, and develop innovative climate projects to save the Aral Sea and the air quality of major cities by converting cotton fields into solar fields to generate solar power and training programmes to educate qualified green economy and green growth experts. It is my long term vision to present the case of Uzbekistan as a success story of the Eurasian Region in turning climate crisis into economic growth opportunities.
– Why are policy innovations such as green growth and new climate economy becoming important components of your strategic thinking?
– The global debate on climate change action is mainly focused on the energy transition and technological innovations. We therefore leave the root cause of climate change untouched. The root of the climate crisis lies in the free market system, which treats carbon as a free good. Therefore, internalising the carbon price into the market price has to be the core of our climate action. Over the past three decades, we have focused on promoting green energy transition and technological innovations, but no tangible results have been achieved in internalising the carbon price into our market price. This is because there is a fear that pricing carbon will cause huge damages to economic growth, and this fear has prevented us from seriously tackling the problem. This is why I have focused on promoting green growth and the new climate economy: to diffuse the fear and spread the positive, encouraging message that carbon pricing can open up new opportunities for economic growth and job creation.
– However, it seems that it is not easy to shout over the voices worried about economic growth…
– When the Paris climate agreement was adopted in 2015, the major international media outlets all quoted a pessimistic environmentalist's report, emphasising that achieving the climate goals could cost $1-2 trillion, and the growth of large economies, such as the United States, the European Union or China, will decrease significantly. This is a typical argument by conventional economists based on the static CGE model (computable general equilibrium - CGE). But economists cannot predict the growth rate of a specific year. So how dare they predict the pace of economic growth in the next 20-30 years? There is no reason to believe such negative forecasts. Common sense dictates that spending $1-2 trillion a year on carbon mitigation over the next twenty years will stimulate technological innovation and open up new markets and investment opportunities that will stimulate growth and job creation through new products and services. Huge investments aimed at reducing carbon will entail a structural transformation of the economy. In this sense, the negative forecasts of static CGE models, which cannot predict the long-term dynamic and structural changes of industries, can be compared to fake news spread during the COVID-19 pandemic. It would be much better to believe instead the empirical evidence from European countries that show a decoupling of economic growth and carbon emissions. It must therefore be understood that carbon can no longer be treated as a free good. New climate economics, internalising the price of carbon into the daily market price, have to be constructed by improving the free market and upgrading it to a sustainable market. So far, very few countries have made tangible progress in internalising the carbon price into the market price. This means that any country can be a leader of climate actions or a leader of the green economy and new climate economics if it decides to embark on a new journey towards an uncharted path of New Climate Economics based on a sustainable market.
– What is the Personally Determined Contribution (PDC) movement about and how could it promote the goals set by the Non-Binding Nationally Determined Contribution (NDC) of the Paris Climate Agreement, and how might it help us in our quest for a more sustainable market?
– There was a lot of sceptical news about the 27th UN Climate Change Conference (COP 27) held in Egypt last November, and it became clear once again that we cannot expect much from the UN's climate negotiations. Although most governments have announced rather ambitious goals to reduce the world's carbon emissions to zero by 2050, we must remember that there have been similarly resounding declarations before. There is, for example, the 1992 UN Framework Convention on Climate Change (FCCC), in which developed countries undertook a legal obligation to stabilise their carbon emissions at 1990 levels by the year 2000. Moreover, it was a legally ratified commitment, yet it failed completely, just like the Kyoto Protocol of 1997, which was ratified by the world's most developed countries, except the United States. Then in Copenhagen in 2009, we once again initiated another round of political pledges for ambitious mitigation targets for 2020 by more than 130 countries. But the countries that made the ambitious promises don't even remember what they gave the nod to. Given this, there is no guarantee that the Nationally Determined Contributions agreed to in the Paris Climate Agreement will be much different from previous historical failures. So we have to learn the lessons.
– And what would the lessons be?
– The first, for example, is that putting pressure on governments and business to reduce carbon emissions while ignoring the final responsibility of consumers will bring few tangible results. The policy makers of every democratic government have very clear political limitations, since they cannot impose an unpopular burden of mitigation plan on their industry and the constituency of their voters. The need to get votes is much more important than the UN's climate goals. Businesses can only make contributions as much as consumers are willing to pay.
The second lesson is that counting carbon emissions based on GDP or production simply doesn't work. As long as GDP is the primary driver of economic policy decision-making, governments will do their best to avoid anything that threatens GDP growth. And the third lesson is that counting carbon emissions should be based on consumption, not production. The calculation of global carbon emissions based on production shows that EU countries have reduced carbon emissions from domestic production. However, if the emissions of imported goods are counted, there has not actually been much reduction in the EU, meaning that the reduction is largely due to the relocation of heavy industry to China and Korea. Emission reduction based on GDP therefore only shows carbon leakage from developed countries to developing countries. For a net reduction at the global level, the reduction must come from final consumption, which includes emissions of imported goods. So we can't blame China and Korea for the rapid increase in emissions, while the cars and ships they produce are used by consumers in the importing countries. Isn't it strange that the responsibility for the carbon emissions of Korean-made cars imported and used in the United States rests on the shoulders of Korean industry? Shouldn’t American consumers bear the responsibility instead? Am I wrong?
– To what extent do you think the responsibility can be shifted to the consumer? (The war in Ukraine, for example, shows that consumers are not happy to cut their energy use or to pay higher prices to stop the carnage in a distant land).
– Let me clarify: PDC is not an attempt to shift responsibility from governments and businesses to consumers. Because whether a given government or a given company implements the measure, ultimately the costs are borne by taxpayers’ money and by consumers’ payments. Rather, PDC provides a short path for climate-concerned individual consumers to directly contribute to reversing climate change and take immediate action on the cause. According to a public opinion survey in Korea, 48% expressed their willingness to pay higher electricity bills to pay for renewable energy, while 45% disagreed. Currently, even consumers who are concerned about climate change cannot make a meaningful contribution to reducing carbon emissions, as governments and businesses are blocked by the 45 per cent of consumers who are completely indifferent to the topic. However, we cannot wait for social consensus or for this unconcerned 45 per cent to join the majority. The PDC gives 48 per cent of concerned supporters the opportunity to directly and immediately contribute to climate change action. Of course, in the current difficult political and economic climate, the 48 per cent may actually be only 5 per cent or even less when it comes to actual payment. Anyway, I was deeply impressed by the optimism and strong conviction of György Matolcsy, President of the Magyar Nemzeti Bank. He said: "If PDC is initiated even by only the 5%, we can still change the whole society.". I can only agree with that. Environmental campaigning did not change society, but PDC can change it and thus the world.
– Since the Paris Accord was signed in 2015, many countries have strengthened their climate commitments during the annual UN climate conferences known as COPs. Are you satisfied with the results so far, or, like many climate experts and researchers, do you have a pessimistic outlook for the future of mankind and our planet, and would you rather sound the alarm bells?
– Recently, I've heard a lot of disillusioned regrets about the outcome of last year's COP27 in Egypt, but it no longer surprises me at all. These kinds of meetings organised by the UN are highly politically charged, paralysed and fragmented. We have been holding climate change conferences for 27 years now, and in the end we ended up with a non-binding, voluntary mechanism of nationally determined contribution - this is exactly the opposite of what COP was created for. So now is the time to shift the focus from these kinds of sound-bite conferences to real business, carbon pricing and final consumer responsibility. I am deeply frustrated that we have failed so far because we could not overcome our short-term interests and sacrificed our long-term sustainability like a foolish child. Our collective intelligence therefore remains at a rather low level and is not mature enough to resist the short-term temptations at the expense of long-term survival. Unfortunately, there are many demagogues who promote slogans such as "America first!" - this kind of thinking dominates the political arena of the world's major countries. However, the fight against the climate crisis must rise above our short-term selfishness, for long-term survival, "Me first!" type of proactive volunteering and social awakening is needed, such as the personally defined contribution (PDC). We can only achieve the goal of reducing the world's carbon emissions to zero by 2050 if we are able to transform the current free market system driven by short-term supply and demand into a sustainable market that reduces ecological and social costs internalised in the market prices and thereby transforms our production and consumption habits towards carbon free patterns. Einstein said, "You cannot solve our problems with the same mindset that created them." So we can't solve the climate crisis with the same free market mindset that treated carbon as a free goods – as long as that's the case, we'll never be able to achieve a carbon-free world. But if we really believe the positive message that internalising carbon prices into market prices can lead to greater long-term green growth, then mobilising social consensus might be a little easier.
The author is editor at Eurasia Magazine