As heads of government, business, and finance gather in New York for the annual United Nations Climate Summit on September 23rd, SIID researchers back the economic benefits of global action on climate change verses the cost of inaction.

The Summit’s discussions are likely to be dominated by debate on the costs of action against climate change versus the cost of inaction. A prevalent argument is that the cost of mitigation and adaptation to climate change is particularly high for resource rich countries and fossil fuel industries under the current economic conditions. Nevertheless, most developing countries and civil society will make the case that the costs of inaction in the longer term will be many times greater than the shorter term costs of action.

Research at the Sheffield Institute for International Development (SIID) suggests they are a number of economically viable options for a low carbon economy available, but that there are a host of political, social and economic constraints that could prevent successful policies and initiatives from being rolled out worldwide.

Dr. Jojo Nem Singh, researcher at SIID and lecturer in international development at the University of Sheffield, is part of a two year research programme aimed at exploring and developing ‘compatible-climate energy strategies’. The programme, supported by the Worldwide Universities Network (WUN), explores initiatives, policies and governance mechanisms that can fulfil the requirement to supply secure and affordable energy in a way that reduces current carbon emissions and builds the adaptive capacity of societies to a changing climate.

Dr. Nem Singh comments on the complexity of finding sustainable energy solutions that are both economically and politically viable, saying;

“Brazil is an exceptionally successful example of a country that has responded to fossil fuel consumption through long-term investments in the renewable energy sector. Brazil’s ethanol programme was developed initially through state investments, but with subsequent development through private sector participation. Today, Brazilian cars are run by a mixture of ethanol and crude oil.

However, there are reasons why such strategies may not be automatically transferable elsewhere, and those reasons are largely political. Previous research into the political economy of renewable energy suggests that a country needs to have a market large enough to allow for innovation in the sector. Rather than competing with the hydrocarbons industry, renewable energy needs to have an economic rationale. For Brazil, the ethanol programme was the answer to its energy security problems and uncertainty in developing self-sufficiency in oil and gas. Our project is beginning to explore these economic and political conditions necessary for climate compatible energy strategies. ”

The research project is exploring examples of such ‘compatible-climate energy strategies’ from developed and developing countries, with a focus on the economic justifications in favour of climate compatible development. Future projects will look at potential barriers to the development of renewable energy sectors within oil-rich countries, including policy constraints given the enormous role of oil and gas in industrialisation, growth and energy security of these countries.

Jean Grugel, SIID Director, commented on the role of environment in the international development agenda;

“Understanding the complex relationships between people and the natural world is vital to making decisions about how best to manage our natural resources, and how to make this management fair and equitable between countries and across society. In recent decades there has been an increasing focus on bringing environment and development together in ‘win-win’ scenarios. Particularly as many of the poorest and most vulnerable groups within society are dependent upon natural resources for their livelihoods, the relationships between environment and society are critical to making decisions for socially and environmentally just development.”

The UN Climate Summit is a key part of the sixth annual ‘Climate Week’ in New York City, with around 100 events, activities and high-profile meetings taking place from 22-28 September.

UN Secretary General Ban Ki Moon has made it clear that the emphasis of discussions at the UN Climate Summit should be on action over words, with the aim of establishing substantial commitments towards a low-carbon economy.

Whether the agreed outcomes of the Summit will be economically costly to committed business and industry remains to be seen, but it is likely that the political costs of action could eventually be a larger hurdle to overcome.