Linking renewables to economic growth: The case for climate-centered SDGs

CANBERRA — The International Conference on Sustainable Development, held in New York from September 18 to 20, saw practitioners, NGOs, policymakers, and academics come together to encourage government, businesses and those supporting development outcomes to think longer term — to 2050.

Among those urging this new focus was the acting CEO of ClimateWorks Australia, Meg Argyriou.

Presenting research findings during a panel session on how we can all profit from the low carbon transition, Argyriou highlighted findings from Southeast Asia and the Pacific that demonstrate the decoupling of economic growth and emissions growth is both achievable and beneficial.

“One of the things we are trying to do with this is challenge the thinking about how development can and should happen,” Argyriou explained to Devex. “We want to challenge the current paradigm that achieving significant outcomes can only be achieved through growth in emission. That was true in the past, but it is not what the evidence suggests these days.”

Armed with such evidence, Argyriou is pushing for governments, donors and NGOs to think longer term about climate action, giving it a central focus in the Sustainable Development Goals.

The evidence supporting decarbonized economies

At the conference, Argyriou presented a variety of recent research projects that repeatedly reveal the link between decarbonization and economic growth.

The Deep Decarbonization Pathways Project demonstrated that — for 16 developed and developing economies studies — ambitious targets could achieve a 46 to 56 percent reduction of carbon emissions below 2010 levels. And for the economy, models predicted an aggregate growth GDP growth between 2010 and 2050 of 250 percent — an average rate of 3.1 percent per year.

PWC’s Low Carbon Index supported these findings, showing that a number of G20 countries were successful in reducing the carbon intensity of their economies while maintaining real GDP growth — including in China, India, South Africa, and Mexico, countries classified as “developing.”

And specifically for the developed world, research by the World Resources Institute showed 21 countries that are reducing annual greenhouse gas emissions while simultaneously growing their economies since 2000 — including eastern European nations such as Bulgaria, Czech Republic, Romania, Slovakia, and Ukraine. For Bulgaria and the Czech Republic, emissions reductions did not shrink the workforce of their industrial sectors.

Development challenges

Argyriou told Devex that while the evidence points to the value of governments focusing on renewables, it is easier said than done. “People instinctively understand it is the right way to go, but practically it is very hard,” she said. “If it was an easy fix, everyone would be doing it already.”

For countries in Southeast Asia and the Pacific — the frontline of climate change — renewables are getting good uptake as a way to enable electrification and access to electricity for those that don’t have it.

“That is where it tends to be getting the best traction at the moment because if communities don’t have any electricity at all, just providing solar panels can be life changing,” Argyriou said. “It enables new business opportunities, better education outcomes and so on. It’s an easier case to make and even in those remoter communities it is often the best solution as well because you don’t need to connect to the grid.”

But the challenge is in cities — where 80 percent of electricity use and greenhouse gas emissions in developing countries is generated. And the real challenge is shifting the current trajectory, which is focused on bringing online more fossil fuel baseload capacity to deal with rapid urbanization.

“To make a real impact and transition these economies, this really needs to be addressed,” Argyriou said.

For many cities, the existing infrastructure is poor and doesn’t tolerate intermittency as well as in developed countries: “If you look at places like Jakarta, they are taking about as much renewable capacity into the main grid as they can,” Argyriou said. “You actually need to upgrade the grid to enable more intermittent capacity to come online. So that presents real challenge because you can’t just build a new generation of plants and plug it in — you need to upgrade the grid as well.”

The rapid rate of population growth in cities is a key issue for developing countries, with governments often addressing their growing infrastructure needs the fastest and easiest way they can. For countries with access to cheap coal, non-renewables are a simpler solution.

“Cities are growing so fast and energy demand is growing so the solutions need to be multi-faceted,” Argyriou said. “You can’t just think about displacing new coal with renewables, you also need to ensure the energy end use technologies are as efficient as they can be so energy demands is more manageable. And ideally, if you are trying to displace coal with renewables, the infrastructure should be built with smart technologies to enable greater control over energy use and communication between the grid and the end user.”

The problem with thinking short term, Argyriou believes, is that it will lead to poor investments that will strand assets in the long term. Having targets to 2050, despite many government focused on the current cycle of parliamentary systems, was important. And thinking beyond one element of development would also lead to changing policy directions.

Putting climate action at the center of Sustainable Development Goals

The research presented by Argyriou showed strong economic impacts of a transition to renewables. But her work also demonstrated impacts to health, education, gender and other areas of the SDGs.

“When you factor in the other sustainable development outcomes, the reality is for countries committed to lifting people out of poverty, achieving better health outcomes, and ensuring environmental protection and equality, a pathway that focuses on avoiding significant growth in greenhouse gas emissions ultimately delivers better outcomes.”

Thinking broadly beyond goal 13, action to combat climate change and its impacts, was important in achieving these better outcomes.

“All of the SDGs are interconnected — some more so than others,” Argyriou said. “But at the moment we are thinking about them in isolation. Governments are dividing up the 17 goals and dividing them up to departments which has a recipe for disaster. If a ministry for energy is looking solely at clean and affordable energy, they are going to choose the cheapest way to roll out energy to as many people as possible. And they might use a slightly cleaner coal technology, but that is completely contrary to SDG 13 and SDGs focusing on health, water and more. They need to be sorted holistically.”

Grant funding, including the Green Climate Fund, is already encouraging governments to think broadly on the development impacts of programs to receive grant funding, but often this is measured in qualitative rather than quantitative terms. And Argyriou argues there are outcomes that can be measured — including health impacts and flow on effects to national productivity.

Encouraging development banks to invest in infrastructure supporting renewable energy

With big shifts in infrastructure required to assist developing countries down a path of decarbonization, infrastructure investment is needed. Those conversations are already occurring.

“In the Asian Development Bank  there is a lot of work that suggesting these discussions are happening internally and this is influencing their investments,” she said, saying their work was important in creating evidence to make connections between all aspects of the SDGs and climate action to assist donors, NGOs, policy makers and financial institutions in directing their development choices.

“What we are trying to do is to lift the focus of the planning process to the longer term goal,” Argyriou explained. “It is a challenging in a context where Australia is pushing to increase its coal exports, but the way to think about it is what is best for the country you are trying to work with — regardless of what the export agenda of countries such as Australia may be.”

And she said it was important for donors to think similarly.

Could a focus on renewables help developing countries become global economic leaders?

An interesting question for Argyriou was the global positioning a focus on renewables could provide to developing countries — highlighting the long-term value of donor investment in this space.

“As the world transitions — and it is going to happen fast — the big question developing countries need to ask is how they can best position themselves to ride that wave,” she said. “What are the strategic advantages they have, natural assets, natural resource and human capacity we have to position ourselves to succeed in a decarbonising future?

“I think China’s got it right. They have figured this out and they have absolutely positioned themselves to own this market. But that doesn’t mean there is no role or opportunities for other developing countries as well.”

Advantages including cheaper labor costs means developing countries can position themselves to much of what is needed cheaply and well.

Pitching for change

For ClimateWorks Australia, the focus is on enabling developing countries to leapfrog the emission intensive choices developed countries have made in the past: “Ultimately that benefits them in the long run and it benefits the world,” Argyriou said.

They are beginning negotiations with countries in Southeast Asia and the Pacific to translate research into practical action. And it is intended to drive policy change, identify skill gaps that need to be filled and improve the pipeline for climate finance.

“Our focus in this work is on encouraging better policy of government and with corporate partners to understand risk and opportunity through renewable energy.”

But Argyriou acknowledges that it is a difficult task ahead to make the pitch for change.

“Our work here is far from done,” she said. “We continue to make the case for why we need to focus on an orderly transition and to raise the gauge above 2030 to 2050. It’s a tricky context in which to work but the focus needs to be on the end goal and the pathway that delivers the greatest benefit.”

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