One and a half degree: Framing global warming within economics

By Rajendra Shende

Two successive globally significant bulletins were released on October 8 from two geographically distinct locations. Both news-bytes came from international organisations. While both of them were defining news of our times, many missed the unmistakable potent link between the two. That nexus, in reality, is so powerful that it has the potential to transform the global pathways for action on climate change. It also is an influential driver to alter the mind and will of political leaders, including climate deniers and those who’ve broken the global consensus.

A warning about 2040

The first piece of news came in from the city of Incheon in South Korea, where the Interntaional Panel on Climate Change (IPCC), a UN body of climate experts from 40 countries, released ‘The Special Report on Global Warming of 1.5 degree Celsius’. For the untrained eye, the title with its figure of ‘1.5 degree Celsius’  sounds far from any immediate importance. However, the report was actually requested by 197 countries of the world that have ratified the United Nations Framework Convention on Climate Change (UNFCCC) to reinforce the Paris Climate Agreement of 2015.

The raison d’etre  of the Paris Agreement is a need to keep the global average temperature rise during this century well below 2 degree Celsius, and to strive to limit the temperature increase even further, at about 1.5 degree Celsius above pre-industrial levels of latter part of the 18th century. The challenge of restricting the rise to 1.5 degree Celsius came mainly from nearly 60 small island countries who in reality are facing existential threat due to sea level rise driven by global warming .

IPCC’s special report sends out the unequivocal message that the global average temperature rise has already reached 1 degree Celsius. At the current rate of action, the additional rise of half a degree is just about 12 years away, within the lifetime of most of humanity alive today .

There is the threat that beyond a rise of 1.5 degree Celsius in global temperatures, humanity would enter the era of irreversible change. The report even goes into details with respect to quantifying  the expected damages and compares it with rise of 2 degree Celsius. It then hints at the possibility of human societies and natural ecosystems crossing certain thresholds, which may cause sudden and calamitous changes, called the ‘tipping point’. The report appears to even enter into dark and cataclysmic spaces of climate impact that will happen beyond 2 degree Celsius.

The call for urgency is never expressed so dramatically than in the 33-page summary of the report . The near impossible timelines read like this: the world needs to reduce CO2 emissions by 45 per cent by 2030 from the 2010 levels and reach net-zero emissions by 2050; virtually all of the coal plants and gasoline-burning vehicles on the planet would need to be quickly replaced with zero-carbon alternatives in the next two decades. Adverse impacts on  the ecosystems and human societies are estimated to be much greater than earlier anticipated, and it has been suggested that the rate of decarbonisation be faster than what was recommended before.

Earlier on the eve of the UN General assembly, that concluded recently in New York , Secretary-General Antonio Guterres stated that climate change is running faster than we are.

Only on one occasion in 2013, Al Gore, former Vice President of USA used a metaphor which was more dramatic than the Incheon report. Al Gore stated at that time that humanity is adding Greenhouse Gases (GHGs) into the atmosphere every day, and trapping additional heat equivalent to the heat generated by 400,000 exploding atomic bombs, like the one dropped in Hiroshima, every day.

However, the pledges given in the Paris agreement would actually limit the temperature rise to 3.5 degree Celsius which is well beyond the point of no return. Sadly, the negotiators of the Paris Climate Agreement are still nowhere near finalising the rule-book for implementation of the agreement, for which the deadline is fixed at the end of 2018 . The rule-book is expected to include the mechanism of raising the ambitions and pledges.

Nearly two decades of similar  warnings from IPCC’s five assessments have been washed away by inaction and obstructions . So why do we think this special report would make a difference?

The second piece is where the potent link takes the central stage.

The news-byte came from Stockholm soon after the report from Incheon. William Nordhaus of Yale University and Paul Romer of New York University won the Nobel Prize for Economics, 2018. Both are well-known pioneers in adapting the western economic growth model to focus on climate change issues and sharing the benefits of technology to address environmental issues.

Why this is transformative news

This is the first time that economists have provided practical and evidence-based triggers to take action on climate change. Nordhaus was recognised for his path-breaking assessment of the economic impact of climate change, and his argument for governments to tax carbon emissions. Romer is known for his work on the role of policy in encouraging technological innovation.

During their press conference that followed the announcement, Romer said, “One problem today is that people think protecting the environment will be so costly and so hard that they want to ignore the problem and pretend it doesn’t exist”.  He went on to state the limitless capability of humans for the collective and coordinated growth in the world of globalisation, without harming the ecosystems.

This is the kind of message that dares to address the complex challenge of keeping the temperature rise below 1.5 degree Celsius. In short, policy instruments and technology innovation to curb climate change are now being framed into economics, which is more appealing for ‘business-minded’ and political leaders. Economists are now poised to be at the core of the climate change negotiations.


Rajendra Shende is Chairman of the TERRE Policy Centre and former Director of the United Nations Environment Programme.

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