20100204 global crisis, global climate change ... · pdf fileindia, china and america...

Singapore EU Centre/SMU (2/4/2010) Copyright by Dan Steinbock 1

Dan SteinbockDan SteinbockResearch Director of International BusinessResearch Director of International Business

India, China and America Institute (ICA)India, China and America Institute (ICA)

Singapore EU Centre/ Singapore EU Centre/ Singapore Management UniversitySingapore Management University

Feb 4, 2010Feb 4, 2010

Global Crisis, Development and Climate Global Crisis, Development and Climate ChangeChange: : Catalyst for Innovation?Catalyst for Innovation?


ContentContent

• New Global Threats• Global Crisis, Energy Prices and Recessions• Growth Priorities: G‐7 Versus BRICs• Development and Sustainability• Rebalancing through Innovation• Clean Tech as Growth Sector• Copenhagen’s Achievement • What Next?

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Manchester, England (" Cottonopolis"), pictured in 1840, showing the mass of factory chimneys

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Perception Vs. RealityPerception Vs. Reality

Emerging Europe as Emerging Europe as the the Source of EmissionsSource of Emissions

Vietnam Pollution Threatens Health. Motorcyclists during rush hour in Ho Chi Minh City, Feb. 25, 2009.

Emerging Asia as Emerging Asia as the the Source of EmissionsSource of Emissions


Global WarmingGlobal WarmingGlobal Annual Avrg Temperature and CO2 Concentration, 1880Global Annual Avrg Temperature and CO2 Concentration, 1880––20072007

Source: Adapted from Karl, Melillo, and Peterson 2009.

Note: Orange bars indicate temperature above the 1901–2000 average, blue bars are below averagetemperatures. The green line shows the rising CO2 concentration. While there is a clear long‐ term global warming trend, each individual year does not show a temperature increase relative to the previous year, and some years show greater changes than others. These year‐ to‐year fluctuations in temperature are attributable to natural processes, such as the effects of El Niños, La Niñas, and volcanic eruptions.


““No Place To HideNo Place To Hide””Synchronized Global Recession, 2006Synchronized Global Recession, 2006‐‐20162016

(All variables in levels, unless otherwise stated; years on x‐axis)


Sharper Contraction than in the US/Euro Area(2008 Q4, GDP growth, quarter‐on‐quarter, % change, SAAR)

Collapse of Exports in Asia

Asia: From Downswing to ReboundAsia: From Downswing to ReboundThe Impact of the Negative Demand ShockThe Impact of the Negative Demand Shock


The Great CorrelationThe Great CorrelationIncreasing Oil Price, Global RecessionsIncreasing Oil Price, Global Recessions


Rising BRICs / Declining GRising BRICs / Declining G‐‐77The BRICsThe BRICs’’ Share Is Increasing, GShare Is Increasing, G‐‐7 Share is Declining, 20007 Share is Declining, 2000‐‐20502050

Source: Goldman Sachs, 2003


Sustainability Not Perceived PrioritySustainability Not Perceived PriorityEnergy, Environment, and Global Warming Not Top PrioritiesEnergy, Environment, and Global Warming Not Top Priorities

9 Singapore EU Centre/SMU (2/4/2010) Copyright by Dan Steinbock 10

BRICsBRICs’’ Priority: DevelopmentPriority: DevelopmentEnergy Consumption,Energy Consumption, Per Capita, Total Consumption, 1980Per Capita, Total Consumption, 1980‐‐20302030

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Source: WDR team, based on data from IEA 2008c.Note: Toe = tons of oil equivalent

Despite low energy consumption andemissions per capita, developing countries will dominate much of the future growth in total energy consumption and CO2 emissions


Role of HighRole of High‐‐Income CountriesIncome CountriesShare of Global Emissions (1850Share of Global Emissions (1850‐‐2005)2005)

High‐income countries have historically contributed a disproportionate share of global emissions and still do

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Sources: DOE 2009; World Bank 2008c; WRI 2008 augmented with land‐use change emissions from Houghton 2009.


Toward 2C TrajectoryToward 2C Trajectory””Business as UsualBusiness as Usual”” Is Unsustainable Is Unsustainable

• Projected annual total global emissions (GtCO2e)

GP3 (11/12/2009) Copyright by Dan Steinbock 12

Source: World Bank


Innovation Potential UntappedInnovation Potential UntappedPublic/Private Spending on R&D RD&D Fraction of WhatPublic/Private Spending on R&D RD&D Fraction of What’’s Neededs Needed

• Global subsidies to petroleum products amount to some $150bnannually.

• Public spending on energy research, development, and deployment (RD&D) has been $10bn for decades, apart from a brief spike following the oil crisis (4% of overall public RD&D).

• Private spending on energy RD&D, at $40bn to $60bn a year, amounts to 0.5% of private revenues

• A fraction of what innovative industries such as telecom (8%) or pharmaceuticals (15%) invest in RD&D

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Nokia aeon concept phone

Nokia’s R&D were 11.8% of net sales in 2008.

Pfizer’s R&D were 16.5% of net sales in 2008.


From 40,000 to 21 million EFrom 40,000 to 21 million E‐‐BikesBikesEE‐‐ bikes now among the cheapest/cleanest travel mode options in Chbikes now among the cheapest/cleanest travel mode options in Chinaina

• Sources: Cherry 2007; Weinert, Ma, and Cherry 2007; photographs from author.

• Note: E‐bike emissions refer to full life‐cycle, which in this case includes production, energy production, and use. For the regular bicycle only emissions from production are included

A ban on gasoline‐ propelled motorbikes in several urban areas of China in 2004—which coincided with technological improvements in electric motor and battery technologies, faster urbanization, higher gasoline prices, and increases in purchasing power—boosted the electric bicycle market from a mere 40,000 in 1998 to 21 million in 2008


Growth SectorsGrowth SectorsGlobal Trends in Venture Capital (2009)Global Trends in Venture Capital (2009)

Source: Deloitte (2009) Global trends in venture capital 2009 global report

In terms of total capital invested, anticipated level of investmIn terms of total capital invested, anticipated level of investment change in select ent change in select sectors, over the next three yearssectors, over the next three years

Global Survey


Ensuring Technology TransferEnsuring Technology TransferIntellectual Property Protection, Technology TransferIntellectual Property Protection, Technology Transfer

Source: World Bank calculations based on individual countrydata provided by Walter Park, American University.Note: A higher score on the index indicates strongerintellectual property rights.

In order to enhance action on development and transfer of technology we decide to establish a Technology Mechanism to accelerate technology development and transfer in support of action on adaptation and mitigation that will be guided by a country‐driven approach and be based on national circumstances and priorities.

11th article, The Copenhagen Accord

Scientific Innovation and Invention (2000‐03)


Rising Investments WorldwideRising Investments WorldwideGlobal Annual Investment in Clean Energy 2004 to 2009, US$ billiGlobal Annual Investment in Clean Energy 2004 to 2009, US$ billionsons

Note: S/RP = small/residential projects. New investment volume adjusts for re‐invested equity. Total values include estimates for undisclosed deals.Source: New Energy Finance


BRICsBRICs’’ Rising Economic PowerRising Economic PowerBRICs Have a Larger $GDP than the G7 By 2040 (GS, 2005)BRICs Have a Larger $GDP than the G7 By 2040 (GS, 2005)


Phases of Talks Phases of Talks FFrom Rio to Copenhagenrom Rio to Copenhagen

1. UN Earth Summit in Rio de Janeiro (1992)– produced the UN Framework Convention on Climate Change.

2. Kyoto Protocol (1997)– a detailed 20‐page legal document– did not really include the rapidly‐growing developing countries; i.e.,

“emerging economies,” such as China, India, Brazil, South Africa, Mexico, and Korea.

– Lack of serious attention to the long‐term path of emissions

3. Copenhagen Accord (2009)– a general 3‐page political statement– a framework for addressing both deficiencies (BICs, LT path of emissions)– Expands the coalition and extends the time‐frame of action – All 17 countries of Major Economies Forum ( 90% of global emissions)

participate. – Each nation registers to abide by its domestic climate commitments


Deep GapDeep GapRequired Annual Climate FundingRequired Annual Climate Funding

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Sources: For mitigation: UNFCCC 2008; IIASA 2009; IEA 2008c;McKinsey Global Institute 2009a; additional data communicationfrom McKinsey for 2030, using a dollar‐ to‐ Euro exchangerate of $1.50 to 1.00; Edmonds and others 2008; and additionaldata provided by Jae Edmonds. For adaptation: Agrawala andFankhauser 2008; World Bank 2009c; and Project Catalyst 2009.Note: Shaded bars represent range of estimates of adaptationand mitigation needs in 2030, as well as the median.

Estimated annual climate funding required for a 2°C trajectory compared with current resources


Global GDP GrowthGlobal GDP Growth(Percent; quarter(Percent; quarter‐‐overover‐‐quarter, annualized)quarter, annualized)

Source: IMF staff estimates


The True The True ‘‘Green ShotsGreen Shots’’Global Green Stimulus Spending Is RisingGlobal Green Stimulus Spending Is Rising

Source: Robins, Clover, and Singh 2009


ConclusionsConclusions• In the coming years, climate change will pose increasing global threats• There is a correlation between rising energy prices and recessions. • Due to different levels of development, G‐7 and BRIC economies have

different interests. • Economic development is vital to lift the remaining billions out of

poverty; addressing issues of global warming and energy is critical to sustain growth.

• Innovation can facilitate the reconciliation of development and sustainability.

• Clean technology is emerging as a growth sector, but it requires the interplay of government policies and firm strategies.

• The Copenhagen conference provides a potential platform for change. It highlights the need for cooperation among both G‐7 nations and the BRICs.

• Today, the “business as usual” trajectory is unsustainable. It is increasingly costly, inefficient and destructive. The 2C trajectory is vital, but it can only be realized through cooperation.

23 Singapore EU Centre/SMU (2/4/2010) Copyright by Dan Steinbock 2424

THE ENDTHE END

20100204 global crisis, global climate change ... · pdf fileindia, china and america...

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