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Carbon emissions: Working from the top down

Engineers can solve the challenges of reducing carbon emissions, says Royal Academy of Engineering president Lord Browne, but they will need far-sighted political leadership and better international frameworks to underpin their efforts.

One of the great open questions of our time is whether there exists a model for low carbon growth. So long as economic activity continues to rely on fossil fuels, there will be a tension between reducing emissions and promoting economic growth. But this can change.

As engineers we share responsibility with policymakers for turning low carbon growth from an idea into a reality. We have a part to play in developing a suite of renewable energy sources and vital new technologies to capture and store emissions from the continued use of fossil fuels.

Engineering has the innovation and skills needed to tackle climate change and create a thriving low carbon, hi-tech economy for the future. Now policymakers must do more to enable engineers to deliver on this promise. Four things come to mind.


Do not exaggerate costs

The time has come for policymakers to be frank − the costs of deploying more low carbon energy will be reflected in higher household bills. But the impact will not be as large as most people are led to believe. The cost of meeting the UK’s renewable energy targets could increase bills by significantly less than the double digit price increases caused by last year’s spike in oil prices.

At present, renewable energy must receive government support to be competitive, but the situation is not static − as low carbon technologies are developed and deployed, their costs tend to decrease dramatically. In the last year, for example, the cost of solar photovoltaic modules has fallen by more than 40%.

Politicians should also be upfront with industry − making businesses pay for their emissions will impose additional costs on fossil fuel intensive industries. But the effect of pricing carbon on industrial competitiveness should not be overstated.


Implement sensible policies

A stronger carbon pricing signal is critical to ensure that emission reduction efforts occur at the lowest cost and highest benefit to society. In theory this is best achieved through full auctioning of carbon credits in a cap-and-trade carbon scheme. In practice, politicians must continue to strengthen and knit together the web of low carbon energy incentives and regulations already in place.

Promoting international trade in low carbon energy would also help reduce the costs of reducing emissions. In Europe, this could be achieved through the progressive liberalisation of energy markets and enhanced transmission linkages between EU member states. In the long-term Europe may benefit from large infrastructure projects − including offshore wind grids in the North Sea or solar rings in the Mediterranean − both of which would help create a genuinely international market for renewable power.


Emphasise the Opportunity

To my mind, the low carbon revolution presents as much an economic opportunity as a threat. With an increasing number of governments now enacting environmental policies now is the moment for countries to join the race to build new low carbon industries.

In Britain, the government has set itself an ambitious but achievable target to increase offshore wind capacity around fortyfold by 2020. But the market will not deliver new, low carbon infrastructure at the scale and pace required unless the government takes a more proactive approach.

The prize is clear − as well as reducing emissions, nations can benefit from enhanced energy security and the creation of new jobs. The development of the UK offshore oil and gas industry in the 1970s shows how successful such intervention can be. The government’s helping hand to the offshore industry, sharing the costs of building new infrastructure and providing fiscal incentives, allowed North Sea oil to compete with the cheaper supplies from the Middle East at that time.

To kick start a new green energy revolution, similar political leadership is required. The most pressing concern must be to alleviate the current shortage of debt finance. Governments should direct state-controlled banks to lend to low carbon infrastructure projects and encourage development banks to speed up their ambitious green lending programmes.


Engage the developing world

Low carbon growth will be impossible to achieve unless developing countries are locked in to a global climate change agreement.

Taken collectively these countries are now the world’s largest source of greenhouse gas emissions. They also contain the majority of low cost opportunities to reduce emissions in the near-term. It is crucial that a robust carbon finance framework is put in place to unlock these savings.

The Clean Development Mechanism should be expanded, made less bureaucratic and enhanced with rewards covering entire industrial sectors. There also needs to be a new financial framework to prevent deforestation and encourage good land management. These activities alone could contribute half the necessary reduction in global emissions by 2020.

Beyond the carbon market, government-driven funding will be needed to encourage international transfer of low carbon technologies; to help to build administrative and human capital; and to pay for adaptation efforts. Analysis suggests that a fund of around $100bn (£61.75bn) per year will be necessary for these activities.

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