The dilemma of new climate economy

World leaders convened in Glasgow for the Climate Change Conference, with countries and investors making big commitments on transitioning away from fossil fuel towards green energy.

Africa contributed the least carbon emissions from energy and industrial sources but is exposed to bearing the heaviest cost. Activists are pushing for more ambitious national and global climate plans. But what is not emphasised is that the transition to a new climate economy is a very expensive initiative and therefore will take time.

First, demand for energy is increasing at a higher rate than the rate of transition. There is a general increase in energy demand globally, which means economies will still be holding and using dirty fuels to meet that demand.

Projections by International Energy Agency show a trend of increase in energy demand whilst at the same time, there is not enough investment in the clean energy transition. For example, the demand for coal in Asia is still big and renewables are not reliable as a backup.

Even though only two percent of coal demand is from Africa, energy security remains a big challenge. Unless there is heavy investment in clean energy transition, Africa will be left with the tough choice of going for energy security with dirty fuels or a new climate economy with an energy security problem because the needed investment for the clean energy transition is more than three times the current investment we are seeing.

Second, there is a big economic returns trade-off that’s needed to be addressed for the transition to a new climate economy to happen.

The Amazon Forest — the world’s largest tropical rainforest which covers Brazil and extends into Colombia, Peru, Bolivia, Guyana, Suriname and French Guiana — is now emitting more carbon dioxide than it is able to absorb, amounting to a billion tonnes a year.

Now, the major causes for this reverse carbon sinking are deforestation and fires set deliberately to clear land for beef and soy production. Brazil has turned into a major exporter of timber, beef and soy, which are all products coming from the Amazon. These commercial activities have led to Amazon releasing 20 percent more carbon dioxide into the atmosphere over the past decade.

So, the intended climate economy is faced with an economic question about the conversion of land for agricultural activity over the use of the land for ambitious climate economy projects.

Gabon’s tropical rainforest is another example. The rain forest is part of the Congo basin and arguably the world’s most important carbon sink after the Amazon. It covers around 85 percent of Gabon’s landmass, which means the country has to forego much of industrial development especially agribusiness that requires huge tracts of land for carbon sinking.

The country has now started commercial exploitation of the rainforest by issuing licences for industrial logging as well as agribusiness development that includes the production of beef and sugar.

So, in both cases of Amazon and the Gabon rainforest, the envisioned climate economy faces an economic question: does climate change provide sustainable economic returns over industrial use? In both cases, industrial use seems to be making more economic returns over a new climate economy.

So new climate economy benefits like carbon credits will have to rival industrial exploitation of the rainforest for the new climate economy to be sustainable.

Here in Kenya, Lake Turkana Wind Power project, considered the largest wind farm in Africa, poses a similar dilemma. The investment has hived off more than 130,000 acres of community land to be used on a lease for 33 years and during this period no development can happen. Unless the community starts enjoying sustainable development from the projects, the community will not forego 130,000 acres of land for a long period of time.