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How to Get Maximum Greenhouse Gas Reductions in Emerging Economies, Part I: Brazil and China

Over the course of the last two decades, most people have realized that in a rapidly changing economic world order, country development categories could do with an update. Especially needed is a new title for the biggest among the economies that used to collectively share the “developing country” name. But, as more and more of today’s readers come to terms with the BRICS nations, its inventor has long called for yet another name. BRIC stands for Brazil, Russia, India and China, high population countries that all had struggling economies at the beginning of the 2000s. They formed an association in 2009 and invited South Africa to join in late 2010, officially establishing the BRICS group. The term “emerging economies” was soon found, but since not only the BRICS, but also South Korea and Turkey, for instance, are well-established now and go far beyond an emerging state, the Economist put “emerging economy” on top of its out-list as early as 2008:

In 2001 Jim O’Neill, chief economist of Goldman Sachs, came up with the acronym “BRICs” for the next four countries it expected to enter the economic big league: Brazil, Russia, India and China. He says that the BRICs, Korea and Mexico “should not be really thought of as ‘emerging markets’ in the classical sense, as many still do. We regard these countries as a critical part of the modern
globalised economy.”

Two years ago, this very Jim O’Neill called for a new name that might update “emerging markets”. He came up with “growth economies”. However, in the global recession we’re currently facing, not all emerging economies remain growth economies. Anyway, is not every capitalist economy in principle a growth economy (apart from maybe the one in Greece)? It sounds a bit weird, honestly, so we’re still waiting for a more satisfactory term. Having traveled a fair bit through many of the emerging economy nations, I personally haven’t found a single person among the locals who found the term emerging derogative. While I’m still looking forward to what we’ll be calling BRICS, and the next eleven, ten years from now, I’ll stick to the emerging economy term for now. Because above all, most people have a clear picture in mind of what it stands for. Anyway, even the countries in O’Neill’s next eleven listing fit into four different categories, ranging from the developed and advanced economy of South Korea to the “newly industrializing” countries of Turkey, Iran, Mexico and the Philippines, to the “lower-middle-income economies” and developing countries of Indonesia, Egypt, Nigeria, Pakistan and Vietnam. In this N-11 ranking, Bangladesh scores last, considered to be a low-income economy and a least-developed country.

Report: How Emerging Economies Can Match Official and Ethical GHG Emission Targets

What’s more important than the category they fall in, however, is how these countries could match their full potential to limit global warming to 2° C by 2100. Their miraculous development can surely be turned into a low-carbon future, but how? This question was explored in a recent report published by the German Federal Environment Agency (Umweltbundesamt). The extensive report bears the name “Emerging economies – potentials, pledges and fair shares of greenhouse gas reductions” and is available for download at uba.de. In this article, you’ll find a brief explanation of the report’s methodology and the most important results for the first two of the six emerging countries it focused on, Brazil and China. Next week, will be the results for the remaining four countries: India, Mexico, South Africa and South Korea.

Altogether, nine authors coming from the Wuppertal Institute and two other climate research organizations, Ecofys Germany GmbH and Climate Analytics GmbH, contributed to the report. For each of the six countries, they compared official greenhouse gas reduction pledges made for 2020 to actual mitigation potential. In other words, they measured the ambitiousness of each country’s official climate target. Together, the six countries of choice accounted for one-third of global greenhouse gas emissions in 2008. The authors did not specify why Russia, a fundamental part of the BRICS, was not included, but Mexico was. Probably because Russia, beyond any doubt, is considered a developed economy by now.

Moreover, six approaches to finding a fair distribution of global emissions were taken into account and compared to the national pledges. These approaches for “fair shares” of greenhouse gas emissions basically deal with the question of how many emissions should ethically be granted to each country, in regard to its population, its history and its economy, and how easily its citizens could reduce emissions. Every approach follows a different path towards the common final goal of one sustainable per-capita emission figure in 2050 that all countries’ citizens share. A detailed description of these noteworthy approaches can be found on pp. 142 (pp. 158 in the PDF).

Not surprisingly, the authors discovered a “a large emission reduction potential” for “most of the countries”. While it is common sense that “action needs to be taken soon to enable the full use of the potential”, and the sooner the better, it is not so easy to name the best measures. “With every year delay in action,” the authors stated, “we can achieve less of the reduction potential”. Once more, it is clear that the longer we delay climate action, the more expensive it gets.

The authors put possible mitigation measures (actions to reduce emissions) into three categories. Category one consists of so-called “no-regret measures” that are either cost-neutral or save costs. In category two, you find measures at moderate cost, or those that generate high costs but come with “significant co-benefits that lower overall cost to society”. Hence, measures in category two are those with co-benefits. Category three refers to “ambitious measures”. These generate high costs that are not outweighed by the co-benefits to society. I’ll do my best to ignore the ambitious measures since their significance is of theoretical value only.

South Africa & Brazil: Vague Baseline, Big Uncertainty

So what measures are there? Let’s start with Brazil, a country whose particular emission distribution illustrates quite well why there is no one-stop solution for all emerging economies. On page 4 (or PDF page 20), the report explains how difficult it is to evaluate Brazil’s climate targets. Theoretically, the 36-39% reduction of greenhouse gases by 2020, as stated by the Brazilian government, is an ambitious goal. However, precise figures on Brazilian land use are hard to come by. Land use, and especially changes in land use, are quintessential to assessing the climate-relevant figures. Taking into consideration the sheer size of Brazil’s rain forests, and the gigantic carbon sequestration these forest ecosystems deliver, it is no wonder the authors criticized the uncertainty there and in some other countries as well:

Mexico and South Korea have rather ambitious pledges, which will require substantial deviation from the BAU [business as usual] trajectory. South Africa’s pledge of 34% below BAU is a strong reduction, but South Africa has given a wide uncertainty range for both its pledge and BAU levels and thus does not allow a definite evaluation. Similar – even more severe – issues arise for Brazil, where the uncertainty associated with land use, land-use change and forestry (LULUCF) emissions is too high to allow us to determine whether reaching the pledged emission level would be a significant improvement relative to the BAU level. […] There are immense uncertainties connected to the data situation.

Brazil: Biggest Potential in Land Use

So where does Brazil’s path to a maximum saving of emissions lead? To begin with, the authors name some areas where cost-efficient measures can be taken: re-forestation, agricultural soils (see PDF p. 61) and energy efficiency in industry. However, these measures don’t cover the entire potential: “The largest potential, from reducing deforestation, comes at moderate cost and determines the overall picture.”

Whilst globally the main source of GHG emissions is the use of energy, the largest share of Brazilian emissions comes from the AFOLU [Agriculture, Forestry and Land Use]. Even though deforestation rates have drastically decreased over the past 10 years in the country, such activities are still responsible for 70% of Brazil’s current emissions.

This particularity is mainly due to two facts: first, 80% of the country’s electricity comes from hydro-power, and second, a big share of its transport sector runs on sugar cane-derived ethanol. Even though they might not be sustainable in a deep definition of sustainability, these two energy sources are remarkably low-carbon ones. To increase energy efficiency in industry, the authors suggest the recovery of heat and steam, augmentation of co-generation and the use of thermal solar plants for process heat. All of these measures are cost-efficient. Recycling would save 7% of the industrial sector’s and 2% of total emissions, another cost-efficient measure.

How should Brazilians reduce deforestation, then? By changing the laws for forestry: “the most important political instrument for Brazil’s mitigation trajectory is forest legislation.” Unsustainable biomass, derived from logging and changing the land use (deforestation) should be replaced by sustainable biofuels, as in harvesting biomass from renewable energy forest plantations instead. Furthermore, there is some unused potential in waste management. Electricity generation from landfill gas and composting could save 50% of the waste management carbon emissions in Brazil. For the transport sector, improvements could be achieved by extending bus rapid transit in urban areas and by shifting cargo from road to rail and waterways.

China: Highest Potential in Renewable Energy and Efficiency

As I wrote two months ago, despite its image in the West, China’s Future is Inevitably Green. Already, the country is the world’s biggest investor in renewable energy and is well started on the way to meet its official pledges, as confirmed by the report’s authors:

China already implements many national measures that could go beyond the international pledge [that is estimated to 9% emission reduction]. As such it is likely that the pledge will be achieved or overachieved.

However, even within the framework of meeting the targets, absolute emission numbers will still rise. How
come? Because China has an emission intensity target only. That refers to the level of emissions in relation to the gross domestic product, not in total. So the 9% emission reduction is an estimation only, based on GDP growth predictions. The carbon intensity from 2005 to 2020 is set to decrease by 40 to 45%, so each Yuan that a person in China earns in 2020 has emitted 40-45% less carbon than a Yuan in
2005.

The main possibilities for GHG mitigation in China lie in the energy supply sector, specifically in the area of renewable energy, and in the industrial sector, specifically in the area of energy efficiency. Another important area of improvement is the building sector, which is subject to rapid changes due to increasing economic wealth.

The energy sector could do with a larger applications of co-generation (using waste heat from electricity generation for domestic and industrial purposes) and increases in renewable generation, i.e., hydro-power, both on- and off- shore wind power, solar photovoltaics, and sustainable biomass. The measures for increasing efficiency in the industrial sector, China’s biggest emitter, are mostly no-regret measures, which means cost-efficient:

No-regret measures lie especially in the area of energy management and auditing. Ambitious measures in many cases involve exchange of capital intensive equipment (for example, highly efficient cement kilns and various technologies for the iron industry. Energy audits and modern equipment can increase (awareness of) safety on industrial plant sites and decrease health risks for employees and populations nearby. […] Besides decreasing the energy intensity of a process, complete processes can also be exchanged.

Despite its high population and the vast distances in the Middle Kingdom, the Chinese transport sector accounts only for a small share of the country’s emissions. However, “vehicle ownership has increased by 850% over the last decade ”, and we have good reason to expect it will rise even further. Nevertheless, it will take forever until the modest, collectivist-minded Chinese reach the gigantic per-capita transport emission levels of most individualized, western economies. The building sector, too, sees a comparatively low per-capita emission level. However, as the standard of living rises, emissions skyrocket, so low-energy buildings and efficient lighting would increase efficiency while being cost-efficient. Efficient electric appliances have a similar potential, but come at a modest cost.

By assuming that emission reductions would hinder economic growth, Chinese authorities miss an important opportunity:

China has put forward an emission intensity target with the rationale that international climate change mitigation commitments should not constrain economic growth and development. This view does not necessarily reflect opportunities for growth in the area of climate change mitigation (“green
growth”).

In other words: there is a big potential in achieving economic growth without generating more emissions. Decoupling is the keyword. If China wanted to fit into what is considered a fair global per capita emission level, its national pledge is not ambitious enough. Following the various fair share approaches, China would have to get its emissions between 6 and 41% below the business-as-usual scenario by 2020. The big difference in these figures result from methodological variation. On the one hand, there are approaches that predominantly base their calculations on per-capita emissions. They call for more stringent reductions. On the other hand,
approaches that value per-capita income, which is still low in China, require milder emission reductions for the country. For exact results, see figure 20 in the report (PDF p. 78).

Stay tuned, because next week, we’ll discover how India, Mexico, South Africa and South Korea can
best save greenhouse gas emissions, whether they’re likely to match their official targets for 2020, and how much they should save in order to match their global responsibility.

Further Reading

Hanna Fekete, Niklas Höhne, Markus Hagemann, Timon Wehnert, Florian Mersmann, Marion Vieweg, Marcia
Rocha, Michiel Schaeffer, William Hare (2013): Emerging economies – potentials, pledges and fair shares of greenhouse gas reduction; Umweltbundesamt, PDF download here

Article image CC BY SA 3.0, edited by Moritz Bühner, based on this
Wikimedia Commons image
. BRICs and Next Eleven countries highlighted in light gray, white and turquoise. All other countries in dark green.

moritzbuehner

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