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Emerging Markets

‘Global warming will hit poor countries hardest’

Persuading American motorists to swap gas-guzzling sports utility vehicles (SUVs) for smaller cars would cut enough emissions to enable 1.6 billion poor people to get electricity without exacerbating climate change, a World Bank official said yesterday.

Marianne Fay, the Bank’s chief economist for sustainable development, said that the poorest countries would be worst affected by devastating climate change if the world failed to cut emissions over the next few decades.

Launching the bank’s World Development Report 2010, Fay urged politicians meeting for the UN climate change conference in Copenhagen in December to strike an “equitable deal” to stem the rise in emissions.

“High income countries can do things that will not compromise their prosperity,” she said. “The most important reason why high income countries should change [their behaviour] is that it is one way to create demand for alternative technologies.”

She said analysis by the Bank showed that swapping the 40 million SUVs in the US for cars with the average fuel efficiency of new passenger cars sold in Europe would cut 142 million tons of CO2 a year.

This would almost offset the 160 million tons of CO2 that would be generated by adding 1.6 billion people in developing countries without electricity to the power grid, bearing in mind relatively low energy consumption in poor states.

The WDR said that there was a massive shortfall in the finance needed to help countries adapt to a carbon-free economy and to mitigate the worst impacts of climate change.

“Pricing carbon whether through a tax or through a cap and trade scheme is the optimal way of both generating carbon-finance resources and directing those resources to efficient opportunities,” the WDR said.

Fay said taxation could alter behaviour, citing the example of petrol taxes in Europe. “We have estimates that, had the price of petrol [in Europe] remained without rises in petrol taxes, consumption would now be equivalent to the US,” she said.

Fay acknowledged that persuading American motorists not only to abandon their SUVs but to pay twice as much for their fuel would be a challenge. She said there was huge potential for countries to increase both the amount they invest in alternative technologies and the resources they devote towards adaptation and mitigation.

She contrasted the $13 billion that the world spent on energy R&D every year with the $34 billion that Americans spent on pet food. “It is a small amount of money,” she said. “If we want to see changes in energy systems we need to have a lot more resources.”

The bank estimates that by 2012 it could raise new resources of $9 billion a year for adaptation and mitigation. However this compared with bank estimates of the likely net cost of spending on adaptation of $140 billion-$175 billion by 2030 and a $75-$100 billion bill for mitigation.

“But years ago we did not have carbon financing or carbon emission markets, or serious discussions about adaptation and mitigation,” she said.

“There has been a tremendous increase in awareness and we have seen a transformation on climate change thinking. Even in the US, that never ratified Kyoto, 1000 cities have signed onto the targets. So even if you cannot get agreement at the national level, you can at the local level.”

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