To live in a cleaner, greener, healthier world we need to sacrifice our desire for lavish lifestyles and accept that economic growth will have to take a hit if we are to promote sustainability and more sensitive use of the Earth’s resources.
At the weekend, even the White House agreed that the sentiment above is absurd. In an unprecedented move, President Barack Obama used his executive authority and the Supreme Court to bypass Congress and issue a bill that requires all power plants to reduce their carbon emissions by 30 percent from 2005 levels by 2030.
Obama’s motive is to slow the effect of climate change, but in a six-and-a-half-minute address to the nation on the subject he never once mentioned polar bears or melting ice caps. His concerns were the increase in lost lives and livelihoods, lost homes and businesses, higher food prices, and higher insurance and repair costs from natural disasters.
In terms of emissions themselves he emphasised the reduction of heart attacks, lung diseases and asthma that would result from cutting back air pollution.
Unfortunately for environmentalists, concerns about extinct animals are not enough to mobilise the masses. But appealing to the homes and pockets of the US citizens, the Obama administration has taken a bold move in restricting the supply of traditional energy production – the key ingredient of economic growth.
The bill is not a slamming door but rather a guiding push towards better energy practices. It is tailored by state to meet their unique energy situations and allows power plants various ways in which they can achieve the targets. Alternatives include switching to cleaner fuels such as natural gas, making use of cap-and-trade markets (a form of carbon trading), expanding the use of renewables such as wind and solar, and exploring policies to encourage consumers to use less energy.
Opposition has been thick and fast – hence the need to avoid Congress. The American Coalition for Clean Coal Electricity, a lobby group for the coal industry, has said such a bill would hurt the economy, causing power outages and creating the US’s next energy crisis. The Chamber of Commerce forecast it would cost the economy $51 billion (R546bn) and 224 000 jobs.
But Obama’s rebuttal points to the precedent set by other such laws. The economy did not take a dive from regulations to clean up city smog and eliminate acid rain. The economy has had no problem moving to non-cancerous plastics and unleaded fuels. To fix the hole in the ozone layer we did not switch from meat to tinned beans but instead we made better fridges. History has shown that when necessity for restraint exists, the remobilisation of resources and creativity is enough to counter any so called “cost to the economy”.
More interesting than technological solutions is the change that will take place in investment flows. Obama has sent a clear signal that there is no future in coal – in the US or abroad. It will take many decades to phase out the use of coal, but phased out it will be and investors will be looking to get off the tail-end of this flow and find the next big thing.
The emission reduction targets may be set for 2030 but Obama has given investors even more reason to get ahead of the game in renewables. With an abundance of sun, wind, space, and innovation among individuals and businesses, this is a trend that South African industry is not going to want to miss.
Pierre Heistein is the convener of UCT’s Applied Economics for Smart Decision Making course. Follow him on Twitter @PierreHeistein