Global Commission on the Economy and Climate - Felipe Calderón - Transforming Transportation 2015

www.TransformingTransportation.org

The Global Commission on the

Economy and Climate

Felipe Calderón

Chair, Global Commission on the Economy

and Climate

Presented at Transforming Transportation 2015

1

1

THE GLOBAL COMMISSION ON THE ECONOMY AND CLIMATE

Felipe Calderón, Washington D.C., 15 January 2015

2

Extreme Weather Events

Haiyan Typhoon, Phillipines

> 6,000 dead

November 2013

3

Extreme winter in the US

January 2014


4

CaliforniaThe worst drought ever

April 2014

Fuente: Monitor de Sequias EUA


5

Drought in Northeast ChinaWorst in 50 years

August 2014


6


Hurricane Odile, Los Cabos

September 2014

7Fuente: IPCC, 2013: Summary for Policymakers. In: Climate Change 2013: The Physical Science Basis. Contribution of

Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change

Año

Global temperature by decades

88Fuente: IPCC, 2013: Summary for Policymakers. In: Climate Change 2013: The Physical Science Basis. Contribution of


IPCC: The average sea level has increased in last Century

Año

99

J= Jule o Julio. 1J=0.0001 BTU 1J= 1N*m donde N: Newton y m: metro

Fuente: IPCC, 2013: Summary for Policymakers. In: Climate Change 2013: The Physical Science Basis. Contribution of


Increasing the heat content of the upper ocean

(1022 Jules)

IPCC: There has been and increase in the sea temperature

Año

1010

At the same time, there is concern for world economic growth

Europe. Risk of a “triple dip.”

Brazil. Fell in a recession the second quarter of 2014.

China. Rate of growth has decreased in the last 4 years.

Japan. Is not growing in spite of monetary expansion.

India. Growth in 2012-13 was the worst in a decade.

Fuente: Elaboración propia

• World leaders are justly worried about generating more economic

growth. But can we take care of the environment at the same time?

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12

The Global New Climate Economy Partnership

Global Commission

Chaired by Felipe Calderón

and Nicholas Stern

Comprising 24 members including:

• former heads of government

• finance ministers

• leaders in business, finance and

economics

Economic Advisory Panel

14 world leading economists, chaired by

Professor Lord Nicholas Stern

Includes:

Two Nobel prize winners:

Daniel Kahneman and Michael Spence

7 Commissioning Countries

Colombia

Ethiopia

Indonesia

Norway

Sweden

South Korea

United Kingdom

8 Partner Research Institutes

Climate Policy Initiative (USA)

Ethiopian Development and Research Institute

Indian Centre for Research on Economic

Relations (ICRIER)

Global Green Growth Institute (South Korea)

London School of Economics (UK)

Stockholm Environment Institute (Sweden)

Tsinghua University (China)

World Resources Institute (USA)

13

CITIESLAND

USEENERGY

RESOURCE

EFFICIENCY

INFRASTRUCTURE

INVESTMENT

INNOVATION

WIDER ECONOMY

BETTER

GROWTH

Critical economic systems and key drivers of growth

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14

1. Energy

Critical economic systems

15

0

50

100

150

200

250

300

350

400

450

500

550

600

2005 2010 2015 2020

Source: Citi Research 2012; Bloomberg NEF (Turner 2013); AIE, World Energy Outlook 2013, WEO 2012

Cost of wind energy

USD/MWh

2000 2005 2010 2015 2020

150

100

90

160

140

130

120

110

50

70

60

80

10

0

Coal

Natural

gas

Cost of solar energy (solar panels)

USD/MWh

Actual Predicted Actual Predicted

2012 2012Note: The graph shows a world average. In some

markets the cost of solar energy is competitive with other

sources of energy.

The cost of renewable energy is dropping rapidly

Coal

Natural

gas

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Energy in Cities

1. Building Sector:

• Improved design

• Insulation

• Lighting and heating/cooling

• Small scale renewables

Leeds, UK

• Payback < 3 years

• Domestic sector emission

reductions of 16%

2. Transport Sector:

• Efficient vehicles

• Cleaner fuels

• Public Transport

3. Waste Management:

• Recylcing

• Landfill gas capture

• Composting of waste

Lima-Callao, Peru

• Payback 2.6 years

• Transport related

emission reductions of

26% by 2025

Kolkata, India:

• Payback 11.8 years

• Waste related emission

reductions of 41% by 2025

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17

2. Land Use


18

18

Sources: Seto, K.C., Güneralp, B. and Hutyra, L.R., 2012. Global forecasts of urban expansion to 2030 and direct impacts on biodiversity and carbon pools. Proceedings of the National Academy of Sciences, 109(40). 16083-16088. DOI: 10.1073/pnas.1211658109.

The global urban area will triple by 2030: equivalent to adding

an area greater than the size of Manhattan each day

19

To lessen the pressure, we need better land use systems

(example of China’s Loess Plateau)

1990

2012

Source: World Bank project completion evaluations of the Loess Plateau Watershed Habilitation Projects I and II, 1999 and 2005.

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20

3. Cities

Moving to a more compact model


2121

Sprawl costs the United States over $400 billion per annum

21

Sprawl costs in the United States per annum

Billion US$

SOURCE: Litman (2014) for New Climate Economy commissioned by LSE Cities.

Note: these denote the potential savings from smart growth policies. See Litman, T., 2014 (forthcoming). Analysis of Public

Policies that Unintentionally Encourage and Subsidize Urban Sprawl for detail of underlying data sources.

External

costs:

air pollution,

congestion,

noise, others

217

90

72

31

0

100

200

300

400

500

Increased

public service

costs

Crash

costs

Increased

infrastructure

capital

costs

Total

410

Total private costs

(including travel time,

vehicle ownership etc.)

are 324 billion US$

2222

Costs of traffic congestion for selected cities

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Cost of traffic congestion as a percentage of GDP in selected cities

Sources: IBM Institute for Business Value, Smarter cities for smarter growth. Li-Zeng Mao, Hong-Ge Zhu, and Li-Ren Duan (2012) The

Social Cost of Traffic Congestion and Countermeasures in Beijing. Sustainable Transportation Systems: pp. 68-76.

Percentage of GDP

4.2%4.1%

4.0% 4.0%

3.4%

2.6%

2.4%

2.1%

1.8%

0%

1%

2%

3%

4%

5%

Beijing Dublin Cairo Manila Dakar Mexco City San Paulo Bangkok KualaLumpar

23

None of the top 50 cities meet WHO air quality standards

0

50

100

150

200

250

300

New

Yo

rk

Los A

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Ch

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go

Bu

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Sa

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Rio

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Ja

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Bo

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Cair

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ann

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Gu

ang

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ka

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oya

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nila

Se

ou

l

Ta

ipe

i

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ng

kok

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hi M

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City

Dha

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Delh

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alu

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Hyde

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Ah

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dab

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Lah

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North

America

Latin

America

Europe &

Central

Asia

Middle-east

& North

Africa

East Asia & Pacific South Asia

WHO air

quality

standard

PM10 <20

per m3

Particulate matter per m3 for top 50 cities

SOURCE: Mortality data from World Health Organisation: http://apps.who.int/gho/data/node.wrapper.ENVHEALTH3

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Economic value of premature deaths from air pollution

Source: NCE estimate, based on WHO mortality data

25

Well planned, compact cities are more economically efficient

and have lower emissions

SOURCE: (1) LSE Cities; (2) Newman and Kenworthy 1989

CITIES

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Different models of urban development

Atlanta’s built-up area Barcelona’s built-up area

Population: 2.5 million

Urban area: 4,280 km2

Transport carbon emissions: 7.5

tonnes CO2 per person (public+

private transport)

Population: 2.8 million

Urban area: 162 km2

Transport carbon emissions: 0.7

tonnes CO2 per person (public+

private transport)

ATLANTA BARCELONA

Source: Bertaud and Richardson, 2004, Kenworthy (2003) citied in Lefevre, B. (2009)

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Cities will account for nearly two thirds of energy-related

emissions growth by 2030

Emerging Citiese.g. Bangalore, Pune,

Puebla. (291)

Pop. 1-10 M $2-20m

Global Megacitiese.g. Beijing, New York, London,

Rio de Janeiro (33)

POP. >10M $ > 2 m

Mature citiese.g. Stuttgart, Minneapolis,

Stockholm, Hiroshima (144)

> $20 000

Small urban areasVillags, small towns, peripheral

industrial areas. E.g Gabarone

Pop. < 0.5M e.g.

Projected base case GDP

growth from 2012-2030,

USD trillions2

Projected base case emissions

growth1 from 2012-2030,

Megatonnes of CO2

Projected

population in

2030, bns

~0.6

~0.4

~1.3

~2.2

1 Energy assumptions are consistent with IEA’s Current Policies scenario 2 At 2012 prices and exchange rates

Urban group

Source: Oxford Economics and LSE Cities; Modelling based on 750 cities emissions and GDP data. Small urban areas include 26 cities in

the Oxford Economics Global 750 Cities dataset with populations < 0.5m people and those areas classified as ‘urban’ in the UN World

Urbanization Prospects dataset.

Total growth ~52 ~4.5~5,890 Total pop. in 2030

Share of world growth ~65%~87% ~55%Share of world pop. in 2030

390

1,220

1,050

3,230

30

Copenhagen has demonstrated its possible to grow and reduce

emissions

Source: Floater, G., P. Rode, D. Zenghelis, M. M. Carrero, D. Smith, K. Baker and C. Heeckt (2013). Stockholm: Green Economy

Leader Report. London, LSE Cities, London; Floater, P. Rode, D. Zenghelis, M. Ulterino, D. Smith, K. Baker, and C. Heeckt (2014).

Copenhagen: Green Economy Leader Report. LSE Cities, London ; Rode, P., G. Floater, J. Kandt, K. Baker, M. Montero, C. Heeckt,

D. Smith and M. Delfs (2013). Going Green: How cities are leading the next economy. L. Cities. London, LSE Cities.

(Gross Value Added)

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CITIES: A range of smart transport systems have taken off

in numerous cities worldwide since 2000

Source: Sustainable Transport Adoption Curves, World Resources Institute, Embarq 2013

32

Investment in infrastructure: estimate for a low-carbon scenario

Source: OECD (2006, 2012), IEA ETP (2012), modelling by Climate Policy Initiative (CPI) for New Climate Economy (forthcoming), and New Climate Economy analysis.

$88

INCLUDES

REDUCTIONS IN

OPERATING

EXPENDITURES

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Next stepsThe Global Commission recommends 10 transformative

actions

Source: NCE. For details please see the NCE Global Action Plan (2014)

1 Integrate climate risk into strategic decisions

Secure a strong international climate agreement

End perverse subsidies

Price carbon to send a clear market signal

Scale-up low-carbon innovation

Reduce the cost of capital for low-carbon investment

Move toward connected and compact cities

End deforestation

Restore degraded lands

Phase out unabated coal fast

2

3

4

5

6

7

8

9

10

,,,

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Compact, connected, and coordinated urban development can

boost growth, reduce costs, and deliver wider benefits

SOURCE: World Bank (2014), Arrington et al (2008), ADB, CAI, and Chreod (2013), Oxford Economics and LSE Cities (2014)

1. Greater productivity and growth - from

agglomeration

2. Reduced infrastructure capital requirements

3. Cost savings in the transport sector

4. Health benefits from improved air quality

5. Multiple co-benefits: Jobs, reduced

congestion, energy security

6. Lower carbon emissions

35

Recommendations of Global Commission (1)

• Make better planned urban development a central element of national strategies

1. BETTER URBANISATION

• Consider greater fiscal autonomy for cities to unleash investment in smarter urban infrastructure

2. FISCAL AUTONOMY

• Eliminate fuel subsidies and other subsidies to sprawl and introduce mechanisms to price externalities such as traffic congestion

3. PRICE EXTERNALITIES

36

Recommendations of Global Commission (2)

• Redirect budget towards more compact, connected and coordinated urban infrastructure

4. REDIRECT INVESTMENT

• Strengthen role of strategic planning at national, regional, and city levels.

• setting up integrated land use and transport authorities

5. PLANNING AND

GOVERNANCE

• Work in partnership with the private sector at new funding vehicles to unlock capital for mass transit and other smarter infrastructure

6. FINANCING MODELS

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THE GLOBAL COMMISSION ON THE ECONOMY AND CLIMATE

Felipe Calderón, Washington D.C., 15 January 2015

38

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1. Innovation

Key drivers of change

39OECD 2010

Index of innovation in climate change mitigation technologies (1990 = 1)

Directed technical change

40

Source: Tesla motors website, scdigest.com, autonews.com

Triggering competitive

response

Transforming the auto industry

Tesla market cap: $26bn

~25,000 cars sold in 2013

GM market cap: $54bn

~9.7 million cars sold in 2013

Promoting new

materials

Pioneering batteries

and energy storage

INNOVATION: Tesla motors is challenging the status quo

in many industries, and creating huge wealth in the

process

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2. Resource efficiency


42

Currently, we are subsidizing a high-carbon operating model

Estimated Global Energy consumption subsidies for fossil fuel and

renewables, 2012

Nominal. US $ billion

Note: values of subsidies are highly sensitive to energy prices so vary year by year. Most recent

estimates suggest fossil fuel subsidies of ~600 millionSOURCE: IEA, World Energy Outlook 2012

~520

~90

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3. Investment in infrastructure


44

An alternative development model is possible:

Cities with similar levels of GDP per capita have vastly different

carbon emissions

SOURCE: LSE Cities based on multiple sources