This week I attended a lecture given by Professor Cameron Hepburn, Senior Research Fellow at New College, Oxford, my alma mater. Professor Hepburn presented the latest trends and explored the varied challenges of a global transition towards an inclusive green economy. He drew on his expertise in environmental, resource and energy economics from a career spanning business, social enterprise, research and policy making.
Cameron Hepburn is the Director of the Economics of Sustainability Programme, based at the Institute for New Economic Thinking at the Oxford Martin School. He is also Professor of Environmental Economics at the Smith School of Enterprise and the Environment, a Fellow at New College, and a Professorial Research Fellow at the Grantham Research Institute at the London School of Economics where he gave the lecture.
He has published widely on energy, resources and environmental challenges across a range of disciplines, including engineering, biology, philosophy, economics, public policy and law, drawing on his degrees in law, engineering and doctorate in economics. He is on the board of Environmental Research Letters and is the managing editor of the Oxford Review of Economic Policy.
Cameron provides advice on energy and climate policy to ministers of various governments including China, India, UK and Australia. He began his professional life with McKinsey, and has since had an entrepreneurial career founding three successful businesses – Aurora Energy Research, Climate Bridge and Vivid Economics – and investing in several other social enterprises, such as Purpose and Apolitical.
He began by saying that he was not going to dumb down his lecture but would respect his audience of New College Alumni and use the same charts he always did. He then tested out his hypothesis by asking us what proportion of carbon emissions the world had to reduce by in order to bring the climate back in equilibrium. Was it 20 – 40%, 40-80% or 80-100%? Some went for the lower figure; the majority went for the middle figure while a few of us went for the higher figure. We were right because of course the emissions are already in the environment and unless you remove most of them they continue to cause harm and warming.
The Anthropocene is a proposed epoch dating from the commencement of significant human impact on the Earth’s geology and ecosystems including but not limited to anthropogenic climate change.
Cameron observed that GDP per person has grown everywhere. Using the lumen test for labour also shows strong progress[i]
and the population keeps growing too. It would seem Malthus is wrong but is it sustainable?
Natural capital must be exhaustible, meaning the black and brown stuff that we extract from the ground. But when we examine how many years of reserves are left for say a mineral like Copper at current rates of production we find it is just 28. It’s 25 for Nickel, 17 for Gold, 16 for Silver and just 14 for Tin. But when we look back we have had 30 years of reserves for Copper for the last 70 years. The capitalist system of market prices, information, and supply and demand works well; we keep finding more of what we need.
But the renewable capital, the forests, the ecosystems, the biodiversity are all getting worse according to 31 indicators. Nature is in the balance and this area is massively under researched. Biodiversity is special as there are limits to substitutability. There is no control. Fishery catches around the world are all in decline. 24.2% have collapsed while 33.2% are over exploited. Grand Banks can be sustainable for ever but if you crash them you crash them forever.
What can we do about it?
We need green growth. We need to live up to and achieve the UN Sustainable Development Goals. (See my blog Global Goals
) The human economy is embedded in society, which is itself embedded in the biosphere. The core inputs are land, raw materials, energy and water. Economists tend to concentrate on just capital and labour but try baking a cake without the raw ingredients of flour, sugar, fat and an egg and without an energy source to bake it.
Cameron pointed out that similar increases in agricultural output had been achieved in Africa and Asia but in Africa it had been done by doubling the area of land used while in Asia it had been done by technology. Artificial meat and protein research is ramping up and we need to substitute the use of the brain for natural resources. Green growth could mean “more mind, less matter”. We also need to measure the right things. In measuring wealth we need to measure the stock of goods not their flow.[iii]
The Climate Challenge
This is where Cameron gave his answer to his opening question; by what % must net emissions be reduced from today’s levels to limit global temperature increases? The answer is 80-100% because we must stop net emissions, not just reduce them.
There is some good news. The growth in use of solar power particularly in the middle regions of the world, i.e. those closest to the equator, is growing strongly; prices of panels are falling and government subsidies are being phased out. Even Saudi Arabia has made a big investment in solar power. Wind too is growing strongly and has got to zero subsidies in most areas, at least on a par with carbon fuels. Battery prices are coming down. The UK has managed to run for three days consecutively without coal but at a global level the continued investment in vast numbers of new coal fired power stations is depressing.
But there is also plenty of bad news. Even in the Paris agreement, now abandoned by President Trump even if by not all his citizens, countries have not promised enough and are not doing enough. Cameron thinks that we are heading for a 3° world rather than the 2° target in Paris, a potentially disastrous scenario. From existing fossil fuel plants there are emissions of 300 giga tonnes of CO². But there’s a further 220 giga tonnes of CO² in the pipeline. India and China are building such plants much faster than developed countries can close them down.
If that seems pessimistic it is but Cameron is pointing out a truth. We won’t make it so we have to move the CO² from the atmosphere. We need to invest much more in R&D in energy, agriculture and transport. And we need to target zero net emissions. It’s not a matter of if, but when.
There is a strong correlation between the presence of electric light and the volume of labour.
Cameron is a man after my own heart. I have been saying this for years.