A day after the new-elected US President, Donald Trump, moved to the White House, the content for global warming and climate change policy has disappeared from the White House’s website. Since long time, Trump has been worrying about the actions to tackle climate change would bring intention to frustrate the American businesses. Quoted by several media, he even called climate change as a Chinese hoax. Without putting aside US and China’s competition on trade, should the action to tackle climate change be erased in order to support the economic growth?
First, blaming China’s industries which produced tons of green gas houses is not entirely appropriate if their products are distributed worldwide and consumed by world’s citizen. Second, when the market is not yet ready for green growth, there must be an intervention from the government together with private initiative. This intervention has already been launched in December 2016 as Paris Agreement. Nation states have agreed to keep the temperatures rise this century by below two degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.
Malthusian point of view believes in the limitation of planet would not accommodate humans’ needs. When population grows, there will not be enough food and land for everyone. In order not to destroy the planet more than the previous humans have done, Malthusian argued that the extractive industries should be stopped immediately. Development economist, Easter Boserup finds that actually humans can survive with limited resources because they have capability to invent. The challenges motivate humans to invent new technologies, for example to find new farming method to overcome the limitation of land production. This capability to invent is already proved by inventions of clean technologies, such as solar power and wind turbine to produce energy.
However, the number of dirty technologies are still bigger than clean technologies. The coal and mining are still considered as the main resources of energy. Palm oils industry is still running because its producers and consumers keep making the deal on the market.
Harvard Professor, Phillipe Aghion observed it as a problem of path dependence, the fact that clean technologies to mitigate climate change seems ignoring the fact the portfolio of technologies available tomorrow depends on what is done today. Research proved the firms that have dirty technology in the past are much more likely to innovate less in clean technology in the future. For example, in automobiles industry, the ratio is one to four for the firms to migrate into clean technology rather than to stay in the dirty technology. It means the gap is still wide.
In this case, governments should really put their priority to increase their investment both on clean knowledge and clean innovation. The policy could be giving subsidy for the clean technology and providing incentives for Research and Development (R&D). Hence, the customers can afford clean products, step by step the number of clean technology will increase. In Indonesia for example, the Ministry of Finance supports on exemption of import duty and excise on imported goods for purposes of R&D of Science.
Over all, raising the awareness on climate change is important especially on making everyone responsible for using every inches of this planet. The economist even put a price by putting a tax levied on the carbon content of fuels (carbon tax). The practical way is to levy it on industry, so the price of product that causes pollution will be higher. For long term effect, the clean technology will cross the line of dirty technology.
Seeing this big picture, there is always a way for the action to tackle climate change to be in line with our needs of economic growth. Talking about development economics, the first problem that comes out is poverty. Climate poverty happened, so does the poverty if number of people lost their jobs if some industries collapse.
Therefore, the solutions must combine of saving the environment and support the economic growth. This is actually the idea of Sustainable Development Goals that has launched by United Nations in 2015.
Finally, come back to the idea that humans are capable of solving the problems and finding solutions. The clean innovation is already one step forward, now the big step is to prepare the market to be ready to accept it. Especially for rich countries, they have more budget to invest in clean innovation. As the biggest economy, US should not politically give up on the action to tackle climate change. In the meantime, developing countries should also take a step to invest in clean innovation.
China will invest $361 billion in renewable energy through 2020. Indonesia still finds the obstacles after the proposal Rp.1.3 trillion subsidy proposed by Ministry of Energy Mineral Resources to support renewable energy in 2017 has rejected by the Houses of Representative. Recently, the Minister stated that renewable energy will run without subsidy. Whether this policy increase the number of clean innovation or even suppress?