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Climate Change

Climate Change

Something in the air

How can global warming be tackled? Dr Bjørn Lomborg, author of “Apocalypse No!”, and Dr Jörg Zeuner in his position as Chief Economist of KfW discussed in 2017 the right approach to climate change and effective development aid.

About Mr Lomborg
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Dr Bjørn Lomobrg is head of the Copenhagen Consensus Centre. He shot to fame across the globe as the political scientist and statistician who wrote the controversial bestseller "Apocalypse No!", in which he queries key views of climate protection activists. In 2015, Time magazine cited him as one of the world's 100 most influential people.

More about Bjørn Lomborg

In 2009, at the United Nations Climate Change Conference in Copenhagen, a consensus was reached to limit the rise in global warming to less than two degrees above the pre-industrial level. Is the final document already fit for the bin?

ZEUNER: No, but the summit of heads of state and government at the end of November in Paris must set the course for a binding international climate protection agreement to protect the world climate. Up to now there has been a lack of commitment.

LOMBORG: I absolutely agree. This is where the politicians come in. Yet I fear there's no viable global solution which is anchored in CO2 targets. Nobody emits CO2 because they want to pollute. CO2 emissions are a side-effect of producing energy, which has been incredibly beneficial for the first world for a long time and still is today. At the same time, costs for lowering CO2 emissions are high. We can see that in Germany at the moment. Why should developing and emerging countries go without cheap energy and strive to reach expensive CO2 targets instead?

So what can we do?

ZEUNER: The industrialised nations, particularly Germany, have to take the lead. We're putting the German "Energiewende" into effect because we can afford to in material terms and as we do so, we can push forward on innovation and progress. Developing and emerging countries don't have the means to do this. KfW finances environmental and climate protection around the globe and transfers expertise. And at the same time, we know better than anyone else that environmental protection also has to be affordable. We talk to companies about this, literally on a daily basis.

About Mr Zeuner
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Dr. Jörg Zeuner was Chief Economist of KfW from September 2012 until April 2019. Before joining Germany’s largest promotional bank, Zeuner worked, among other things, for the International Monetary Fund (IMF) on stabilisation and reform programmes. The economist lectures in applied macroeconomics at the Ruhr University Bochum and International Finance at the University of St. Gallen.

LOMBORG: We need to dramatically ramp up our funding and investment in innovation so that we can develop cheaper solar and wind energy with better storage. Additionally, we need to find a way to get China and India on board; essentially climate protection needs to be so cheap that all the countries will want to do it. But when people look to the European solution and realise that Spain, for instance, is currently spending more on subsidies for renewables than on their higher education, most would probably think that their priorities are all wrong.

ZEUNER: Admittedly, the energy transition in Germany is expensive; we've made mistakes and need to rectify them. But at the outset, new technologies are always costly. And another thing to be taken into account: if we had an EU market for CO2 pollution rights that worked, it would have been possible to leverage renewable energies here with much lower subsidies. Because this is not the case, coal has made a comeback as an inexpensive source of fuel.

So what is your overall assessment on the effectiveness of the German "Energiewende"?

ZEUNER: In some places the "Energiewende" is making good headway, and in others it is too slow. Wind and solar power were, in fact, added to the energy mix too quickly. That was overly expensive and the brakes are now being applied. On the other hand, we're lagging behind in terms of energy consumption, which is still far too high. New incentives have already been introduced for home-owners, local authorities and companies ‒ including by ourselves.

In dialogue

Dialogue between Jörg Zeuner and Bjørn Lomborg (KfW Group/Thomas Schuch).

LOMBORG: The German “Energiewende” has its heart in the right place. But considering the high costs, emerging countries should put the limited resources they have into investing in climate change adaptation, rather than tackling global warming.

Wouldn't that be an admission of defeat?

LOMBORG: What I'm trying to do is use resources as effectively as possible, because at the end of the day, you can only spend every euro once. My question is how many euros do I get back for every euro I've spent over time? I'll give you an example which has nothing to do with climate policy. Last year everyone was talking about Ebola, but hardly anyone talked about diseases that kill a lot more people, such as tuberculosis, HIV or malaria. I believe that it's my job to stimulate discussion on such topics. Far greater health risks than that caused by Ebola could be reduced or even wiped out by spending much less cash. Shouldn't that be our priority then?

ZEUNER: Firstly, with Ebola there's the risk of contagion in our globalised world, that doesn't exist in this form with malaria. And for health policymakers, doctors or aid workers it's a consideration which doesn't count. Apart from that, in practice, the question doesn't arise. There mightn't be any malaria in Central Asia, but there are other important health risks, which can and have to be tackled there.

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With view to London’s financial district

Bjørn Lomborg and Jörg Zeuner met each other in the british office of the KfW IPEX-Bank

LOMBORG: But you agree with me that we need some form of orientation to make our decisions. If you went into a restaurant where there were no prices on the menu, you'd feel very uncomfortable about ordering. There are very few of us for whom prices are not important. They help us make our choices from the menu.

ZEUNER: Yes, I agree, but I also consider what I ate yesterday, what my doctor recommends and what I like.

LOMBORG: I'd never say that we don't need to do anything about Ebola. But even in the World Health Organisation's (WHO) worst-case scenario the forecast figure of Ebola deaths was lower than the annual mortality rate of tuberculosis patients. We shouldn't overlook that, even if it's hard.

By putting price tags on development goals, it's not just sharpening the sense of proportion – you also influence decisions.

LOMBORG: Well, I would hope so. We'd like to give headwind to the targets we're supporting. You can save a person from malaria for around one-tenth of the cost of saving someone from HIV, and that's mostly because you can protect a person against malaria very easily. You only need ten days of medication and it's fairly cheap, so you can either save ten people from malaria or one person from HIV. I know that that doesn't feel very good, but it's also reality.

ZEUNER: The danger of your approach, Mr Lomborg is of losing sight of important development aspects. Beyond combating selected diseases, developing countries need to be helped to build up robust healthcare systems which offer a wide range of medical services.

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“At KfW, we’re not there for putting out fires, rather we take a long-term view.”

Dr. Jörg Zeuner

Mr Lomborg, the international community is willing to update the Millennium Development Goals. If you could spend the USD 2.5 trillion the world plans to use in development aid from now till 2030, what would your three priorities be?

LOMBORG: If you just look at bang for your buck, then free trade comes top of the list. You could have especially developing country economies grow faster and lift 160 million people out of poverty by 2030. The second one is contraception for women. If you spend a euro there you'll do about EUR 120 worth of good. Thirdly, I'd choose a variety of health interventions. In the case of tuberculosis, every euro invested would have the impact of EUR 43. The protection of coral reefs turns out to be an incredibly good investment:

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“Let’s focus on the stuff we do know how to fix.”

Dr. Bjørn Lomborg

Could you explain that please?

LOMBORG: It’s very cheap to get people to stop dynamite fishing in coral reefs. It saves coral reefs, generates many more fisheries and boosts tourism. For every euro you spend on coral reefs you'll get back EUR 24 worth of good.

The causes of many of these problems are poverty and social issues. Aren’t we better to tackle the root causes rather than treat the symptoms?

LOMBORG: There's nothing wrong with just treating symptoms. In a world where we can't fix everything, let's focus on the stuff we do know how to fix. It's not a full solution, but neither is anything else.

Source
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This article was published in the CHANCEN magazine Spring/Summer 2015 “Heat”.

To German edition

ZEUNER: We work with countries and project partners who make use of their sovereign right to set their own priorities. We advise them in this process and help them implement what we find makes sense. In doing so, global considerations are, of course, also taken into account, such as global warming; we spoke earlier about climate protection. We're not there for putting out fires, rather we take a long-term view to ensure that fully-functioning institutions are set up. We commit ourselves long term. This allows us to help everyone involved look beyond daily politics and act with a sustainable future in mind.

LOMBORG: I also believe in the importance of long-term goals that go beyond a setting that is overly coloured by political views. But the work of development banks could be even more effective if they focused more intently on the very best projects.

Published on KfW Stories: Friday, 24 March 2017

Last updated: Tuesday, 30 April 2019