Davos 2015: Four Conclusions
Analyzing the results of the annual World Economic Forum in Davos, many experts agree that a major shift in guiding principles is happening in the world economy. However, according to environmental NGOs, Russia keeps staying away from the latest global economic trends, and its development is primarily moved by inertia.
With promising milestones on the horizon for climate change and the development agenda this year, much of the discussion among public and private sector leaders at the World Economic Forum in Davos focused on the role of energy in transforming our growth model, the way it never did before. In her blog article, UNFCCC Executive Secretary Christiana Figueres comes to four conclusions regarding the new shining beacon of the current economic development.
Zero cost energy
Solar and wind are no longer marginal energy technologies. Investment is increasing, reaching US$312 billion in 2014, up 16% from 2013. Meanwhile, the prime cost of the energy alternative is decreasing speedily, and the technology itself is advancing. In Davos, renewable energy was referred to as a zero cost energy source that is also crisis-resilient.
The forgotten fossils
In the run-up to Davos, press has reported at least five major oil companies retreating from high cost projects. Fossil fuels are becoming a luxury that is hard to afford, since their available deposits run dry. Some countries that subsidize fossil fuels are taking advantage of the drop in prices to decrease or eliminate subsidies, channeling the budget savings into other social needs. Economists predict that by the time the oil price recovers and finds itself unsubsidized, it will have a hard time competing with decreasing solar and wind prices.
An increasing number of corporations are waking up to both the threat of unrestricted climate change as well as to the opportunities afforded by the low-carbon economy. In pursuit of transforming their own company and/or sector, many corporations are redirecting themselves towards low-carbon or zero-carbon operations, understanding that the transformation is by now inevitable, and that first movers have the advantage. Additionally, they want to encourage international policy development. In September 2014, more than 1000 companies and 70 governments said no to the use of coal in energy production. In Davos, 1000 companies announced an initiative to call for an intergovernmental directional signal of net zero emissions by 2050.
The gateway effect
As in other fora, much was discussed in Davos about the relationship between climate change and sustainable development. The fact is that unless we are able to address climate change in a timely manner, all development gains will be under constant economic and social threat due to the increasing frequency and intensity of natural disasters that can easily wipe out our living spaces, infrastructure and croplands. From the climate change perspective, this type of vulnerability is in part recognized as the urgent need for resilience. Greenhouse gas mitigation policies and technologies can therefore be seen as the necessary “gateway” to development that is sustainable in the long run. Passing through that gateway is the only way to avoid a self-destructive developmental lock-in, with impacts that go way beyond the technological lock-in we usually consider.
‘The urgency to act and to develop renewable energy and low-carbon strategies is also recognized in Russia. Recently, certain changes in legislation have been implemented, which are supposed to stimulate this kind of development, says Olga Senova, Head of the Climate Secretariat, Russian Socio-Ecological Union. However, positive change is happening at an extremely slow rate. Expensive and risky Arctic projects are still a priority, while fossil fuels and nuclear power keep being subsidized. At the same time, the very territory of our country is a goldmine in terms of renewable energy development. Russia, like no other country in the world, desperately needs a change in its economic and energy-related priorities, the change that international economists talk so much about.’