Building a green future: Policy traction is imperative

It is increasingly evident that we want a green and clean future. The number of webinars and events organised during this pandemic on the rebooting of economies to make a successful transition to the green future, compatible with the climate goals as agreed in the 21st Conference of the Parties (COP21), is a testament to our wish. 

Notably, people of almost all quarters, including students, academics, experts, policymakers, researchers, have engaged them in these discussions. Many of the discussions have been technology, investment and capacity centric. 

Yet, a green future that we aspire to build to address the planetary emergency largely hinges on the policy traction of different economies. 

Businesses need enabling environment

In this increasingly competitive world, businesses innovate products, adjust production processes and undertake different interventions to have an edge over other entities. They, further, adapt to the changed circumstance, be it natural or human induced, sooner rather than later. 

For example, during this health emergency of Covid-19, businesses across the world, regardless of their types, have adapted to a certain degree. Among other things, events and meetings have largely been shifted to online platforms to contain health risks. 

When it comes to a green future, some businesses will make the transition, as we expect, on their own and many will not be able to do so. 

The challenges of climate change, however, necessitate that the green transformation shall be rapid and wide-ranging. This transformation also provides tremendous opportunities to enhance quality of life without following the carbon intensive pathways. 

For this to happen, economies will need suitable financing and other fiscal measures to support the growing use of renewable energy, enhanced resource efficiency and minimisation of resource wastage. 

There are many examples of good policies being used by countries. Feed-in-tariff is one of such policies that have spearheaded revolution in the renewable energy market. Carbon tax, low-cost finance and other mechanisms have been handy in different economies. 

While renewable energy promotion doesn't require the feed-in-tariff in most cases now, the distortion in energy pricing, wherever available, shall be addressed. Moreover, the choice of policy instruments is country specific and the lessons can be drawn from other countries.   

Illustration: TBS

A lot depends on energy & related infrastructures

Over 70% of global greenhouse gas (GHG) emissions, according to our world in data, is related to energy. These GHG emissions are generated during energy production and energy usage in industries, transports, buildings etc., making the problems trickier to solve. 

Cleaning the global energy supply won't result in avoiding all these emissions as we will still have emissions from aviation, road transport, heating etc. Without interference from governments across the globe, these emissions are unlikely to be completely addressed in the foreseeable future. 

Regulation and Monitoring

In many cases, command-and-control instruments are imposed on different sub-sectors/sectors of an economy to decarbonise and to allow changes to clean technologies. This instrument includes, for example, emission standards and prescription for selected clean technologies compared to business-as-usual (BAU) practices. 

The implications of this instrument simply mean for businesses to comply with the government directives and within the given timeframe. Nevertheless, there are at least two major challenges vis-à-vis command-and-control instruments. 

First of the two problems lies in the market readiness to accept the standards or prescribed technologies in place of existing practices. Despite conducting stakeholder consultations and implementing demonstration projects before making the instrument mandatory, the market may not accept the change at a rate, as required and expected. 

Financial and technical capacities pose serious threats to sectoral transformation under the regime of command-and-control instruments. Secondly, the size and number of business units within a sector hinder the transformation under the command-and-control instrument. 

With too many small business units, the monitoring by the government to check whether the business entities have shifted or not becomes difficult and expensive. Yet, to ensure that business entities follow the regulation, periodic monitoring is essential. 

Mass awareness required

Well, industries, transports and other processes-generated emissions remain the main focus when we talk in the forums or webinars but individual choices and resource consumption patterns have significant consequences on overall GHG emissions. 

Energy and other resource consumption at individual level and how we manage waste can make huge differences compared to the decisions taken unconsciously. The efficiency level of appliances we use at households means a lot too. 

To induce behavioural change vis-à-vis cutting down energy and other resource wastage and using energy efficient home appliances, raising awareness is key. Moreover, people shall have adequate information on the economic benefits of energy-efficient appliances and the quality of the new appliances. 

Governments, as a result, need to consistently conduct awareness programmes, which are normally proven to be least costly. And there are plenty of cases of successful awareness campaigns, for instance, on energy savings, in the world.    

Final remarks 

The green transformation with lack of policy support and in the presence of perverse incentive, say fossil fuel subsidy, is something like a bird with trimmed wings. 

National policies shall, therefore, send the markets the right signals to stimulate transformation towards green. These signals, in turn, will lead to major shifts in investment, production and consumption from BAU. 

In fact, policies shall create the space for investment in clean technologies and establishments. The perverse incentives that promote polluting technologies shall be gradually phased out. In tandem, awareness raising on behavioural change and the pollution monitoring under command-and-control shall be continued, as needed. These are some examples but countries shall decide on their own as to which policies and instruments they may choose to follow. 

Shafiqul Alam is an environmental economist.