North-South disparity and sustainable energy systems

The globalization of environmental deterioration is the direct consequence of population growth and industrialization. In 1990, some 23 per cent of the world population living in industrialized countries were responsible for some 80 per cent of GHG emissions. Future demographic developments will likely push global population close to 10 billion people by the year 2050. Clearly, with 96 per cent of the incremental population growth taking place in the developing countries, the historical link between population, industrialization, and environmental degradation must be decoupled. Yet, present per capita income and per capita energy use in the developing world are about one-tenth of the respective values for the OECD. These disparities between the "haves" and "have-nots" are highlighted in figure 5.8. In the light of these disparities, we must ask how the deep future energy system fits the realities of the developing countries. No doubt, at face value the sheer capital intensiveness of the sustainable energy system, in addition to the capital resources needed for the industrialization process, will far exceed their economic capability.

In the past, environmental degradation has been a steady companion of industrialization and urbanization. At a certain level of prosperity and income, however, societies appear to express a preference for environmental amenities. This preference manifests itself as an internalization of external costs. Clean air acts, mandatory zero emission vehicles, or legislated flue gas desulphurization of coal-fired power stations are representative historical examples of the emergence of environmental awareness in the developed world. To a certain extent the industrialized societies have begun to pay a small part of the interest on the mortgaged environment used to establish their wealth. Most of the interest, not to mention the principal, is still owed.

The industrialized world may well have harvested the benefits of the environment to the point of rapidly decreasing returns. It would add insult to injury for the rich North to withdraw to a position where the developing countries are expected to forgo the benefits of industrialization so that the North can live an enjoyable life in a clean world that the South cannot afford. For sure the South will not consider the preservation of the North's wealth at the expense of their own development as equitable burden sharing.

- Fig. 5.8 Development indicators. for the industrialized and developing economies (Note: the CO₂ and CH₄ data include emissions related to the production and use of commercial energy only. Source: adapted from Grübler and Nakicenovic 1992)

Still, there is growing concern about a potential conflict between economic advance in the developing countries and the protection of the environment. Addressing this concern requires us to ask the fundamental question: What would be the environmental impact of no economic advance?

The industrialized and developing countries are faced with the following dilemma. Successful business-as-usual industrialization will take its toll on the environment. Compounded by the anticipated population growth, even small per capita income improvements may soon put the South on a par with the North, in terms of GHG emissions. However, lack of economic growth and development translate into increased poverty and population growth, which in turn lead to accelerated environmental deterioration through deforestation, soil erosion, and groundwater degradation. Moreover, agriculture-based economies may be more vulnerable to climatic hazards than industrialized economies where agriculture accounts for less than 3 per cent of gross domestic product (GDP) and the bulk of production is little affected by climate conditions.

Is a clean environment a matter of affordability? The answer is yes. Thus, economic development of the South is a necessary prerequisite for global environmental stability. Sustainable energy system development in the developing countries, therefore, is likely to depend on international action such as science and technology transfer. The costs of this transfer should, to the extent it is benefiting the protection of the atmosphere, be borne by the North. It can be said that the North's environment mortgage has matured and the principal including the accrued interest is now due for redemption.

Ideally, this repayment would be financed from the revenue generated by the monetary incentives, green taxes, or other mechanisms deemed suitable for correcting the present market imperfection of free use of the environment. Consequently, the concept of an internalization of external costs that is neutral in terms of tax revenue would have to be abandoned in favour of a capital transfer to the developing countries.

Economic potency demands that the North initiate the transition to the deep future energy system. From the perspective of system evolution, the initial step is under way already - the increasing role of natural gas in meeting global energy service requirements. The redemption of the North's environment mortgage will assist the South in the development of sustainable energy systems. In addition, the combating of global environment degradation may lead to the recognition that a dollar spent in the South may generate higher marginal environmental returns than one spent in the North.¹⁰