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Going GreenOne Developing Country at a Time

Tyler WitkowskiJay Pollack

March 14, 2016

Benedictine UniversityMSBA 659 - Business Analytics

Winter 2016

Importance of Carbon Emission Controls

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The U.S Environmental Protection Agency along with many global consumers have recognized climate change as one of the leading environmental challenges to be faced by humanity in the 21st century. One of the primary climate altering pollutants discussed by field experts is the level and rate of carbon dioxide omitted through fossil fuel combustion and increased global industrialization. Edward Goldsmith a known environmentalist has had conflicting viewpoints with the Intergovernmental Panel on Climate Change (IPCC) on their forecasts of global temperature increases and the future issues cause by global industrialization. One of his major defenses has to do with the IPCC’s lack of inclusion of data on deforestation. Edward (2004) begins by explaining,

The IPCC did not take into account such added critical factors as the annihilation of our tropical forests and other vegetation, especially because of global trade and development models. These forests contain six hundred billion tons of carbon, almost as much as is contained in the atmosphere. Much of this carbon is likely to be released into the atmosphere in the next decades by the increasingly uncontrolled activities of the giant global logging companies. The director-general of the United Nations Environment Program recently said only a miracle could save the world’s remaining tropical forests.

Deforestation and increased emissions have become essential to everyday life in developed countries but are now seen as growing trends among the non-developed, or developing countries around the world.

In addition to understanding the importance of maintaining the forests around the world from human destruction, there is strong correlation between human activities and carbon dioxide emissions. According to the EPA, “carbon dioxide accounted for roughly 82% of all greenhouse gas emissions caused from human activities” (EPA, 2016). As a result of these behaviors, the normal earthly cycle that controls carbon emissions has been severely impacted and are now adding to the concentrations of carbon dioxide found in the atmosphere. It is important for humans to understand how every individual can make an impact on reducing each individual’s carbon footprint. Additionally, the man commonly referred to as “the real-life Tony Stark of today’s society”, Elon Musk, often speaks publically on the issue of carbon emissions and goes to say, “We're running the most dangerous experiment in history right now, which is to see how much carbon dioxide the atmosphere... can handle before there is an environmental catastrophe.” (Woodyard, 2013). Taking a sample country from the developed country group, such as the United States, they alone emit approximately one-fifth of the world’s greenhouse gases. The rate of global carbon emissions clearly is a substantial problem that is only going to increase as the global population, fossil fuel consumption, GDP, and global urbanization rise in size.

It is important for everyone, not just corporations to dive deeper into the importance and effects of carbon dioxide reductions. The following chart is provided from the EPA that provides basic examples of how the human race can take steps to decrease the amounts of carbon dioxide that are emitted each and every day.

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- Chart provided from EPA, 2016

There is a great debate over climate change and how fossil fuels play into it. However, there has largely been a consensus over the years that something humans need to take a stand and create change to try and limit the effects of climate change. According to the University Corporation for Atmospheric Research, 2016,

The climate is vastly complex and strongly influenced by many factors other than greenhouse gas concentrations. This makes it extremely difficult to link any climatic events or characteristics to a single cause. As a result, controversy exists as to the magnitude and danger of global warming induced by greenhouse gases. Many scientists take the issue very seriously and support efforts to slow or reverse the build-up of atmospheric CO2 with the expectation that global warming will slow as a result

Regardless of individual feelings on climate change the effects of fossil fuel usage and the increased CO2 emissions around the world needs to be addressed. To properly address the issues one must first have a strong understanding of the issues that are currently being faced around the world, second a proposed solution, thirdly the research behind the proposed solution, and finally the affects that will occur once the proposed solution is implemented.

The Problem at Hand

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After collecting data on both developed and developing countries beginning with 1960 going through 2012, with data provided from The World Bank, there are some troubling trends. Firstly, one will notice that oil use per capita levels have almost doubled among the developing countries over the past few decades. Do to the obvious correlation between fossil fuel consumption and emissions, there must be a focus on finding an alternative to fossil fuels. The developed countries may have started the age of increased emission outputs but developing countries are now following in the footsteps of these nations and are much larger and will have a more dramatic effect on the world climate. With increased carbon dioxide levels comes more natural disasters and disease. The “IPCC tells us to expect a considerable increase in heat waves, storms, and floods and the spread of tropical diseases into temperate areas, which will not only affect human health but also that of our crops” (Goldsmith, 2004). The chart below compiled from data from The World Bank illustrates just how quickly the global temperature has been increasing over the past few decades. The forecast tells an even more drastic story, one that cannot be ignored, and something that will not just go away. The increased storms and disease that Goldsmith talks about is correlated to increased temperature, no one can deny that the average temperature has not increased since 1960 and even before then.

- Chart data provided by The World Bank (2016)

Proposed Solution

The initial step to our solution is to gather world leaders from five of the most advanced nations: United States, United Kingdom, Germany, Italy, and Japan. We view these nations and their leaders as the most influential among their industrialized peers as well as leaders in global emissions and overall consumption of the worlds goods. These five nations will be responsible for the implementation and continued monitoring of a renewable energy program for the

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developing countries around the world. The majority of discussion when it comes to global emissions falls on the hands on the developed nations. It is clear that the industrialized countries have been negligent and unaware of the affects they have had on the earth and must take a stand to prevent the much larger, developing countries from repeating the same mistakes. There will be two goals to focus on, which are illustrated with the two graphs below: Emissions and Forest Area percentage. We believe that developing countries’ will have very large increases in emissions over the next 25 years, our predications follow that of the upper confidence bound on the graph. Additionally, we believe that the forest area percentage will follow that of the lower confidence bound and continue to decrease at fast rate.

- The two charts above have data provided by The World Bank (2016)

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The developed countries still have a role to play in reducing their carbon emissions and deforestation, but the increase in population, living standards, overall consumption of the individual will all rise among the developing countries. Our fear follows a track that once these developing nations reach similar peak consumption levels that the already developed nations lavish in each and every day, it will be past the breaking point and be too late to make a difference for humanity and the earth.

Implementation

Again the five nations will cooperate and aid the developing nations within these five regions: East Asia and Pacific, Europe and Central Asia, Latin America and Caribbean, Middle east and North Africa, Sub-Saharan Africa. These regions represent all developing nations around the world, the leader of the pack is none other than China. China represents the largest population of the developing countries and the developed countries. They also contribute the largest CO2 Emissions, as illustrated in the following chart from the EPA (2016).

- Chart provided from EPA, 2016

The argument can be made that since the United States is second there needs to be a large focus on decreasing the emissions within the USA before reaching out to the developing countries. This is where differ from previous emission reduction programs. Our forecasts show that the developing countries will have dramatically increased population along with life expectancy over the next 25 years, which will directly increase their consumption of goods creating larger emissions and less forest area within these developing nations.

The cost of the program is expected to reach over $500 billion per year over the next ten years. We plan on a heavy amount of investment coming from the developed nations along with less extensive investments coming from the developing nations. According to Bloomberg analyst, Alex Morales, “China’s $67 billion of investment in wind, solar and other renewable projects led developing nations to $112 billion of spending in 2012, according to an e-mailed

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statement today from the UN and other groups involved in the studies. That compares with $132 billion of expenditure in the industrialized world” (2013). Since the industrialized countries are already spending over $132 billion and the developing countries spending $112 billion, we do not see a total increase of about 106% or about $256 billion more to be too much to ask of the developed countries. Morales also discusses the specific investments among certain developing countries, states, “In Germany, spending fell 35 percent to $20 billion. In Japan it surged 73 percent to $16 billion as the government introduced subsidies for wind, solar and geothermal power” (2013). Germany, as a developed nation needs to take responsibility and invest more heavily in renewables, this current trend of theirs is devastating to the future children of the world, and this is why we are asking them to take part and invest in the developing countries as well as their own.

Additionally, we see that the costs of renewable energy have decreased over the years and continue to decrease as innovation and technology are continually invested in. According to Alex Morales, “Total global investment in renewables fell to $244 billion in 2012 from $279 billion in 2011, due in part to a drop in the cost of solar and wind technologies” (2016). Unfortunately, even though costs have decreased and investments among developing countries have increased over the years, there is still not enough to allow renewable energy to grow and become the dominant energy source for the developing nations. The follow graph shows the future trends of the renewable energy percentage among developing nations. The total energy consumption of these countries will continue to expand at such a large rate that not even the current investments make renewables a larger percentage of total energy consumption.

- Chart data provided by The World Bank (2016)

To further the debate over the decrease in overall renewable energy consumption we see that oil use per capita is expected to explode over the next 25 years in the following forecasted model. We need to focus on reducing these levels of oil use. The only way is to make the developing countries less dependent on oil usage.

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Finally, the leaders of the industrial world will need to manage deforestation among the developing countries. According to the EPA, the United States’ forests have absorbed more CO2 from the atmosphere than they emit. In 2013, 13% of the CO2 greenhouse gas emission by the United States was offset because of forestry. Unfortunately, every year, more than 15 million hectares of tropical forests are cut down (2016). The deforestation needs to be put under control, we propose more stringent standards for cutting down trees in the developing countries as well as aid from the industrialized countries to replace leveled forests to maximize the CO2 greenhouse gases that the forests can absorb.

Application

Tracking of the program implementation and tracking the success will be two different factors. To track the implementation, the metrics we have seen prior will be taken into account as well as a few new ones. These include the following:

- Yearly global investments made for renewable energyo To ensure that the proper amount of investments is made for the developing

countries to build a strong renewable energy infrastructure- Yearly global investment for forestry

o To ensure that the proper amount of investments is made for the developing countries to build a strong forestry program

The metrics that will be used to track success of the program include the following:

- CO2 emissions by developing countrieso To ensure that overall emissions are either dropping or the rate of increase per

year is lessening to a slower rate- Forest area percentage

o To ensure that overall forest area is staying the same or growing do to forestry- Fuel import percentage

o To ensure that imported fuel decreases as a percentage of overall fuel usage

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- Renewable energy percentageo To ensure that renewable energy power plants are being built and utilized

- Oil consumption o To ensure that oil consumption does not reach unsustainable levels that the

developed countries have already reached- Global temperature

o To ensure that the rise of the average global temperature does not rise as the fast rate that has been recorded over the past decades.

One Metric That Matters

The one metric that matters will be the overall renewable energy consumption from developing countries. Below is the trend that we think will be capable given proper investment in the program and full support by the fully developed countries.

- Chart data provided by The World Bank (2016) – *forecasted estimate is based off an average of a 0.3% increase in renewable energy per year.

Final Thoughts

“Climate change may be the most daunting problem that humankind has ever encountered, and economic globalization is accelerating it” (Goldsmith, 2004). This statement by Edward may seem rather drastic but its importance cannot be overlooked. The issues of climate change and increased emissions is an issue that the entire world faces together, it is not just one countries problem but that of the collective. The United States, United Kingdom, Germany, Italy, and Japan have all been lucky to be among the most successful nations and be able to industrialize first and consume the earth’s goods at unsustainable rates. It is up to the nations that made the mistake first to step in and prevent the even larger nations from repeating in their mistakes. The advanced nations need to invest in the developing nations for their own futures, it is no longer an issue that one country can tackle on its own, or one that only the wealthy nations

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can fix while the developing nations continue to increase emission and destroy their forests. Without these investments now there may not be a strong future, only a tough world to live in.

Works Cited

EPA. "Overview of Greenhouse Gases." Carbon Dioxide Emissions. EPA, Updated - 24 Feb. 2016. Web. 12 Mar. 2016.

Goldsmith, Edward. "Globalization and Climate Change." EdwardGoldsmith. N.p., 1 Jan. 2004. Web. 12 Mar. 2016.

Morales, Alex. "Renewable Energy Investments Shift to Developing Nations."Bloomberg.com. Bloomberg, 12 June 2013. Web. 12 Mar. 2016.

The World Bank. "Data | The World Bank." Data | The World Bank. The World Bank, 2016. Web. 12 Mar. 2016.

UCAR. "Global Climate Change." : Background Material. University Corporation of Atmospheric Research, 2015. Web. 12 Mar. 2016.

Woodyard, Chris. "Icons: Elon Musk Doesn't Let up at Tesla, SpaceX." USA Today. Gannett, 22 Apr. 2013. Web. 12 Mar. 2016.