As we enter 2013, there are signs of growth and economic advancement around the world. The global middle class is booming. More people are moving into cities. And the quality of life for millions is improving at an unprecedented pace.
Yet, there are also stark warnings of mounting pressures on natural resources and the climate. Consider: 2012 was the hottest year on record for the continental United States. There have been 36 consecutive years in which global temperatures have been above normal. Carbon dioxide emissions are on the rise – last year the world added about 3 percent more carbon emissions to the atmosphere. All of these pressures are bringing more climate impacts: droughts, wildfires, rising seas, and intense storms.
All is not lost, but the window for action is rapidly closing. This decade – and this year – will be critical.
Against that backdrop, experts at WRI have analyzed trends, observations, and data to highlight six key environmental and development stories we’ll be watching in 2013.
1. Will the Obama Administration Lead on Climate Change?
Although climate change was largely absent from the U.S. presidential campaign, President Obama’s legacy will be defined in part by whether he can put the country on a safe emissions trajectory. A string of recent extreme events could ramp up political momentum. Hurricane Sandy caused more than $60 billion in damages. The U.S. drought will wipe out approximately 1 percent of the U.S. GDP, and is on track to become the most expensive natural disaster in U.S. history.
These events appear to be shifting public perceptions: Americans’ understanding that global warming is happening increased to 70 percent in September from 57 percent in January 2010.
Will changing perceptions lead to more political pressure?
How quickly will the U.S. Environmental Protection Agency move to reduce carbon pollution from existing power plants? Who will Obama appoint to his cabinet, and will they push for climate action? We’ll be listening to Obama’s Jan. 21 inauguration speech for signs of greater leadership on climate in the coming term.
2. What Will the Global Energy Mix Be?
More than 1.3 billion people currently lack access to electricity, while a burgeoning global middle class is demanding more. How can we meet these energy needs while still reigning in greenhouse gas emissions? How these dynamics play out will say a lot about whether the world is on track for a low-carbon future. Three energy sources will be particularly important to watch this year: coal, natural gas, and renewables.
Coal is the greatest driver of energy emissions. While coal demand is waning in the United States, it is growing globally. WRI found 1,200 new proposed coal plants around the world. This growing demand has led to record levels of U.S. exports – meaning that the United States is largely shifting its emissions overseas.
Will the U.S. continue to feed the world’s growing appetite for coal? And how many of the 1,200 proposed coal plants will actually get built?
“I want my gold coins, but also green mountains and clean water.”
Shale gas is booming. U.S. shale gas production increased nearly 10-fold since 2005, and countries like China, India, and Argentina have huge potential shale reserves. Shale gas offers new opportunities as a cheap energy source and driver of economic growth. However, shale gas extraction carries significant environmental risks. It produces roughly half the carbon emissions of coal and can release methane emissions, a potent greenhouse gas.
Will the shale boom continue? And will countries pursue environmentally responsible shale development?
According to Bloomberg New Energy Finance, renewable energy investment dropped 11 perecent to $268.7 billion last year, largely due to uncertain policies and the low price of natural gas. Still, more than 100 countries have renewable energy targets (the United States is notably absent from this list), and countries from Saudi Arabia to South Africa are making big bets on renewables.
Will more countries enact renewable energy targets? And will renewable energy investment rebound in 2013?
3. Will China Embrace “Ecological Progress”?
China is the world’s largest consumer and biggest producer of carbon emissions. Last weekend, Beijing’s air quality was the worst on record, reaching 755 on the Air Quality Index. As China’s new leaders come into power they are faced with the underlying environmental issues, while trying to reinvigorate an economy that slowed to 7.5 to 8 percent growth last year.
China’s new leadership, helmed by incoming president Xi Jingping, has included making “ecological progress” to its Party constitution. As one official said, “I want my gold coins, but also green mountains and clean water.”
The world needs around $1 trillion in climate finance, but is only receiving about one-third of that amount.
What progress will China make on its national climate and energy targets under its 12th five-year plan? Will it advance carbon-trading pilots toward a national trading scheme? And will it exploit its vast shale gas potential using environmentally sound policies?
4. How Will Africa's Lions Grow?
Africa claimed six of the top 10 fastest-growing economies from 2001 to 2010, improving living conditions for millions. These are the so-called, “African Lions.”
But Africa’s growth is being fueled largely by overseas investment, with about 50 percent coming from extractive industries. Extractives are important drivers of economic development, but can be extremely detrimental without the proper safeguards and governance in place.
Will African countries embrace better governance to ensure sustainable growth? Will newly enacted laws for greater transparency under Dodd-Frank legislation make a difference? Will foreign investors like the EU and Canada take up similar measures?
5. Are We Turning a Corner on Forests?
Forests are home to 80 percent of the world’s land biodiversity and bring $720 billion dollars in economic benefits worldwide. While deforestation rates have declined in some places, the world still loses 13 million hectares per year.
Indonesia and Brazil are two key countries to watch—together they account for 60 percent of the world’s tropical forest loss.
In Indonesia, a two-year moratorium aimed at slowing deforestation expires this year. Will Indonesian President Yudhoyono extend the moratorium?
Likewise, Brazil has had a remarkable transformation in recent years, achieving record-low rates of deforestation. Can it maintain this progress? And what impact will Brazil’s new forest legislation have on this turnaround?
Better quality forest data is also needed. Later this spring, WRI will launch a new online forest mapping platform, Global Forest Watch 2.0, that provides high-resolution, near real-time monitoring of forests. This should be a boost to governments and businesses seeking to measure and prevent deforestation.
6. Will Green Growth Survive the Financial Squeeze?
We are living in a risk-averse financial moment. Faced with global economic uncertainty, many investors are focused on the short-term, putting pressure on “green” investments. For instance, the world needs around $1 trillion in climate finance, but is only receiving about one-third of that amount.
Will we see a shift in investments that de-risk markets and provide opportunities for green growth? Will new funding mechanisms emerge, like the Green Climate Fund, which could become a driver for more investment from the public and private sectors? Will multi-lateral development banks’ recent commitment of $175 billion investment for sustainable transport catalyze more investments in this direction?
Likewise, some business leaders—like UPS, Johnson & Johnson, and Unilever are incorporating long-term strategies into their business models. Will other companies follow?
Andrew Steer is president of the World Resources Institute. He previously worked as the World Bank Group’s Special Envoy for Climate Change.
Analyses and commentary on The Grid are the views of the author and do not necessarily reflect the views of Bloomberg News.