Middle East Economic Survey

VOL. LI

No 32

11-Aug-2008

Post-Kyoto and Technological Innovation

By Tatsuo Masuda

This paper was presented by Prof Masuda at the Ravand 3^rd Annual Conference in Tehran, 24-25 May. He is a professor at the Tokyo Institute of Technology (SIMOT) and visiting professor at the University of Paris-Dauphine, having previously been Vice President of Japan National Oil Corporation (JNOC) and President of the Asia Pacific Energy Research Center. He also serves as advisor to Japan Petroleum Exploration Company Ltd.

As the impact of climate change has become indisputable both in developed and developing countries, the discussion on the Post-Kyoto agreement measures naturally attracts global attention. I believe there are two critical conditions for Annex I countries [industrialized countries] to keep in mind when negotiating with developing countries on Post-Kyoto measures:

• Developing countries have a right to pursue their own well-being, as already enjoyed by developed countries over decades; and
   

• Given the above, developed countries have to cut greenhouse gas (GHG) emissions by enough to allow a breathing space for developing countries to become richer.

In this regard, it is welcome that the EU and Japan have expressed their willingness to cut GHG emissions by up to 60-80% from the 1990 level by 2050. This type of approach will be the most effective way to encourage developing countries to take the necessary actions without being forced to do so. Forcing them towards that direction will be counter-productive due to the nature of climate change, which is caused mainly by the accumulation of GHG ever since the Industrial Revolution. If developed countries may underestimate this aspect, it may take much longer for developing countries to become seriously engaged with the global fight against climate change. My worry is that this consideration for developing countries is not necessarily shared among some Annex I countries.

One obvious distinction in the debate on the Kyoto Protocol and the Post-Kyoto situation is the time frame of target setting. The Kyoto Protocol set the target years relatively in the near term, with 2008-12 being agreed as the commitment period. In this case, one can remember who took the decisions under what circumstances. Some of the responsible politicians and government officials may still remain in relevant positions. The institutional experience remains a vivid memory.

The Post-Kyoto arrangements may possibly focus on a very long-term target in the form of an X% cut of GHG emissions by 2050. I have no doubt about the seriousness of decision makers currently involved. However, this kind of very long-term target has its own weakness, as the decision makers of the time may not stay in power that long. Strong political will and institutional memories could wane over the time.

The Role Of Technological Innovation

In contrast to the uncertainty of sustainable political will and institutional memories, I place my bet on the role of technological innovation in our fight against climate change. Politicians will come and go with the differing priorities of the time. Ordinary people may be too busy with day-to-day life to care about climate change. However technological innovation, once in place, will do the job of arresting climate change without affecting the quality of life. People may not even notice specific technologies at work.

The Japanese experience will explain this. After the oil shocks of the 1970s, the Japanese government and industry took powerful initiatives to develop energy efficient technology to support the country’s huge economy with limited indigenous energy resources. Today, for example, the most advanced refrigerators or air-conditioners in Japan consume only one fifth of the amount of energy compared to those manufactured prior to the oil shocks. In the area of renewable energy sources, Japan is the world’s leading supplier of solar cell equipment for power generation. The most common material for photovoltaic power generation has been crystallized silicon, the manufacturing process for which requires a lot of energy in itself. However, more recently, the technology to manufacture thin film silicon solar cells has been commercialized, which has dramatically changed the viability of solar cells. This new technology can produce solar cells with barely 1% of the silicon required for the previous process. Thin film technology has made solar cells very light and easy to install in any place without constraints. This technology is spreading all over the world, making solar cells readily available and affordable. These are just a few examples, and many more improvements are expected to come.

Technological innovation will offer a universal solution for both developed and developing countries. There are good signs of concerted efforts to promote technological innovation and its dissemination. At the 3^rd OPEC Summit, held in Riyadh in November 2007, Saudi Arabia earmarked $300mn in order to set up an international fund to promote technological innovation to arrest climate change, and three Gulf countries (Kuwait, Qatar and the UAE) expressed their readiness to donate $150m each to this fund. As for G8 member countries, the discussion will likely build towards the setting up of an international fund to disseminate environmentally friendly technologies to developing countries. An important thing is not to lose such momentum in the heat of the politicized debates on the Post-Kyoto arrangements. Let technological innovation do the right job.