Clean Power Keyhole Ruin, on Horse Creek in Canyonlands National Park

Published on December 13th, 2015 | by Tobias Engelmeier

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Notes From Paris, Part 1: Forget The Developed vs Developing Country Divide

December 13th, 2015 by  



The division between developing and developed countries has been a core feature of the global climate talks since the first meeting (COP) in Berlin in 1995. Back then, low-carbon technologies were considered far too expensive for poor developing countries and would have constrained their growth options. And besides: it was the developed countries who were responsible for the emissions. So, by the principle of justice, they should also take the responsibility. From a climate perspective, however, it made sense to also begin to decarbonise developing country economies, which often ran on particularly inefficient and polluting fossil fuels. The solution was to transfer money and technology from rich to poor. Subsequently, the divide between developing and developed countries became entrenched in the language, psychology, and negotiations of climate talks — and it still is central to the discussions today.

Today, this divide no longer makes sense, because the world has changed fundamentally: An energy transition is today clearly an opportunity, not a sacrifice. Low-carbon technologies — renewables like wind and solar, energy efficiency solutions, and electric vehicles — have become competitive with fossil fuels. In addition, they provide energy security, are fast to implement, and help keep air and water clean. Going green just makes sense — for developed and developing countries alike.

Of course, it is entirely understandable that developing countries continue to hold developed countries to account and to their word and try to get as much financial assistance as possible. This is a perfectly rational negotiation strategy. However, it is a sideshow. If a low-carbon energy system makes sense and there is an early-mover advantage, the future choices of developing countries will be driven by that, not by financial assistance packages.

The real question, in my mind, is a different one. Given that the global energy transition is the “business opportunity of a lifetime,” to go with US Secretary of State John Kerry — who will capture it? Which countries are confident that they can be winners of this global megatrend? Which countries are capturing an early-mover advantage?

The US believes it can be a leader in the new economy, because of a strong tradition of entrepreneurship, innovation, and efficient financial markets. So do many European countries, which believe they have a technological edge, relevant experience, and a number of key industrial companies. China believes it can be at least the manufacturing base for a global solar and wind boom. India seems to have now mustered the self-confidence to take a jump into the fray — it has a vast captive market, the IT skills (big data will be key), the entrepreneurship, and the technology companies. It could be more difficult for the poorer and smaller developing countries in, for example, Africa to build a competitive low-carbon economy. But then again, why not? This is an age of rupture — they can seize it.

What stands in the way is not finance. There is enough capital looking for good investment opportunities. It is not technology, either. Technology is sufficiently good for what we need today and will likely be improved exponentially as it is deployed more. The challenge is market design: how to create a market environment to enable the fastest possible shift from a slow, big-infra, monopolistic, political energy market to a nimble, consumer- and solution-oriented, competitive, diverse energy market? The trouble is that many countries, and particularly developing countries, lack the institutional ability to design new markets. This ability might be the only divide that matters today.





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About the Author

is working towards a low carbon world. He believes that this is a great opportunity rather than a sacrifice and that it will be driven by business and economic fundamentals rather than by political directive. Developing countries, who can still make a choice about their future energy infrastructure, are in a particularly good position to get the most out of the renewable energy and energy efficiency solutions available. The good news is: A global energy transition is inevitable. The bad news is: current market designs in most countries are not conducive enough and could delay this inevitable transition for just too long to save our climate. So that is what we need to work on: better market designs. (Disclaimer: views in motion...) Companies I am involved with: TFE Consulting (www.tfeconsulting.com) www.bridgetoindia.com (sustainability solutions for India), www.indiagoessolar.com (helping consumer go solar in India), www.gridhub.com (the business platform for the global renewables industry).



  • Ian

    It’s a breath of fresh air to read analysis like this post here. Thanks Tobias! I have read so many articles about COP21 that completely ignore the central fact of situation: that the technology has improved and come down in price enough to make real progress possible. Most writers act as if shear force of will and a ‘good’ political agreement are all that is needed. They totally ignore the fact that progress has been made this time around precisely because the technology, for the first time ever, allows governments to make the kind of commitments that they have made in these negotiations. I don’t put much faith in the various commitments that countries have made. I suspect a lot of countries will actually de-carbonize faster than committed to. What I wish we’d seen more of were specific policies committed to, such as reform of the utility markets, as mentioned here, carbon taxes, and more tax incentives for renewables and EV’s.

    • JamesWimberley

      “Most writers act as if sheer force of will and a ‘good’ political agreement are all that is needed.” Examples? The commentary I’ve seen has been pretty realistic: the agreement gives a boost to good policy, largely by removing the “but China” argument; good policy gives a boost to good action, by investors, mayors and ordinary citizens.

      Example: electric mobility, which is still above price parity and dependent on subsidies, regulatory incentives and first-mover public purchases. Countries like Germany which haven’t jumped in yet are more likely to do so. Car companies will boost investment in their electric lines.

      Example: at the end of COP21, Julie Bishop of Australia half-promised a review of Australia’s mingy INDC, meaning more green policies.

      Example: Cameron is coming under pressure on the disconnect between his Paris rhetoric and his government’s shredding of renewable incentives.

      Example: India said late in the Paris meeting that the coal burning plans were not set in stone but negotiable for more foreign money for renewables.

      • Ian

        I’ve read articles (the latest in the Nation: http://www.thenation.com/article/the-paris-climate-conference-last-chance-for-planet-earth/ ) that completely fail to mention anything about the fact that the cost of technologies has fallen as it has. All they talk about is activists, goals, etc. My point is that you can’t get blood from a rock. Just a few years ago it would have been impossible for any government to implement a policy that would have done anywhere near what is need to be done to avoid 2 degrees warming because any effective policy would have been prohibitively expensive. What has changed has been the cost of renewables (and now batteries). And that has made everything else possible. If you read Mark Hertsagaard’s article it seems as if he is entirely unaware of this.

  • JamesWimberley

    One hidden advantage developing countries have over rich ones is that they are generally much more realistic about their own institutional limitations, and readier to learn from others. Example: payments systems based on mobile phones have spread rapidly in Africa and Asia, from the pioneering effort in Kenya : itself enabled by a regulatory vacuum, allowing Safaricom to launch M-Pesa with little interference. Brazil’s home-grown auction system for wind and solar energy works better than those in Germany and the UK. In contrast, know-it-all California imported electricity deregulation from Britain – carefully removing the bits that made it work. Result: Enron’s market manipulations.

    • Omega Centauri

      I can think of several advantages that might(ought) to accrue to developing countries. One is the lower cost of labor, which ought to be translatable into lower deployed cost. Another one is that they are starting from much lower levels of internal and domestic demand. A village can start with a couple of solar panels for phone and solar lantern charging, then add more as the desire and capacity to move up the energy consuming ladder dictates. Also they don’t
      have the huge entrenched interests in the old way of doing things.

  • Matt

    It is not just developing nations that have trouble design (redesigning) markets. You have to look not farther that the relative cost of roof top solar in Germany or Oz compared to USA to see a developed country continues to fail in this area. Or the “market reforms” being driven by utilities trying to stop or at least slow solar DG.

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