The main obstacles to creating global green economy are the lack of political will, the fear of alienating voters with rising costs and the absence of a global price on carbon, economists and scientists said at a U.N. environment summit on Wednesday.
Heads of state and deputy leaders from around 120 countries are meeting in Rio de Janeiro in Brazil until Friday to try and set a series of clear goals for sustainable development and to discuss how to achieve green growth.
Known as Rio+20 because of a landmark Earth summit in the coastal metropolis 20 years ago, the summit runs the risk of delivering a weak agreement, as leaders lack political will and are afraid of the huge costs of moving away from fossil fuel-derived energy and towards renewables, said a panel of experts including economists, a scientist and a politician.
"It's a lack of political will and the vested interest of some elements of the fossil fuel industry who love the status quo and don't want to see a transition to a low-carbon economy," said British climate scientist Robert Watson.
The current financial crisis is putting some governments off spending huge amounts of money on developing cleaner energy technologies as they are afraid of unpopular legislation and raising taxes to support it, some of the panelists said.
"The green economy is not a freebie. It is costly but it is much less costly than not doing it," said U.S. economist Jeffrey Sachs, director of the Earth Institute at Columbia University.
"But it is a politician's nightmare to try and sell a short-term cost to avoid a longer-term cost (..) Politicians are too scared of asking people to pay," he added.
COSTS
A 2008 report led by UK climate economist Nicholas Stern estimated that 2 percent of global gross domestic product (GDP) per year needs to be invested in order to avoid the worst effects of climate change
Without action, the overall costs of climate change will be equivalent to losing at least 5 percent of GDP each year. This could rise to 20 percent of GDP or more if a wider range of impacts and risks are factored in.
Britain's environment minister, Caroline Spelman, said finance ministers needed to understand this dilemma.
"With the current economic situation it is not an easy time for an environment minister," she said.
"We need finance ministers to understand what the true cost to the economy would be of ignoring (the environment)."
Many experts say a global carbon price would generate large amounts of money to help fund clean technologies and developing countries adapt to climate change.
The European Union's $148 billion emissions trading scheme is the largest carbon market in the world but current EU carbon permit prices of 7.5 euros ($9.53) a tonne are way too low to spur low-carbon investment.
Several other countries, including China, Australia, New Zealand, South Korea, Japan and some U.S. states have set up or are planning programs but the world's second biggest polluter, the United States, does not have a national carbon market.
"We must put a price on carbon to stimulate the transition to a low-carbon economy. The price of coal is clearly inadequate and does not take into account the social, human and environmental costs of burning a fossil fuel," Watson said.
Eliminating fossil fuel subsidies would also help fund a move to a green economy, the panel said.
According to the International Energy Agency, phasing out fossil fuel subsidies by 2020 would reduce annual global energy demand by 5 percent and carbon dioxide emissions by nearly 6 percent.
"There are trillions of dollars of subsidies – they don't help the climate or the poor. There is plenty of money from that standpoint which could be redirected," Watson said.
A draft Rio+20 agreement which heads of states and ministers will debate this week – and possibly amend slightly before adopting it – reaffirmed previous commitments by countries to eliminate harmful and inefficient fossil fuel subsidies.
But it stopped short of beefing up the voluntary commitment with timetables or more details, which disappointed some business and environmental groups.
