By Nina Yu, CCA Associate
On 8th October, the Royal Swedish Academy of Sciences announced that the 2018 Nobel Prize in Economics was awarded jointly to William Nordhaus “for integrating climate change into long-run macroeconomic analysis” and Paul Romer “for integrating technological innovations into long-run macroeconomic analysis”.
Nordhaus and Romer “have designed methods for addressing some of our time’s most basic and pressing questions about how we create long-term sustained and sustainable economic growth,” the Royal Swedish Academy of Sciences stated in the press release i. “Their work have significantly broadened the scope of economic analysis by constructing models that explain how the market economy interacts with nature and knowledge”.
Nordhaus pioneered an economic model called the DICE (Dynamic Integrated model of Climate and the Economy) to estimate the costs of climate change, such as crop failures and floodings. The model remains the industry standard. Subsequent works such as the IPCC report ii released on the same day the award was announced, was built directly on Nordhaus’s work.
The report investigates the differences in consequences between allowing temperatures to climb 2°C above pre-industrial levels or limiting the rise to 1.5°C, and the actions required to reach the 1.5°C goal.
As the report details, the world will face significant impacts with 1.5°C of warming, and will become even worse with 2°C. The severity of the impacts is not linearly proportional to the degree of rise in temperature. A 0.5°C extra warming could subject tens of millions more people worldwide to life-threatening heat waves, droughts, severe storms and coastal floodings. It is also a junction between a world with coral reefs and Arctic summer sea ice, and a world without them. These risks are no longer distant or hypothetical, if we go past 1.5°C, we are dicing with the planet’s liveability.
The report shows that meeting the 1.5°C limit will require major and urgent transformations worldwide. Annual carbon dioxide emissions will need to be reduced by 40-50% by 2030 compared to 2010. By 2050, emissions should reach net-zero and renewables are projected to supply 70-85% of electricity. At the same time, the removal of atmospheric carbon dioxide must be enhanced, for example through forestation and direct air capture and storage technologies.
These goals cannot be achieved without concerted efforts. Globally, 25 pioneering cities including Cape Town, London, Melbourne, New York City and Stockholm have pledged to establish progressive climate action plans by 2020 with a commitment to become carbon neutral and climate resilient by 2050. Copenhagen and Oslo have set the most ambitious goals of becoming carbon neutral by 2025 and 2030 respectively.
The Hong Kong Government has released Hong Kong’s Climate Action Plan 2030+ report iii in 2017, setting a target of reducing carbon dioxide emissions by 26-36% by 2030 and an estimation of adopting renewable energies covering 3-4% of total consumed electricity. No timeline was established for achieving carbon neutrality. More recently, in the 2018 Policy Address iv and the 2018-19 Budget v, the Hong Kong Government has pledged to support and facilitate private sectors, schools and NGOs in the development of renewable energies, and to deploy $1 billion to promote the installation of renewable energy facilities at government buildings, venues and community facilities, but still, no solid targets were made. As a coastal city with a subtropical climate, Hong Kong is vulnerable to climate change, yet we are clearly lagging behind other major cities in climate actions. It is time for Hong Kong to take bolder actions and set to become carbon neutral and climate resilient.
At a news conference after the Nobel prize announcement, Romer said it was perfectly possible for global warming to be kept to a maximum of 1.5°C, in line with the latest recommendations of IPCC. “One problem today is that people think protecting the environment will be so costly and so hard that they want to ignore the problem and pretend it doesn’t exist. Humans are capable of amazing accomplishments if we set our minds to it.”
i The Royal Swedish Academy of Sciences press release:
ii IPCC report:
iii Hong Kong’s Climate Action Plan 2030+ report:
iv 2018 Policy Address:
v 2018-19 Budget: