A New Climate Economy for Colombia?

In September, Nivela published an update on the New Climate Economy (NCE) Report, a new study calling for a global shift to low-carbon development. The NCE report underscores the economic opportunities inherent in smart climate policies, pointing out that the next 15 years will be critical in the shift to cleaner energies, building better cities, and phasing out fossil fuel subsidies. The report’s underlying message is that countries can build lasting economic growth while simultaneously reducing the immense risk of climate change. During the last week of October, the NCE team visited Bogotá to present the report and what it means in the Colombian context.

Development versus Environment: A False Choice

For decades, decision-makers have sold a narrative that economic growth comes first before we can focus on the sustainable use of natural resources. Such a narrative is not unique to Colombia. For many years, leaders across Latin America have led us to believe that given enough time to exploit oil reserve and mining opportunities we will all become rich and prosperous. It is now nearly 2015, and this narrative is far from being true.

For Colombians, economic growth and security remain a top concern given the need to raise many out of poverty and to improve the delivery of social services. However, we should remain skeptical of “development as usual” scenarios that seek economic growth at the expense of society and environment. A survey this year by the Inter-American Development Bank (IDB) shows that 84% of Bogotanos care about climate change impacting their lives. Further, this number does not even begin to capture the importance of natural resources and ecosystem stability for groups outside of the capital, including farmers, indigenous groups, and Afro-Colombian communities.

This is why envisioning a new climate economy is so essential. It challenges traditional development and business-as-usual thought by showing the opportunities that sound economic policy can deliver for both growth and low-carbon development.

On October 30, the Chair of the Global Commission on the Economy and Climate and former Mexican President Mr Felipe Calderón, gave a presentation in Bogotá on aspects of new climate economics. Mr Calderón proposed the integrated management of water, land, and soil use to increase crop yields, the development of renewable energy over the next 15 years, and support for public transportation in big cities to improve the quality of life and public health.

For Colombia in particular there is an imperative to diversify the economy and reduce climate risk: Colombia to a large extent still relies on coal and oil exports. Planning ahead to make its economy more resilient in the face of declining fossil fuel prices is essential.

Key Points of the Plan

The NCE presentation highlighted the importance of having clear governmental signals supporting a 10-step framework. The first six steps deal with key recommendations to achieve a low-carbon trajectory. The final four steps outline opportunities to mitigate climate change while stimulating economic growth.

1. Accelerate the transition to low-carbon economy by integrating climate in decision-making processes.

2. Ratify a legally binding and equitable international agreement on climate with a robust and long-lasting character as a clear signal to markets.

3. Phase out subsidies for fossil fuel consumption, agricultural inputs, and urban expansion, to achieve a more efficient use of resources.

4. Introduce carbon-pricing schemes as part of a fiscal reform, sending clear economic signals.

5. Reduce costs for investment in clean infrastructure.

6. Expand strategic innovation of low-carbon and climate resilience technologies.

7. Plan for more connected and compact cities that promote sustainable urban development.

8. Halt deforestation in natural habitats by 2020, and strengthen incentives for forest protection.

9. Restore at least 500 million hectares by 2030 of agricultural lands and forests that have been degraded or deforested .

10. Gradually eliminate the burning of coal in middle income countries by 2025.

Towards a Low-Carbon Economy

During Mr Calderón’s presentation, Colombian Environment Minister Mr Gabriel Vallejo said that plans to cut deforestation, stimulate clean energy, and implement national climate change adaptation need to be accompanied by new communications and an educational strategy, to change the behavior of Colombians towards integrated economic development.

The attention that Mr Vallejo’s Ministry gave to the NCE report was a step in the right direction. Colombia needs to continue to see the economic opportunities that climate-smart development can bring.

However, the preliminary positive reception by the Ministry of Environment did not exactly characterize all government response. The same week of the NCE presentation, the Ministry of Finance called on Colombia’s largest oil company Ecopetrol to increase its production. Finance Minister Mr Mauricio Cardenas said that “the most important source of welfare that Colombia has is oil production.” He then followed by saying that the country must increase the number of oil barrels produced in order “to help those most in need.”

Why is it that governments continue to waste energy on a business-as-usual approach that we already know does not work? People are tired of the environment-versus-development dichotomy that often permeates public discussion around a low-carbon pathway transition. Alleviating poverty should not be mutually exclusive from policies that make an economy and country resilient to the changing climate.

It is critical that politicians in the Ministry of Finance, the Ministry of Mines and Energy, and the Department of National Planning internalize an alternative narrative to development, such as that presented by the NCE report.

Now is not the time to accept short-sightedness, especially when compelling evidence exists that can address both climate change and economic growth. Young and old generations of Colombians alike know that they deserve better paths of development. This is a critical moment for Colombia to shape its future, and a new climate economy is possible if we work towards making it so.

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