How to reduce CO2 emissions and poverty – in Mexico, Thailand and South Africa?

A glance of SA's challenges in pro-poor mitigation in one image: Electricity theft campaign, low cost solar water heating roll out at Gautrain station  in Johannesburg
A glance of South Africa’s challenges in pro-poor mitigation in one image: Anti-electricity theft campaign, low cost solar water heating roll out at Gautrain station in Johannesburg

Researchers from five countries – Germany, Italy, Mexico, Thailand and South Africa – started off a new project on the question of how to reduce emissions and poverty at the same time. In freezing Hamburg, researchers from the Monterrey Institute of Technology and Higher Education, the National Institute of Development Administration, the Public Policy Studies Institute at the University of Chiang Mai, the Energy Research Centre at the University of Cape Town, the Fundazione Eni Enrique Mattei and the German Institute for Global and Area Studies met to discuss ways forward in the research project on Climate Mitigation and Poverty Reduction (CliMiP), funded by the Volkswagen Foundation.

Mexico, Thailand and South Africa share the challenges of high income inequalities, remaining poverty levels, growing emissions from semi-industrialized economies.

The research project takes a closer look at the key question in climate change and developing countries: how to continue to develop while reducing emissions? Under the United Nation’s Framework Convention on Climate Change (UNFCCC) developing and industrialized countries acknowledge the principle of “common but differentiated responsibilities”, which acknowledges that all parties need to act to slow climate change despite the fact that it’s a problem, which was caused by the industrialized nations in the first place. Therefore, industrialized nations need to support actions of developing nations in their efforts of reducing emissions and to adapt to the consequences of climate change. For a long time, developing nations, especially the middle income countries, claimed that they could not reduce emissions, because they need to continue to develop in a way, which does not allow them to reduce emissions at the same time. In the negotiations, this lead to the (in)famous targets of emissions trajectories, which “peak, plateau and decline”.

This project aims to investigate how the trade-offs between reducing emissions and poverty unfold in three middle income countries, Mexico, Thailand and South Africa. All three countries have high emissions profiles, where emissions basically derive the industrial basis of the economy and the high dependency on fossile fuels. South Africa ‘s economy highly depends on a coal-based electricity sector, which traditionally supplied heavy mining, steel, chemical and manufacturing industries with inexpensive electricity. Recently, tarrifs have increased mainly in the residential, but also in the industrial sectors. The impact of the increases of the tariffs on the economy, employment and the poor population is unknown.

At the same time, the South African government announced a carbon tax, which will price the carbon emissions from industry as well as transport. The research will investigate the distributional impacts of a carbon tax in South Africa and Mexico on different income groups. Thailand has no carbon taxing or trading scheme in place yet.

Besides the carbon taxes and prices, the researchers investigate the impact of renewable energy programs on poverty. All three countries have renewable energy incentives in place. The South African scheme functions as a competitive bidding scheme, which demands companies to offer a price, local technology content and contributions to community development. Thailand has a feed-in tariff, which guarantees a fix price for independent power producers. Mexico is in a similar process of rolling out renewable energy programs similar to the South African one. The differences in the incentive schemes allow for interesting comparative research on the beneficiaries and losers of these programs. We will identify more case studies for comparative research after analyzing the structures of the political economies of poverty alleviation and climate change mitigation in all three countries.

Why does this research matter? This research is relevant in three ways. Firstly, the findings will be important for the selection and design of “Nationally Appropriate Mitigation Actions” (NAMA), which are the key vehicle towards reducing emissions in developing countries with the support of Annex 1 countries as stated in the Bali Action Plan in 2007. None of the three countries has put forth any so called NAMAs into the UNFCCC’s registry.

Secondly, climate finance is another important international dimension. Does the support for NAMAs and the Green Fund bring additional funds or are these re-labeled from other purposes? Does this affect the funding originally dedicated for poverty alleviation through “official development aid” (ODA)?

Thirdly, insights into priority setting, design and impacts of mitigation actions in Mexico, Thailand and South Africa matter to decision-makers, private sector and civil society within the three countries as well as European and other international actors and donors who are trying to support these actions.

The project will run until 2015 and I will keep you posted about activities and products in this blog.