It’s hard to deny when the effects of climate change are all around us
Andrew Sheng says that from increasingly intense hurricanes to regional
landslides and flooding, it’s clear our actions are effecting the
environment. But, it’s also evident that there are ways for us to avert
disaster and change course
AFTER two Category 5 hurricanes (Harvey and Irma) hit the US in October, followed by Maria hitting Puerto Rico, no one can deny that natural disasters are devastating.
With three hurricanes costing an estimated US$385bil, with less than half insured, the poor are suffering the most because they cannot afford to rebuild as the rich.
This year alone, monsoon floods in Bangladesh, India and Nepal have left millions homeless. This year will therefore break all records as Munich Re-insurance data suggests that 2016 natural disaster losses were only US$175bil, already 28.6% higher than the 30 years (1986-2015) annual average of US$126bil.
But how much of these natural disasters are man-made?
Despite US President Trump being sceptical of climate change, the US Global Change Research Program Climate Science Report published this month concludes that “it is extremely likely that human activities, especially emissions of greenhouse gases, are the dominant cause of the observed warming since the mid-20th century”.
Carbon dioxide concentration already exceed 400 parts per million, last occurred about 3 million years ago, when both global average temperature and sea level were significantly higher than today. Roughly one third of carbon emission is due to residential heating/cooling, one third for transport and one third for industrial production.
Human activities on Mother Earth include over-consumption of natural resources, cutting down forests, polluting waters and excessive cultivation/development that caused desertification or soil erosion. You see this from warmer surface and oceanic temperatures; melting glaciers; diminishing snow cover; shrinking sea ice; rising sea levels; ocean acidification; and declining tree and fish stock.
Oceans warming up
Hurricanes are caused by oceans warming up, building energy and vapour levels that create freak typhoons, tornados and massive downpours. At the same time, droughts are also occurring with more frequency for longer.
Scientists estimate that global average sea level has risen by about 7-8 inches since 1900, with almost half that rise occurring since 1993. Everyday, we hear new extreme events, such as unusually heavy rainfall, heatwaves, large forest fires, floods or landslides.
Climate warming is most observable in the water-stressed Middle East and the North Africa/Sahel region, where rapid population growth created desertification, food shortages, civil conflicts and ultimately, outward migration towards cooler climates, especially Europe. This hot region accounts for 60% of global war casualties since 2000, with 10 million outward refugees. About 90% of the world’s refugees and asylum seekers come from four regions with half under the age of 18 years.
A 2016 World Bank report estimated that these water-stressed countries’ GDP could be reduced by up to 6%, with dire consequences on stability. Without water, industries cannot function, food cannot be cultivated and health can deteriorate due to disease from water-shortage and drought.
European estimates suggest that each refugee costs roughly US$11,600 per person to maintain and there are already one million trying to enter Europe last year. The OECD has classified countries such as Afghanistan, Central African Republic, Iraq, Somalia, Sudan, Syria and Yemen as extreme fragile.
Critical point
The world is already reaching a critical turning point. If the Paris Climate Accord can be implemented, with or without the United States, there is some chance of averting further global warming.
But closer home, we are already witnessing the effects of climate change on our daily lives.
In 1972, Hong Kong experienced a devastating landslide near Po Shan Road in Mid-Levels, which caused 67 deaths and collapse of two buildings. One cause was unstable ground following heavy rainfall from Typhoon Rose eleven months prior to the incident.
This tragedy in densely populated Hong Kong resulted in rigorous slope protection and inspection of drains to ensure that these slips do not occur again. I lived near Po Shan Road and admired how Hong Kong engineers regularly inspected the slope protection measures and that the drains were always clear.
In 1993, the collapse of Highland Towers in Kuala Lumpur was partly attributed to the clearing of the hilltop above Highland Towers, which led to soil erosion and the weakening of the foundations. By the time the residents detected cracks in the buildings, it was already too late. Some of my personal friends were among the 48 persons who were killed in that collapse.
Last weekend, Penang (where I live) had the worst rainstorm and floods because we were hit by the tail end of strong winds from Typhoon Damrey, one of the strongest to hit Vietnam in 16 years, leaving 61 people dead. Driving along Penang Bridge, I can see that the continued hilltop developments in Penang are leaving soiled scars on the previously pristine landscape, I am reminded of Highland Towers and Po Shan incidents. Natural disasters are acts of god, but the size of their impact on human lives are completely within our control.
Soil erosion
Soil erosion does not happen overnight, and require responsible developers and conscientious governments, as well as concerned citizens, to be continually vigilant that maintenance of roads and drains, including soil inspections, are serious business with serious consequences.
Modern technology can provide drones and inbuilt sensors that can detect whether erosion is reaching critical levels. Regular maintenance of drains and checks on stability of the soil, especially where there has been recent clearing of trees in steep slopes, will forewarn us all of impending accidents.
As cities are building more and more on hillsides subject to torrential rain, Penang should seek technical expertise from Hong Kong which has extensive expertise on the maintenance of steep hill slopes that are subject to typhoons and sudden rainfall.
Landslides are today used more in political terms than in real terms. The next time landslides happen, residents who watch daily the erosion of their natural environment will know who is really looking after their interests.
Former
MBPP councillor Dr Lim Mah Hui wrote this piece for the press in his
personal capacity: I wish to comment on the press statement by Jagdeep
Singh Deo as reported in Berita Daily and many other newspapers on 24
October.
Nature’s fury: A car dealership is covered by Hurricane Harvey floodwaters near Houston, Texas. The chaos caused by the hurricane proves that climate change is not fake science. — Reuters
THIS month, two Category 4 hurricanes hit the United States within 17 days of each other. In Asia, North Korea is threatening nuclear Armageddon, and floods and famine are putting thousands of lives at risk from Bangladesh to Yemen. How can one survive in this chaotic era?
A first step must be to make sense of the apparent chaos. Hurricanes Harvey and Irma have proved that climate change is not fake science, but real threats to home and security. When hailstones the size of golf balls hit Istanbul in the middle of summer, even the agnostics accept that climate change is serious business.
The biggest uncertainty that has hit Asia recently is the shock that North Korea has not only developed possibly a hydrogen bomb, but also the missile capability to deliver it even to the United States. This has changed the geopolitical balance not only in North Asia, but globally because it is no longer possible for the United States alone to contain nuclear proliferation.
Physics teaches us that chaos is often a characteristic of transition from one order to another. Chaos is also a pattern in which there is apparently no discernible pattern.
But there is a seismic transition from a unipolar world led by the United States to a multi-polar world of competing powers and ideology, particularly after the 2007 global financial crisis. As the share of US GDP in the world declines relative to the rest, the rise of China, India and increasing assertion by Russia and non-state players like IS means that the United States’ ability to dominate militarily and ideologically is being challenged.
At the same time, increasing stresses from social inequalities and paranoia of terror, immigration and job loss have tilted the United States to become more inward looking. The Trump administration has dramatically begun to dismantle the neoliberal order of multilateral trade and finance that shaped US foreign policy since the end of the Second World War.
There is a raw open division within the United States in outlook and values. The Democratic Left believes in maintaining the old order of moral leadership on human rights, democracy and multilateral global stability and prosperity. The Republican Right questions these beliefs and prefers America First, negotiating bilaterally to achieve that premier status.
Earlier this year, the Pentagon asked the Rand Corporation to conduct a review on “Alternative Options for US Policy toward the International Order”. The key questions for the New Global Order are: Who sets the rules and how binding are the rules?
The study breaks the future order into two camps of rule-makers – the US and its allies or a concert of great powers. Under such a division, there are two conditions where rules are binding – one dominated by the US camp to enforce rules and the other where the great powers agree to a global constitutional order enforced by institutions. The other two conditions where rules are not binding involve a coalition of states aligned to counteract against revisionism and a new concert of great powers.
The immediate problem with the Rand categorisation of New Order Visions is that the existing liberal, rules-based order is not being challenged by others, but by the US itself.
First, after German Chancellor Angela Merkel’s comment earlier this year that Europe must begin to look after its own interests, it is no longer clear that America’s traditional allies are going to follow the US leadership when there are serious disagreements on trade, climate change and immigration. It is no coincidence that the largest trade imbalances are no longer between China or oil producers with the US, but between Europe and the United States. Germany alone is running a current account surplus equivalent to around 8% of GDP.
Second, within the Middle East, alliances are shifting almost by the day. The quarrel between Saudi Arabia and Qatar has riven the Gulf Cooperation Council, while Turkey is playing an increasingly pivotal role within the shifting alliances.
Third, North Korea’s bid for nuclear power membership, despite being a small state, means that Great Powers may have to accommodate new players whether they like it or not.
Fourth, climate change in the form of Hurricanes Harvey and Irma demonstrate that nature can impose larger and larger economic losses on nations and regions, which will require global public goods that the current order is neither willing to fund, nor able to agree on how to address. The economic losses from Harvey alone is estimated at US$180bil, equivalent to the annual GDP of a middle-income economy. The existing multilateral bodies such as the United Nations and the World Bank are facing serious resource shortages relative to these new global demands.
The bottom line is that the current order has neither the resources nor the collective will to enforce rules when the human population growth puts increasing competition for scarce water, food and territorial spaces. Chaos arises from the breakdown of rules and borderlines.
In short, globalisation of trade, information and human migration has meant that traditional borders in many regions are becoming non-enforceable. For example, it is 101 years since the 1916 Sykes-Picot Agreement divided up the collapsing Ottoman Empire into British, French and Russian spheres of interest and eventual control. These borders were drawn and enforced by the Great Powers through their military superiority.
Seen from the long lens of history, with the Great Powers being unwilling to put troops on the ground to enforce borders drawn up under the colonial era, these artificial borders are failing.
A hallmark of the times is that even the best of think tanks cannot map out how to navigate through this era of disruptive technology, unpredictable climate and shifting alliances and interests. What history teaches us is that the fault lines will be at the borderlands, at the confluence of emerging forces and stresses.
We should therefore be prepared for not only disruption at the borderlands of physical space, but within the realms of cyberspace.
By Andrew Sheng
Tan Sri Andrew Sheng writes on global issues from an Asian perspective.
IN Washington, the swamp Donald Trump is trying to drain is in tumult. The centres of the established order are fighting back against the elected president with a mandate who is doing what he wants.
On the one hand, there is a system of governance based on the rule of law which accords rights and limits the exercise of power. On the other, a president with a style of rule that transcends and challenges that order.
Whether it is working with the enemy, government by executive order, unrestrained authority in a centralised executive arm, president Trump who is already temperamentally in accord with it feels fully supported by those marginalised and on the periphery who had elected him. He sees it as a battle against the elites. Indeed, he increasingly depicts himself as a victim of the elites, especially the media.
The media wants him impeached. This is not going to happen – at least, not any time soon. The Republican-dominated House of Representatives and Senate would not have it. But Trump has to understand he cannot continually push at the boundaries and violate constitutional authority with impunity. If not Congress, the courts will have him.
Fired FBI director James Comey is expected to appear before the Senate to relate if Trump tried to influence investigation into links with Russia he and his aides forged during and after the election campaign. Already, a special counsel, Robert Mueller, has been appointed by the Attorney-General’s office to establish if there had been criminal violations in those links.
The American president is impetuous, sneering and always up for a fight. This is not the way to govern – anywhere.
He chops and changes. He does not use established institutions, even of the executive branch, like the State Department, which he wholly distrusts as a Hillary Clinton bastion.
There is conflict in Washington, not orderly governance. America is bitterly divided. Trump represents the other side. In this conflict, it is a strong incentive for Trump to ride on populist policies to attack his enemies in the swamp in Washington.
Both the disorder in Washington and particularly the populist policies – many of which are not properly thought through – also have an impact on the rest of the world.
It is difficult to know whom to deal with and which way policies may turn. His “America First” policies, like on climate change and on trade, harm and disregard other countries.
Small countries like Malaysia are down the list of his concerns. Yet we are on the list of 16 with whom the Trump administration claims America has trade deficits which are not tolerable.
The cut-off value of US$10 billion just manages to leave out Israel from the black list. What countries like Malaysia would like to know is what the United States proposes to do about it.
With respect to China, which tops the list with a whopping surplus of US$347 billion, Trump has eased from hanging tough to being pliable. No more talk of China as a serial currency manipulator and of slapping a 45% tariff on Chinese exports to America.
Last month the US entered into a so-called trade deal with China which encompassed a 100-day programme as part of a “comprehensive economic dialogue.” There is to be a 10-point action plan covering topics ranging from meat to financial services to biotechnology.
But American companies are dissatisfied, contending matters such as overcapacity, forced technology transfer and equal treatment of US companies should have been covered.
White House professionals in the National Economic Council and the US Trade Representative’s office say there is work in progress on Chinese steel, after which the administration would decide how to pursue the matters of subsidies and overcapacity – either through the World Trade Organisation (WTO) or bilaterally.
This is an interesting twist. Trump does not have any time for the WTO. Yet with China, he might go for the multilateral approach rather than his favoured bilateral dealing.
The officials say they do not want a trade war. So perhaps some sobriety is sinking in.
Meanwhile, Vietnamese Prime Minister Nguyen Xuan Phuc made haste to Washington this week – Vietnam is sixth in that list of 16 – and ended up with extravagant praise from Trump for the deals he entered into worth US$8bil (the prime minister claimed US$15bil), including US$3bil of US-produced content that would support 23,000 jobs. General Electric is the biggest beneficiary with deals worth US$5.58bil in power generation, aircraft engines and services.
Commerce Secretary Wilbur Ross pronounces Vietnam is the fastest growing market for US exports. US Trade Representative Robert Lighthizer is deeply concerned about the rapid growth of the trade deficit with Vietnam (2016: US$32bil). Phuc gets the double squeeze in the firm handshake with President Trump. One must hope he knows where he stands at the end of his visit last Wednesday.
Phuc was the first Asean leader to visit Washington since Trump’s election as president. Philippines president Rodrigo Duterte has not taken up Trump’s invitation. Neither has Thailand’s Prime Minister Prayut Chan-o-cha.
Apart from a report that the Vietnamese prime minister said he was waiting to welcome Trump to Danang for the Apec summit in November, and a statement he made expressing disappointment that America had withdrawn from the Trans-Pacific Partnership, there has been no indication that anything pertaining to Asean had been raised – apart, of course, from Vietnam’s position on the South China Sea.
This is the way of Asean. National concerns and the national interest come first. There is not even some kind of debriefing or discussion on or before a visit of such import. Such a shame.
Perhaps Malaysia should take the lead and try to make a difference. As Trump will be coming for the Asean summits in Manila, including US-Asean and the EAS, would it not make sense to prepare a regional position paper on trade with the US?
We can leave the South China Sea issue pretty much alone as it divides more than unites Asean. But surely there must be consensus on free trade, as the AEC is founded very much on that principle.
Should not Asean take a common position on free trade in discussion with the American president? Not one based on generalities but on specifics and benefits, including to those on the supply chains (in terms of employment, revenue and taxes) before imports reach the US destination, not to mention the benefits to consumers in respect of choice, price and inflation.
Instead of just all the normal niceties, could not the leaders meeting incorporate a short, sharp presentation on the benefits of free trade to America and the costs to its economy of subsidy, support and inefficiency?
Already, it has been estimated about three quarters of job loss in America is attributable to employment displacement through technological development. Not through exports to America.
Everyone wants that 20 minutes with Trump. Asean should not fritter it away with amiable general chatter.
Of course, Malaysia has its own particular issues with the US which could be raised in a visit by the prime minister, perhaps at the end of the year or early next year.
By that time, of course, the 90-day “investigation” into the surpluses of countries on the list of 16 (Malaysia’s US$25bil puts it ninth on that list), which technically began on April 7, would have been completed.
There would be plenty to discuss then, even as bilateral representations would have been made at the working level before and after expiry of that period and whatever subsequent American actions.
Other issues, of course, are outstanding on which views can be exchanged, including on investment and technology. Hopefully, by that time, things would have settled down, that sense can be made out of the disorder in Washington.
Tan Sri Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.
By Tan Sri Dr Munir Majid
Tan Sri Dr Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.
Continuing the climate battle, without the US
https://youtu.be/vDyZy-VRyAY
With President Trump pulling out from the Paris agreement, the US has lost membership of the community of nations that subscribe to humanity's fight for survivial against climate change.
SO in the end President Donald Trump decided to pull the United States out from the Paris Agreement on climate change.
Just as disturbing as the withdrawal was Trump’s speech justifying it. He never acknowledged the seriousness or even the existence of the global climate change crisis, which poses the gravest threat to human survival. He lamented that the Paris accord would displace US jobs, mentioning coal in particular, while ignoring the jobs in renewable energy that would increase manifold if the United States tackled climate crisis seriously.
His main grouse was that the Paris agreement was “unfair” to the United States vis-a-vis other countries, especially mentioning China and India. And he grumbled that the United States would have to contribute to the Green Climate Fund.
The speech was riddled with misconceptions and factual errors.
For example, Trump said the Paris agreement would only produce a two-tenths of one degree Celsius reduction in global temperature by the year 2100, a “tiny, tiny amount”.
But scientists from the Massachusetts Institute of Technology said Trump badly misunderstood their study. “If we don’t do anything, we might shoot over five degrees or more and that would be catastrophic,” said MIT’s programme co-director John Reilly.
Condemnation came fast and furious from within the United States and around the world. Said John Kerry, former Secretary of State: “He’s made us an environmental pariah in the world ... It may be the most self-defeating action in American history.”
The Trump decision to leave Paris may well be a milestone marking an immense loss to the United States of international prestige, influence and power.
In a world so divided by ideology, inequality and economic competition, the Paris agreement was one rare area of global consensus to cooperate, on climate change.
For the United States to pull out of that hard-won consensus is a shocking abdication not only of leadership, but of its membership of the community of nations in its joint effort to face its gravest threat to survival.
The lack of appreciation of this great challenge facing humanity and the narrow-mindedness of his concerns was embarrassingly evident when Trump made his withdrawal speech.
He was more interested in reviving the sunset coal sector than in the promise of the fast-developing renewable energy industries.
He was convinced reducing emissions would cost millions of jobs, ignoring the record of other countries that have decoupled emissions growth from economic growth.
He was miserly towards poor countries which are receiving only a fraction of what they were promised for climate action, while celebrating hundreds of billions of dollars of new armaments deals.
He complained that the United States is asked to do more than others, when in fact the nation has the highest emissions per capita of any major country and its pledges are significantly lower than Europe’s.
He saw the speck in everyone else’s eyes while being oblivious to the beam in his own.
With or without the United States, the negotiations on how to implement the agreement will continue in the years ahead.
A complication is that America has to wait four years before the announced withdrawal can come into effect.
The United States will still be a member of the Paris agreement for the rest of Trump’s present term, although he announced he will not implement what Barack Obama had committed to, which is to cut emissions by 26%-28% from 2005 levels, by 2025. This defiance will likely have a depressing impact on other countries.
While a member, the United States could play a non-cooperative or disruptive role during the negotiations on many topics.
Since Trump has already made clear the United States wants to leave the pact, and no longer subscribes to its emissions pledges, nor will it meet its US$3bil (RM12.8bil) pledge on the Green Climate Fund, it would be strange to enable the country to still negotiate with the same status as other members that remain committed to their pledges.
How to deal with this issue is important so that the United Nations Framework Convention on Climate Change negotiations are not disrupted in the four years ahead.
Finally, Trump’s portrayal of developing countries like India and China as profiting from the US membership of the Paris Agreement is truly unfair.
China is the number one emitter of carbon dioxide in absolute terms, with the United States second and India third. But this is only because the two developing countries have huge populations of over a billion each.
In per capita terms, in 2015, carbon dioxide emissions were 16.1 tonnes for the United States, 7.7 tonnes for China and 1.9 tonnes for India.
It would be unfair to ask China and India to have the same mitigation target as America, especially since the United States has had the benefit of using or over-using more than its fair share of cheap fossil-fuel energy for over a century more than the other two countries.
A recent New York Times editorial (May 22) compared the recent performance of India and China with the recent actions of the United States under President Trump.
It states: “Until recently, China and India have been cast as obstacles ... in the battle against climate change. That reputation looks very much out of date now that both countries have greatly accelerated their investments in cost-effective renewable energy sources – and reduced their reliance on fossil fuels. It’s America – Donald Trump’s America – that now looks like the laggard.”
President Trump has taken the United States and the world many big steps backwards in the global fight against global warming. It will take some time for the rest of the world to figure out how to carry on the race without or despite the United States.
Hopefully the absence of America will only be for four years or less.
By Martin Khor
Martin Khor is executive director of the South Centre. The views expressed here are entirely his own.
Anger as Trump announces US withdrawal from global climate deal
WASHINGTON: President Donald Trump announced America’s shock withdrawal from the Paris climate accord Thursday, prompting a furious global backlash and throwing efforts to slow global warming into serious doubt.
In a sharply nationalistic address from the White House Rose Garden, Trump announced the United States would immediately stop implementing the “bad” 195-nation accord.
“I cannot, in good conscience, support a deal that punishes the United States,” he said, decrying the “draconian financial and economic burdens the agreement imposes on our country.”
Trump repeatedly painted the pact — struck by his predecessor Barack Obama — as a deal that did not “put America first” and was too easy on economic rivals China, India and Europe.
“I was elected to represent the citizens of Pittsburgh, not Paris,” he said. “We don’t want other leaders and other countries laughing at us anymore. And they won’t be.”
Trump offered no details about how, or when, a formal withdrawal would happen, and at one point suggested a renegotiation could take place.
“We’re getting out but we’ll start to negotiate and we will see if we can make a deal that’s fair. And if we can, that’s great. And if we can’t, that’s fine,” he said.
That idea was unceremoniously slapped down by furious allies in Europe, who joined figures from around the United States and the world in condemning the move.
“The agreement cannot be renegotiated,” France, Germany and Italy said in a joint statement.
Worst polluters
The United States is the world’s second largest emitter of greenhouse gases after China, so Trump’s decision could seriously hamper efforts to cut emissions and limit global temperature increases.
Amid Trump’s domestic critics was Obama, who said the United States was “joining a handful of nations that reject the future.”
Nicaragua and Syria are the only countries not party to the Paris accord, the former seeing it as not ambitious enough and the latter being racked by a brutal civil war.
Hillary Clinton, Trump’s opponent in last year’s White House race, called the decision to pull out a “historic mistake.”
“The world is moving forward together on climate change. Paris withdrawal leaves American workers & families behind,” she said in a tweet.
The Democratic governors of New York, California and Washington states formed a quick alliance, vowing to respect the standards agreed on under the Paris deal.
In New York, some major buildings, like the World Trade Center and City Hall, were lit green in solidarity with the climate agreement, echoing a move in Paris.
With much of the implementation of the accord taking place at the local level, the Paris accord’s supporters hope the deal will be in hibernation rather than killed off entirely.
Trump’s decision is likely to play well with the Republican base, with the more immediate damage on the diplomatic front.
The US president called his counterparts in Britain, Canada, France and Germany to explain his decision.
But traditional US allies were uncharacteristically blunt in their condemnation of the move, which comes amid already strained relationships with the hard-charging president.
Germany said the US was “harming” the entire planet, and European Commission President Jean-Claude Juncker called the decision “seriously wrong.”
Trump the showman
Ever the showman, the 70-year-old Trump had given his decision a reality TV-style tease, refusing to indicate his preference either way until his announcement.
Opponents of withdrawal — said to include Trump’s daughter Ivanka — had warned that America’s leadership role on the world stage was at stake, along with the environment.
A dozen large companies including oil major BP, agrochemical giant DuPont, Google, Intel and Microsoft, had urged Trump to remain in the deal.
Ultimately, the lobbying by Trump’s environmental protection chief Scott Pruitt and chief strategist Steve Bannon urging the president to leave won out.
In the wake of the announcement, Tesla and SpaceX boss Elon Musk and Disney chief Robert Iger announced they would no longer take part in presidential business councils.
“Climate change is real. Leaving Paris is not good for America or the world,” Musk said.
GE head Jeff Immelt said he was “disappointed” with the decision: “Climate change is real. Industry must now lead and not depend on government.”
'Morally criminal'
White House officials acknowledged that under the deal, formal withdrawal may not take place until after the 2020 election.
Hours ahead of Trump’s announcement, China’s Premier Li Keqiang pledged to stay the course on implementing the climate accord in a joint press conference with German Chancellor Angela Merkel, and urged other countries to do likewise.
China has been investing billions in clean energy infrastructure, as it battles to clear up the choking pollution enveloping its cities.
China and the US are responsible for some 40 percent of the world’s emissions and experts had warned it was vital for both to remain in the Paris agreement if it is to succeed.
The leader of Asia’s other behemoth, Indian Prime Minister Narendra Modi — who is due to visit the White House shortly — has said failing to act on climate change would be “morally criminal.”
Trump’s announcement comes less than 18 months after the climate pact was adopted in the French capital, the fruit of a hard-fought agreement between Beijing and Washington under Obama’s leadership.
The Paris Agreement commits signatories to efforts to reduce greenhouse gas emissions that cause global warming, which is blamed for melting ice caps and glaciers, rising sea levels and more violent weather events.
They vowed steps to keep the worldwide rise in temperatures “well below” two degrees Celsius (3.6 degrees Fahrenheit) from pre-industrial times and to “pursue efforts” to hold the increase under 1.5 degrees Celsius.
We are entering the age of dealing with unknown unknowns – as Brexit and Turkey’s failed coup show
The dark future of Europe
THE Age of Uncertainty is a book and BBC series by the late Harvard economist John Kenneth Galbraith, produced in 1977, about how we have moved from the age of certainty in 19th century economic thought to a present that is full of unknowns.
I still remember asking my economics professor what he thought of Galbraith, one of the most widely read economists and social commentator of his time. His answer was that Galbraith’s version of economics was too eclectic and wide-ranging. It was not where mainstream economics – pumped up by the promise of quantitative models and mathematics – was going.
Forty years later, it is likely that Galbraith’s vision of the future was more prescient than that of Milton Friedman, the leading light of free market economics – which promised more than it could deliver. The utopia of free markets, where rational man would deliver the most efficient public good from individual greed turned out to be exactly the opposite – the greatest social inequities with grave uncertainties of the future. Galbraith said, “wealth is the relentless enemy of understanding”. Perhaps he meant that poverty and necessity was the driver of change, if not of revolution.
The economics profession was always slightly confused over the difference between risk and uncertainty, as if the former included the latter. The economist Frank Knight (they don’t make economists like that anymore) clarified the difference as follows – risk is measurable and uncertainty is not. Quantitative economists then defined risk as measurable volatility – the amount that a variable like price fluctuated around its historical average.
The bell-shaped statistical curve that forms the conventional risk model used widely in economics assumes that there is 95% probability that fluctuations of price would be two standard deviations from the average or mean.
For non-technically minded, a standard deviation is a measure of the variance or dispersion around the mean, meaning that a “normal” fluctuation would be less than two; so if the standard deviation is say 5%, we would not expect more than 10% price fluctuation 95% of the time.
Events like Brexit shock us because the event gave rise to huge uncertainties over the future. Most experts did not expect Brexit – the variance was more than the normal. It was a reversal of a British decision to join the European Union, a five or more standard deviation event – in which the decision is a 180 degree turn. The conventional risk management models, which are essentially linear models that say that going forward or sequentially, the projected risk is up or down, simply did not factor in a reversal of decision.
In other words, we have moved from an age of risk to an age of uncertainty – where we are dealing with unknown unknowns.
There are of course different categories of unknowns – known unknowns (things that we know that we do not know), calculable unknowns (which we can estimate or know something about through Big Data) and the last, we simply do not know what we may never know.
Big Data is the fashionable phrase for churning lots of data to find out where there are correlations. The cost of big computing power is coming down but you would still have to have big databases to access that information or prediction. Most individuals like you and me would simply have to use our instincts or rely on experts to make that prediction or decision. Brexit told us that many experts are simply wrong. Experts are those who can convincingly explain why they are wrong, but they may not be better in predicting the future than monkeys throwing darts.
Five factors
There are five current factors that add up to considerable uncertainty – geopolitics, climate change, technology, unconventional monetary policy and creative destruction.
First, Brexit and the Turkish coup are geo-political events that change the course of history. In its latest forecasts on the world economy, the IMF has called Brexit “the spanner in the works” that may slow growth further. But Brexit was a decision made because the British are concerned more about immigration than nickels and dimes from Brussels. This is connected to the second factor, climate change.
Global warming is the second major unknown, because we are already feeling the impact of warmer weather, unpredictable storms and droughts. Historically, dynastic collapses have been associated with major climate change, such as the droughts that caused the disappearance of the Angkor Wat and Mayan cultures. Iraq, Afghanistan, Syria, Sudan and all are failing states because they are water-stressed. If North Africa and the Middle East continue to face major water-stress and social upheaval, expect more than 1 million refugees to flood northwards to Europe where it is cooller and welfare benefits are better.
The third disruptor is technology, which brings wondrous new inventions like bio-technology, Internet and robotics, but also concerns such as loss of jobs and genetic accidents.
Fourthly, unconventional monetary policy has already breached the theoretical boundaries of negative interest rates, where no one, least of all the central bankers that push on this piece of string, fully appreciate how negative interest rates is destroying the business model of finance, from banks to asset managers.
Last but not least, the Austrian economist Schumpeter lauded innovation and entrepreneurship as the engine of capitalism, through what he called creative destruction. We all support innovation, but change always bring about losses to the status quo. Technology disrupts traditional industries, and those disappearing industries will create loss in jobs, large non-performing loans and assets that will have no value.
Change is not always a zero-sum game, where one person’s gain is another’s loss. It is good when it is a win-win game; but with lack of leadership, it can easily deteriorate into a lose-lose game. That is the scary side of unknown unknowns.
I shall elaborate on how ancient Asians coped with change in the next article.
By Tan Sri Andrew Sheng
Tan Sri Andrew Sheng writes on global issues from an Asian perspective.
Mar 29, 2016 ... While the Federal Reserve doesn't break out hedge-fund ownership, a group
seen as a proxy increased its holdings to a record $1.27 trillion in...
Apr 16, 2016 ... That belongs to the realm of politics and education, which is another story.
Andrew Sheng writes on global issues from an Asian perspective.
Amidst gloomy news in the deteriorating climate change situation
is this bright spark – the cost of solar energy has been going down
dramatically.
THE source of clean and renewable energy is
seen as one of the major saviours that could help power the world
without emitting greenhouse gases.
The drawback is that solar energy has traditionally been more expensive to use than carbon-intensive coal or oil.
But
in recent years solar power has become much cheaper. Energy experts
predict that its cost could match that of conventional fuels in the next
few years in some areas.
Solar cell prices have been falling,
from US$76 (RM235.52) per watt in 1977 to about US$10 (RM30.99) in 1987
and only 74 cents (RM2.29) in 2013. Between 2006 and 2011, Chinese cell
prices dropped 80% from US$4.50 (RM13.95) per watt to 90 cents (RM2.79)
per watt.
Factors for this include a drop in price of the main
raw material polysilicon (due to oversupply), increasing efficiency of
solar cells, manufacturing technology improvements, economies of scale
and intense competition.
The use of solar energy has shot up as
the cost goes down. Global installed capacity jumped by 28.4 gigawatts
(one gigawatt is 100,000 megawatts) in 2012 to reach 89.5GW. The 100GW
milestone will be crossed some time this year.
All this is good news for the fight against climate change. Now comes the bad news.
The
growing global demand has prompted the rise of solar panel
manufacturers, and the competition is fierce, with a number of companies
facing closure. China’s biggest solar energy company Suntech is in
serious trouble.
But China has even bigger problems. The United
States government, receiving complaints from US solar panel
manufacturers, has slapped high anti-dumping tariffs on Chinese imports.
Now the European Commission also plans tariffs averaging 47% on Chinese solar products which it claims are selling below cost.
China
is taking these threats seriously. Premier Li Keqiang in a visit to
Europe last week took up the issue with European leaders.
Senior trade officials say China will retaliate. A full-scale trade war is thus imminent.
In
a surprise turn of events, Germany and 16 other European countries have
told the European Commission they are against its move.
But EC
Trade Commissioner Karel De Gucht will apparently still slap on the
tariffs provisionally, which is within his power to do.
So the
solar wars between China with Europe and the US will likely proceed.
This is a real pity, as the commercial interests of the countries are
coming in the way of rapid progress in solar energy and the fight
against climate change.
The expansion of the solar panel industry
in China has played a crucial role in getting prices down, making solar
energy more and more competitive, and driving its explosive growth.
Yes, China subsidises and promotes its solar industry. But the US and Europe also provide massive subsidies and supports.
The
US has provided its solar companies with loan guarantees, research
grants and tax deductions including investment tax credits and
accelerated value depreciation.
European countries have given
subsidies to consumers using solar energy, and incentives to producers
including through the feed-in tariff scheme, in which solar energy
providers are paid prices higher than what is charged to electricity
users with the price difference being met by governments.
Without
the subsidies, the solar industry would not have grown. Trade
protectionist measures taken by one against the other, or by all against
others, would be a recipe for disaster – for trade, the solar industry
and the environment.
Well known solar energy advocate and
chairman of Solarcentury Jeremy Leggett uses the following analogy to
illustrate the trade war: “A planet faces an asteroid strike. Its
inhabitants manufacture rockets with which to head off the threat. But,
as the rock nears, they descend into international bickering over who
pockets what from rocket-making.”
No one wins in this trade war,
because of global solar supply chain, explains Leggett. Solar ingots,
the upstream feedstock, are mostly made in Europe and America. The
midstream products, cells and modules, are mostly made in China.
If China is hit on the mid-stream products it exports, it could retaliate with tariffs on the upstream products it imports.
For
example, in Europe, the tariffs against China would wipe out thousands
of jobs because most are not in manufacturing but in the companies that
install the modules, regardless of where they are made.
The
solution, he adds, is for the leaders of the few countries where most
solar panels are manufactured to make a deal that coordinates the
subsidies required in the various parts of the solar chain, and which is
required for the few years that some countries need to bring the price
of solar energy to parity with that of conventional energy.
An
apt conclusion is made by Leggett: “The world will have to embrace
common security on a bigger scale. Engaging in international competition
while clinging to the illusion that markets always work will never
solve our common problems of energy insecurity, poor air quality and
resource depletion, never mind development. We will keep on maiming
industries that can save us.”
This week, 26 countries will meet to organise retaliation against the EU over its move to tax airlines for their emissions. This may be the first salvo in dangerous trade wars fought over climate change.
A TRADE war is looming over the European Union’s move to impose charges on airlines on the basis of the greenhouse gases they emit during the planes’ entire flights into and out of European airports.
Many countries whose airlines are affected – including China, India, Malaysia, Nigeria, South Africa, Egypt, Brazil and the United States – consider this to be unfair or illegal or both.
Since their protests have not yielded results, officials of 26 countries are meeting in Moscow this week to discuss retaliatory action against the EU.
The EU’s move, which took effect on Jan 1, and the tit-for-tat actions by the offended countries, is the first full-blown international battle over whether countries can or should take unilateral trade measures on the ground of addressing climate change.
Developing countries in particular have been concerned over increasing signs that the developed countries are preparing to take protectionist measures to tax or block the entry of their goods and services on the ground that greenhouse gases above an acceptable level are emitted in producing the goods or undertaking the service.
Besides the airlines case, several other measures are being planned by the EU or by the United States that will affect the cost of developing countries’ exports.
In fact, trade measures linked to climate change may become the main new sources of protectionism.
The EU’s aviation emissions tax is thus an important test case, and this could explain the furious and coordinated response by the developing countries, which form the majority of the protesting 26 nations meeting in Moscow.
The countries are particularly angry that the EU is imposing a charge or tax on emissions from the entire flight of an airline, and not just on the portion of the flights that are in European airspace.
The EU action takes effect by including the aviation sector (and airlines of all countries) in the European Emissions Trading Scheme.
Beyond a certain level of free allowances, the airlines have to buy emission permits depending on the quantity emitted during the flights.
As the free allowances are reduced in future years, the cost to be paid will also jump, thus increasingly raising the price of passenger tickets and the cost of transporting goods, and affecting the profitability or viability of the airlines.
The China Air Transport Association has estimated that Chinese airlines would have to pay 800 million yuan (RM387mil) for 2012, the first year of the EU scheme, and that the cost will treble by 2020. The total cost to all airlines in 2012 is estimated at 505mil (RM2bil), at the carbon price of 5.84 (RM23.30) per tonne last week, according to Reuter Thomsom Carbon Point.
Last September, when the carbon price was 12 (RM48) per tonne, Carbon Point had estimated the cost to be 1.1bil (RM4.4bil) in 2012, rising to 10.4bil (RM41.6bil) in 2020.
While this may generate a lot of resources for Europe, airlines in developing countries will in turn have to pay a lot.
There are many reasons why the concerns of the affected countries are justified, as shown by Indian trade law expert R.V. Anuradha, in her paper on Unilateral Measures and Climate Change.
Since each country has sovereignty over the airspace above its territory (reaffirmed by the Chicago Convention), the EU tax based on flight portions that are not on European airspace infringes the principle of sovereignty.
The UN Climate Convention’s Kyoto Protocol states that Annex I parties (developed countries) shall pursue actions on emissions arising from aviation through the International Civil Aviation Organisation (ICAO).
Consistent with the principle of common but differentiated responsibilities, only Annex I countries are mandated to have legally binding targets. This UNFCCC principle is violated by the EU requirement affecting airlines from both developed and developing countries.
ICAO members have been discussing, but have yet to reach agreement on, actions to curb aviation emissions. Last October, 25 countries issued a paper in ICAO protesting against the EU measure.
While the United States has challenged the EU action in a European court, China has ordered its airlines not to comply with the EU scheme unless the government gives them permission.
In addition, retaliation measures such as imposing levies on European airlines and reviewing the access and landing rights agreements with European countries are being considered by the 26 countries.
What happens in this aviation case is significant because there are many other unilateral measures linked to climate change being lined up by developed countries.
These include the EU plan to impose charges on emissions from maritime bunker fuel, a US Congress bill that requires charges on energy-intensive imports from developing countries that do not have similar levels of emissions controls as the US, and several schemes involving labels and standards linked to emissions.
If these unilateral measures are implemented, then developing countries will really feel they are being victimised for a problem – climate change – that historically has been largely caused by the developed countries.
Moreover, this will lead to a growing crisis of both the climate change regime and the multilateral trade regime.
Trump tilts 'America First' toward 'America Alone' 
