Arvea Marieni is Strategy and Innovation Advisor and Manager specialized in environmental cooperation between the EU and China. She currently collaborates with Brainscapital Srl e GcM Consulting Srl.
She is often invited to present global events on environmental technologies, energy transition, circular economy and new business models. She also joins ministerial-led delegations (such as the Prime Minister of Finland, 2017; or the visit to Beijing led by Federal Minister for the Environment Svenja Schulze, 2019). As a polyglot writer she regularly writes articles and engages with the international media. She has an in-depth knowledge of international climate, energy and environment, political cycle as well as industry policies, with a focus on EU-China cooperation.
She holds the role of Expert Evaluator for the European Commission on the tender called Horizon and other national institutions of the Member States (i.e. Finpiemonte).
1 – Why is the climate issue so important? What are the challenges to be faced on a global level? What are the objectives to be achieved?
The climate issue is important because it is an existential risk for human civilization.
I reply by quoting the statement made – but there are many similar ones – by the Vice-President of the European Commission Frans Timemrmans a few days ago. If we do not face the climate crisis now, and if we are not ready to make some sacrifices, today’s children and young people will face a future of wars over water and food. To meet the challenge the economic system must be transformed. The first thing to do is to set a high price for emissions. Today, for the first time, the carbon price in Europe has reached 50 euros per ton. There is still a lot to go up.
On climate change and the environmental crisis we are facing certain scientific data that have been confirmed by the facts, perhaps beyond the worst expectations forecasted in recent years. All this has been known for 30 years. Exactly from 1990, the year of the first meeting of the IPCC (Intergovernmental Panel on Climate Change). The acceleration of climate change and disasters are alarming governments around the world. In fact, after 2018, we are seeing a change of gear. The calls of high government representatives are now daily, most recently also the United States Special Envoy for the climate, John Kerry, asked to act urgently to face the greatest challenge humanity has ever faced.
Up to now, the political will to act has been lacking. The negotiations carried out for thirty years in the UN system of COP “Conference of Parties” ended in a stalemate or little more. 2020 seems to have produced a change of gear. For the first time in the history of climate and environment negotiations, the main economies of the planet, EU in the first line, have made unilateral and unconditional commitments to reduce emissions in the medium term by 2030, and reach climate neutrality by mid-century. These commitments are being translated into law these days. In practice, we have come out of what I call the “prisoner’s dilemma” of the negotiations. With the Green Deal, the EU is committed to reducing emissions by 55% compared to 1990, and to reach climate neutrality in 2050. China has announced zero-emissions target in 2060. The United States, with the new administration, aligns itself with the new “international consensus” on climate, and President Biden recently announced that he wants to decarbonise the country’s electricity system by 2035. Furthermore, he declared that he wants to reduce emissions by 50% (up to 52%) by 2030, but compared to 2005 levels. Beyond the fact that the “baseline” is different and therefore the various commitments are not immediately comparable, the global trend is clear. However, we are still on commitments and promises. The bulk of the work, for everyone, begins now.
The main difficulty is found in the fact that there are significant costs to completely restructure the energy and production matrix of industrial consumption, these costs must be divided between rich countries and poor countries, the latter, however, claim their right to development. A transformation of this magnitude means huge changes, for example, in the distribution of wealth, in the asset value and a loss of jobs. These are all aspects that need to be managed. An industrial revolution and a great social revolution.
The so-called “Paris Agreement”, adopted in 2015, came into force in 2016, and establishes a global framework for limiting global warming to below 2ºC compared to 1990. Today, the consensus is that it is necessary to limit the increase in temperatures to 1.5ºC (compared to 1990). Furthermore, the Agreement aims to strengthen the ability of countries to address the impacts of climate change and to support them in their efforts.
The IPCC calculated the amount of emissions that humanity can afford to produce to hit the 1.5 degree target. It was then 420 gigatonnes (Gt) of CO2. Annual CO2 emissions – from burning fossil fuels, industrial processes and land use – are estimated around 42 Gt per year, the equivalent of 1,332 tons per second. With these emissions at a constant level, the budget should be exhausted in less than seven years. And years have already passed.
The UNEP calculated that in order to respect the natural constraint dictated by the absorption capacity of our terrestrial systems (atmosphere and carbon sinks such as oceans and forests) and to achieve the objective of 1.5 degrees, every year, starting from today, emissions should fall by 7.6% until 2030. To give you an idea, this is more or less the reduction we experienced during 2020 with Covid.
Human life and the sustainability of societies are linked to a historical period in which temperature variations were kept within a certain band (+ 1 / – 1 degrees). This is the Holocene phase. During this era, the climate and the conditions of the planet enabled the development of agriculture. Humanity has been able to colonize a large part of the planet, enjoying the wealth of natural resources. For example, environmental and climatic conditions have allowed the oceans to be rich of fishes. But today we are witnessing phenomena of extinction of entire species. The bluefin tuna population, for instance, fell by 85% in the 1990s due to overfishing. The point is that neither the planet nor its resources are infinite. The sad truth is that by looting them, we destroy the foundations of our civilization and our own life.
When temperature variations begin to alter, the planetary subsystems are impacted as well. Then, there are other agents that we introduce into the ecosystem. Chemical elements, materials, etc…, all of these have harmful effects on natural systems and biodiversity. Think about the chlorofluorocarbons that caused the ozone hole.
Therefore, we must relearn to live and operate within natural limits, that allow the regeneration and proper functioning of the earth system, these limits are called “planetary boundaries”. The most infamous boundary is given by the concentration of carbon in the atmosphere. The speed of change increases dangerously. Today we are at 420.14 ppm. Last year, on May 5, we were at 415.67.
2 – This brings us to the second question. Achieving the goals of the Paris Agreement would cost around 68,000 billion dollars (source: International Energy Agency), only with regard to decarbonisation, then, in parallel, there should be large investments in the adaptation of the industrial chains that exploit the petrochemical industry, then investments in remediation, reforestation, etc… Where is all this money? Does this money exist? Let’s assume 100.000 billion $ to invest in climate change, but then there is everything else, such as health care and education. Without forgetting that world wealth is estimated at 317.000 billion $ (source: Credit Suisse Research).
I’ll answer you in the words of President Biden’s Special Envoy for Climate, Senator John Kerry. First, the cost of inaction is much greater than what we would have to invest to change the structure of the world energy and production matrix. Also, it’s about investments, not costs. Kerry calls this the greatest challenge ever faced by humans, but also the greatest economic opportunity in our history. Yesterday, the President of the European Central Bank, Christine Lagarde, recalled how at the beginning of the American history, they saw the economic and financial integration of the United States, the construction of infrastructures (in particular railways), and this made it possible to lay the foundations for the American financial system. Imagine what we can do today that we have to rebuild everything.
In our global economy we have not given a price, until now, to the so-called externalities, which are the negative impact that is created not only on the environment, but also on human health (for example the polluting particles in the air that damage the lungs). The rarity and scarcity of certain resources (such as water, air, fundamental natural resources, etc.) are not priced, these resources are not renewable, and also essential for our survival. So, rather than reasoning about cost, I would think about the value attributed to resources by our economic model. This is the real revolution. Change the levers of the economic system. The value of all things.
Our economic model has always been based on the idea of infinity of resources, unfortunately the reality of the facts is different. But from 2012 this paradigm has started to change. A fundamental document was presented at the World Economic Forum in Davos entitled: “Towards the Circular Economy: Accelerating the scale-up across global supply chains”, prepared by the Ellen MacArthur Foundation and McKinsey & Company. This analysis starts from the real observation of the fact that we are about to move towards a finiteness of resources, in some cases we already see conflicts, as with the metals used by the electronics industry. Therefore, the document argues that the relationship between the amount of resources used for the production of a unit of product must be broken down. Above all that it is necessary to make sure that products last longer (non-obsolescence, the European Union is moving in this direction), reducing the waste, but also avoiding an economic loss, since within the discarded product, resources and work are conserved. The paradigm shift I was talking about is characterized by the fact that, for the first time, the economy rethinks itself and tries to imagine ways to “incorporate” ecology. This must be the result of a rational process, expanding the number of variables taken into consideration, for example the real value of natural resources. According to the report I just mentioned, the circular economy can lead to an additional 3% growth in some “segments” of the European economy. It must also be said that consumption patterns must be changed, disconnecting us from the waste economy. The Chinese have just passed a law banning food waste under penalty of severe fines.
The Circular Economy is not only about the end of life of the product (recycling, recovery and reuse), but it is a complete redesign of the production structure, of the value chains and of the industrial processes that involve all the products, understanding the way in which these are distributed and used.
These ideas are already beginning to become prevailing industrial structures and models, as in Northern Denmark, where there is a virtuous case of industrial symbiosis. This is Kalunborg, which is home to some large European companies, which have developed an almost “closed” circuit for some material flows, within which the waste of one industry is the resource or raw material of the other.
The Chinese government has carefully studied the aforementioned model in order to reason on its own Law on the Circular Economy (China Circular Economy Promotion Law). In fact, China is among the first countries to have approved a law on the circular economy (2008). Moreover, it is also an Italian success, given that in those years our Ministry of the Environment had co-financed – together with the World Bank – an initiative that also dealt with the Circular Economy.
3 – Speaking of new models: what structural changes does our economy face? There is talk of necessary social change, but in what form? What is the model?
I would like to start with some data: the European Union emits 9% of world emissions, China 27%, the United States, according to current data, 11%, India 7% (14% by 2030 ). This is in absolute terms, but when you read the carbon intensity data, or the amount of emissions per capita, you discover an inverse trend: US emissions are double that of China. The latter data call the energy efficiency index of an economic structure in a much more precise and clear way, which is also an index of economic development. China, while economically growing and taking a huge population out of the poverty line, has tried to invest in energy efficiency, increasing its investments in renewables (in 2018 double the investments made by the United States).
Europe has lower per capita emissions than China, being an international benchmark for “carbon” efficiency. This does not mean that Europe has had to give up economic development, making the industry less competitive, quite the contrary. Pushing legislation that takes into account emissions, the environment and standards, has allowed Europe to be a world leader in the adoption of the best avaiable techniques, creating conditions of excellence in many industrial sectors.
I would like to give you a trivial example, that allows you to better understand the theme of the models you were referring to: globalization has accustomed the consumer to buy t-shirts for € 5, this price is possible if the t-shirt is produced in Bangladesh, without managing dirty water, destroying local resources, without environmental standards that regulate emissions, disposal of production waste, dyes, etc… If we do not put a price on all this, we will continue to buy the t-shirt for € 5, and in Bangladesh it will not change the situation. On the other hand, if to import the t-shirt into the European market, and therefore be sold to the consumer, the product cost what it should cost considering the environmental damage it has produced, then the consumer would not buy it and probably it would not even be able to be imported.
The model, in this case, must be a top-down system, through adequate regulations, prices and taxation.
Taxation is a key issue. We need to be able to create a system that does not lead to distortions of competitiveness for our industries, and at the same time discourage and prevent the entry into the market of certain products that are harmful to the environment.
Instead of talking about abstract models, we need to define measures that determines a change. In the Western world we cannot give indications on how to behave (in China it is partially possible), but we must address behavior to ensure that there are advantages or penalties with respect to the actions of the consumer or the manufacturer.
I would like to add a fundamental issue with respect to models; another key factor is the change in our energy model. This slogan must resonate: electrification, electrification, electrification!
The infrastructure is the electricity grid, but what is the problem? Renewables have grown, but why can’t we fully assimilate them? First of all, because renewable energies are variable, that is to say that they are discontinuous (the wind does not always blow, solar energy can only be used during the day and not at night, etc…), but above all they cannot be produced everywhere. For example, in Germany the most important production of wind energy is located in the North Sea, but the industrial base is in the South or in the West, where that energy should be consumed. The result is a waste of clean electricity because there are no suitable networks to transport the energy where it is needed.
The networks are sized for another energy model, generally centralized, where the large nuclear power plant, coal or gas, produces a large mass of energy that is distributed around it. Instead, natural resources, since they are natural, depend on specific factors such as the level of insolation or the wind, so the place where the resource is present does not necessarily coincide with the place where the energy is consumed. The transport of energy produced in this way is hindered by the fact that we inherited a centralized system, therefore the electricity grids are fragmented, so they do not allow optimal management. This decentralized and multifocal approach needs a different technology, for example, ultra-critical networks. These networks are capable of transporting large quantities of electricity for thousands of kilometers (from this point of view the Chinese are at the forefront). These networks are also a different way of managing systems, with the integration and interdependence of producers and consumers, for instance, and with business models that are completely different from the traditional ones. It is clear that the resistance is enormous. But also think about the opportunities, the revolution is on the march.
Also due to the decline in demand during Covid, for the first time, in 2020 renewables generated more electricity in Europe (39%) than fossil fuels (36%). In the last three months of the year, solar production in Europe increased by 12%, compared to the previous year, and reached 18 TWh. Almost all of the increase is due to Spain alone. It seems to me that Italy, even in its PNRR (National Recovery and Resilience Plan), is much less determined in pursuing European objectives.
Translated into English by Marco Grattarola.
