By Herbert A Samuel

An extraordinary, amazing and unprecedented year came to a close a few weeks ago.  Who at the start of 2008 would have imagined that the coming twelve months would bring a crippling global economic meltdown, the election of a black man to the White House and crude oil prices that would run up to almost $150 then suddenly crash to $35? 

The first of these events – global economic crisis precipitated by the collapse of the US housing market – was predicted by only a few people, who were widely derided for their foresight.  The second event, incredible though it seemed at the time to conceive, was indeed imagined by many, who saw the blossoming of their greatest hopes and dreams for a new world; for what candidate Obama often referred to as the “realisation of our best selves”.

The third story – oil’s shocking rise and fall – was different: no one saw it coming.  Not the analysts, not the economics professors, not the pundits and not OPEC, whose members are now feeling the hangover of the collapse after the party.  But what should be clear by now is that these three events are interrelated and have enormous implications for the future of global economic, environmental and energy policy.

The good news about the first event – the economic crisis – is that despite the gloom, it has created a global environmental windfall, perhaps just at the right time.  A Reuters report of 19th December 2008 notes that “China's dramatic economic slowdown is paying an environmental dividend, slashing emissions levels from the world's biggest greenhouse gas emitter as its highest-carbon industries begin to contract.”  But the prospect of doom quickly re-asserts itself: as the report points out, “the question Beijing will soon face is how it will manage to sustain those curbs once growth is restored.”

This is the essence of the question for the world – and the world’s policymakers: how to achieve and sustain future growth without irretrievably damaging our planet in the process?  I suggest that the answer is: with the right leadership and a recognition of the un-economics of oil.  These factors can be examined in the context of the other two unprecedented events of the past year.

LEADERSHIP

The inauguration of Barack Obama as America’s 44th president means that the world finally has political leadership from America on energy and climate change; and this leadership is critical.  Without it, the most urgent public policy matter of our time – dealing with the interconnected issues of energy and the environment – will not be tackled at the required scale, scope and time and, if the established scientific consensus is correct, such failure will have disastrous consequences for the very future of our earth. 

The effect of Mr Obama’s leadership on this matter became evident even before he took office.  During his campaign, Mr Obama had pledged to spend $150 billion over the next decade on a new clean energy agenda for America, to create 5 million new, ‘green-collar’ jobs.  Now many governments see a green agenda as the solution to their economic woes, and because America is both the world’s second-largest greenhouse gas emitter and one of the countries hardest hit by recession, other capitals are closely observing – and emulating – America’s actions.  A January 9th report from ClimateWire outlines how Japan, the United Kingdom, Australia and South Korea are following suit, announcing plans to invest billions in renewable energy and energy efficiency to create a new generation of green jobs.  Their proposals call for “more than $200 billion in low-carbon investments and aim to save and create millions of jobs worldwide”.  Australia’s government is reported to have accelerated its projected spending schedule, promising a "solar revolution" and vowing to use its renewable energy fund in 1½ years rather than the six years initially planned.

Such developments are a relief to many who had feared that, because of the economic downturn, governments would retreat from their previous commitments to cut carbon emissions.  They confirm the realisation of the world’s leaders that, in the words of the UK’s prime minister, Gordon Brown, "the environment is part of the solution”.

Next: The un-economics of oil

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