CAPE TOWN – The urgency of energy transition continues to be underestimated, “resulting in short-sighted decisions such as expanding investment in oil and gas exploration and coal-fired power generation”.
This was according to the UN’s World Economic Situation and Prospects 2020 report, released yesterday, ahead of the World Economic Forum annual meeting next week.
UN chief economist and assistant secretary-general for economic development, Elliott Harris, said: “This not only leaves many investors and governments exposed to sudden losses, but also poses substantial setbacks to environmental targets. Any delay in decisive action towards energy transition could double the eventual costs.
“The transition to a cleaner energy mix will bring not only environmental and health benefits, but economic opportunities,” he said.
Countering an argument frequently cited by the South African government: that its developmental status requires it invest in “cheaper” coal power, Harris said if per capita emissions in developing countries were to rise towards those in developed economies, global carbon emissions would rise more than 250percent – compared to the global goal of reaching net zero emissions by 2050.
To combat climate change, the world’s growing energy needs should be met with renewable or low-carbon energy sources, requiring “massive adjustments” in the sector, which currently accounts for three-quarters of global greenhouse gas emissions, the report said.
The UN report painted a bleak picture of growth in Africa, which had experienced a decade of near stagnation in per capita gross domestic product.
In one-third of commodity-dependent developing countries – home to 870million people – average real incomes were lower today than they were in 2014, including in South Africa, Angola, Argentina, Brazil, Saudi Arabia and Nigeria. The UN estimated that to eradicate poverty in much of Africa, annual per capita growth of more than 8percent would be needed, compared to the just 0.5percent average rate over the past decade.
Pervasive inequalities and the deepening climate crisis were fuelling growing discontent in many parts of the world, the report noted.
UN secretary-general António Guterres said: “These risks could inflict severe and long-lasting damage on development prospects. They also threaten to encourage a further rise in inward-looking policies, at a point when global co-operation is paramount.”
The UN said global growth in 2020 would hinge on reducing trade disputes and uncertainty, but 1 in 5 countries would nevertheless see per capita incomes stagnate or decline this year.
This after the global economy suffered its lowest growth in a decade in 2019, of only 2.3percent. The UN said the world economy might increase up to 2.5 percent in 2020, if risks were kept at bay.
A flare-up of trade tensions, financial turmoil, or an escalation of geopolitical tensions could derail a recovery, and in a downside scenario, global growth might slow to just 1.8percent this year, the report said.
A prolonged weakness in global economic activity would cause significant setbacks for sustainable development, including goals to eradicate poverty and create decent jobs.
Rising tariffs and months of shifting between the escalation and de-escalation of global trade tensions have fuelled policy uncertainty, significantly curtailed investment, and pushed global trade growth down to 0.3percent in 2019 – its lowest level in a decade, the report noted.