Global Poverty and Global Warming

often positions these two aims as mutually exclusive. Can't solve poverty without fossil fuels, but the climate movement also does this, with some folks agreeing with oil companies that the only way to address global poverty is to continue developing fossil fuels in the global South for the foreseeable future, and others arguing that there can be no further fossil fuel expansion, but failing to offer any real solutions to poverty. As

with all complicated issues, the answer is equally complex. It requires nuance and a whole lot of context, and it felt important to bring that in at this point in our story. So this week I asked doctor Narasimha Rau from Yale University to join me. Doctor raw studies energy systems and their relationship to human well being and human development, and you lead something called the Decent Living Energy Project.

That project focuses entirely on this big question, how do we solve poverty and climate change at the same time. Dr Rao is going to walk us through it right after this quick break.

extreme heat. So that is well understood. But what is perhaps less well understood is the impact of poverty eradication in terms of resource needs on emissions and climate change. That is, bringing people out of poverty all around the world going to have such a significant rise in emissions that it really complicates our ability to mitigate the climate problem. And that's the question that my research has tried to answer.

It has been of interest for a long time, but it has not really been tackled in a manner that allows you to really answer the question. So let me explain why. The first question is what is poverty in

the first place. Now, our understanding of poverty, in largely in development policy internationally, is based on income thresholds per day that people earn around the world, and in global international policy we use the World banks originally dollars per day that increase with inflation to dollar ninety per day. But it's seen, first of all as an acute poverty threshold, and there are many issues with this, both in terms of its absolute value as well as the notion of

an income threshold for poverty. First of all, it's hard to translate such an absolute income threshold to the actual lives of people. What does it mean in terms of the services they receive and the actual well being For many reasons. Price differences for people in poverty are large extent of services that are received non monetarily through social transfers or public services. It's very difficult to characterize people's

living standards with this threshold. Second, of all, different thresholds are used in countries, so national poverty lines use different threas for different reasons. So some consider absolute conditions of people, usually food expenditure and some additional aspects, but also relational poverty. So richer countries have higher income poverty lines, and so it's not just translating to an absolute level of living

standards so well being. So for this reason, the first question in this project was really fundamental, How should we define the material basis of poverty In the first place, we don't have anything that we can hang our hat on it directly. And I say material in particular because that's what we're concerned about with regards to environmental impact.

Of course, well being has psychological dimensions, social dimensions, and what we want this project wanted to do was to translate those to material requirements so that it would then allow us to estimate energy and material needs and translate that to climate impacts. So basically, decent living standards are the minimum inviolable material requirements that we consider necessary for people to pursue a good life, no matter what else

they may want in their lives. So can we define that minimum threshold, and then decent living energy is then the energy requirements to provide everybody with these basic living standards.

a completely separate matter. We may only speak about the energy demand required to eradicate poverty now, in terms of what types of energy we use to deliver these services is a matter of fuel endowments that country have and the costs of technologies and other types of energy sources, and then that translates to a matter of global climate justice. So I think there's a lot of substance and a lot of validity to saying that poor countries right now

need fossil fuels to eradicate poverty. It's important to unpack that and understand that what they really need our energy services.

But in the current global context, where clean energy is not affordable at a large scale in certain countries and there is an immediate urgency to build infrastructure and provide these services to people, it is only expected that policy makers in the global South will build infrastructure using what is competitive in those countries right now, and that tends to be fossil fuels currently gas, and so that's what

we're seeing. Another element to this is countries, of course follow their own development priorities first, and countries that have resources, fossil resources they want to extract them for microeconomic reasons

for raising revenues for economic development broadly. Now, that is a slightly separate issue because those revenues that they earn, it's questionable to what extent those are going to eradicate poverty, but it certainly may be an important revenue source for these countries to invest in those resources unless alternatives are made available to them.

And there's not really anything immediately presenting itself as an alternative, either in terms of financing or funding for alternative energy

or even the technology scale of alternative energy resources. How are countries thinking about this and is there a sense that the kind of short term choices are being made with any kind of thinking about the long term climate impacts, or is it sort of everyone is just making the decision that's best for the next ten years and kind of leaving it to the next batch of people to figure out the rest.

transformation of economies. So, given that it will require significant capital investments on the order of one hundreds of billions of dollars globally, trillions of dollars that clearly these countries do not have and are not made available today. Now in this portfolio of technologies, some elements of them are

getting increasingly competitive cost competitive with existing technologies. So the decarbonization of the electricity sector using solar and wind technologies up to a point is become cost competitive with coal and to some extent with gas as well in certain circumstances. However, the complete transformation and decarbonization of the electricity system will

involve significantly more renewables. The retirement of existing capacity in fossil fuel plants, and significant amounts of storage capacity to balance the intermittency of the renewables, and a lot of technologies and how you run the grid to manage this new kind of portfolio of resources. Now that deeper level of reliance on renewables, even just for electricity production is not cost competitive today, and then there are a whole bunch of technologies that you need for industry as well.

If you think about fertilizer for food production, if you think about cement and steel production, and industrial heat production which requires hydrogen, these are completely not even commercialized in other countries, let alone in poor countries. So the need for international cooperation for technology transfer and some sort of consideration of fair efforts is essential for deeper transformations in

these per economies. Having said that, there is some potential for them to scale up renewables beyond what they're currently doing potentially, but still there's an upfront capital requirement. So let me speak about finance for a second. If you look at private finance today, the cost of capitals are exactly inversely related to the average income of countries, that is, the poorest countries in subsidn Africa have the highest costs of capital seen by a private finance because they see

high risk in investing in these economies. But this is a problem also of how risk is assessed and measured. So, for example, we think about credit risk. People need to have debt to get new debt, and that's circular and maybe inappropriate for people who have never been part of the former economy. But they may yet have a record, a perfect record of paying bills to the extent they

receive existing services. So the existing market for finance on its own is going to be even more challenging because of the fact that the poorest countries have the highest demanding cost of capital. So there's going to have to be some kind of government intervention to underwrite private finance if at all, or some sort of broadest scheme for government cooperation. So that's with regards to the transformation. Now are developing countries thinking only short term not thinking long term?

For the most part, we have to understand that poor countries have development priorities that are long standing. And over the last few decades, generally countries started out by saying that the climate is a northern problem. It's a problem created by the West and has to be dealt with

by them. But over time, for various reasons, it's been understood that all countries have to be part of the energy transition, and also that there are several opportunities for efficiently growing in ways that will be beneficial to even low income countries, for example by reducing air pollution and other health benefits of transition to clean energy. So there has been a push towards trying to integrate and mainstream

climate conditions and climate priorities into development priorities. But it's really important to understand that we have to embed climate considerations within the existing set of priorities developing countries have, rather than to think about it as let's see how we can introduce climate policy and think about other benefits

for development. So that mainstreaming of climate into development policy, I think is happening increasingly, and so yes, poor countries are mostly thinking about near term priorities, but there has been significant progress and at least formally thinking about climate explicitly including them in plans for the future, but very often conditional on support from the international community.

lock in happening in poorer countries. But there's also the risk that investeeing signs of this already, that multilateral institution development banks start to stop funding fossil based projects as part of their climate first priorities in poor countries before

you have strong decarbonization in rich countries. So actually the opposite effect where they are pushing for renewables but simply by not providing lending for fossil resources, and at the same time, renewable energy is not very affordable either, So that actually puts the risk of investing in more expensive clean energy technologies in poor countries well before they are cost effective and affordable, and well before they have been

deep cuts given in Western economies. So I'm as concerned about that second scenario as I'm concerned about the first, where you just have a fragmentation where poor countries continue to invest in fossils and we just don't meet our

broader climate targets. There's a serious case of justice playing out over here where poor countries don't get access to the technologies they need to develop, and not only are we not solving the climate problem, but we're making their existing development problems harder by making all forms of energy expensive because we are proscribing the use of fossils without making available cheap renewable energy technologies.

well as backed by empirical support. That is, we've seen household surveys around the world that show people want to have certain things once they reach a certain level of income, things like access to the internet, mobile phones, access to televisions, refrigerators,

durable housing, and things like that. So what was lacking in the analytical space was the ability to project or to understand the energy requirements stemming from these particular goods and services, because we buy and large thing about energy demand as a function of GDP growth and maybe decomposed into industry versus transport versus buildings, but not really being able to translate them to people's own enjoyment of services

and their well being. So this project is actually creating this link between household consumption of goods and services which provide us with well being or at least our basis for it and the broader energy and environmental environmental impact of that consumption. So what will it cost in energy terms for meeting the transportation needs of people, the basic mobility requirements when they move away from cycles and animal

power to motorized transport. What will it take to get fifty million people households off of slums and into more durable housing that protects them from the elements, or will it take to get people up to the level of nutrition that are consistent with the standards of the Food and Agricultural Organization the FAO and with country regulations around the world. So we have assessed this and found out

what it would take in different countries. So what's interesting is that we learn that the most important elements of consumption anywhere in any country that have the strongest impact on climate change in terms of their energy intensity are housing, mobility,

getting around with motorized transport, and diets. These are three of the biggest elements and one of the reasons why they are so important is because, in contrast to say, water, sanitation, health, and education, that are all services that are provided through shared capital, shared resources networks, of infrastructure that are commonly used by large populations, cars and houses and food is private consumption and that ends up being a lot more

energy per person to satisfy well being. So the insights for poor countries, what does a decent living energy basket look like. Equitable development that is geared towards providing these fundamental services like water and sanitation, health and education are cheapest in energy terms and provide the most important elements

of well being. In mobility and housing, if we were to provide people options for public transit rather than just supporting a card dependent economy in emerging cities in the global South, if we were to build public housing with local materials and efficient construction practices rather than focusing on gated communities for high income households, we would satisfy equity in terms of focusing on poor poor housing policy, and we would reduce the footprint, the carbon footprint of housing

developments in general. So those are the key synergies we're seeing in poor countries. Now, some elements of this are the same even in rich countries. Some of the key differences are that for the same living standard, you do tend to require more energy in richer countries because they

tend to be colder. So northern European and northern American countries need more energy to provide the same thermal comfort at home to heat them than the energy you need in subtropical and tropical climates to cool homes to the

same level of comfort. That's one important difference. Another difference is we have some path dependence, you know, in our economic structures, and ideally we would have more and more people moving to public transit, which is much more efficient, much less of an impact on climate and on the environment in general. But countries like the US or Brazil also or Turkey for example, they all are car dependent.

Over ninety percent of travel demand is met with cass or road transport, so you assuming that they can shift over to public transit completely is not very realistic. So in our analysis, when we kind of create realistic assumptions for the shift to public transport, you do find that the same mobility requirements, cost warn energy terms in the US are in Brazil compared to say India of Japan.

So those are some of the differences. There are some colleagues of mine who are also interested in seeing these decent living standards with some adjustments in terms of the thresholds as also a sufficiency standard. That is, if we just increase the quantity of the size of housing, the amount of travel, the amount of food and water we consume for different parts of the world that allow a slightly higher quality of life, we can still use this

threshold to think about even sufficiency. As you increase consumption levels beyond this minimum point at one time, at what point when you start to see diminishing returns to well being as we consume more and more. We know that it has significant impacts on other people, but can we see diminishing returns to our own well being? And we don't have sufficient evidence to say that. We only have circumstantial evidence related to income that people's self assessed to

well being in terms of life satisfaction. It keeps increasing with income, but not at the same rate as at lower levels of income. There's diminishing returns at a broad level.

But we need to do a lot more research to understand how different consumption patterns contribute to well being in affluent societies, and how we can find lifestyles and patterns in the West that are environmentally benign because a lot of these lifestyles are being aped in poor countries, and we want to we want to generate evidence for these lifestyles that are less consumptive and less impact from the environment,

but still give people high well being. And that's the direction that I'm moving now with this research.

people's well being. A classic example being moderating meat consumption, particularly red meat, and the impact on lower cardiovascular disease and significant reduction in environmental impacts. So there are differences, But at the same time, I am seeing some discussion in the media. I've seen in the New York Times some articles that do talk about sustainable consumption that talk

about waste. I think waste is well understood in the US, and that is a significant component of demand side discipline, if you will, in consumption. You know, forty percent of food that's produced is wasted in the US and twenty five percent globally. Also, the circular economy is much more in the public realm understanding the short product lives and the effect that has on waste, and that indirectly, of course, requires more energy and therefore has more of an impact

on climate change. But I would certainly say that there is much more receptivity to these ideas in Europe. There also are more examples of cities where you're seeing actual trends of people driving less. So, for example, we've seen a trend in Austria that younger people, younger generations, a lower share of them are applying for driving licenses compared

to before, which is interesting. You also see in Northern European cities a lot more people biking and walking as a form of commuting, so we actually see as much as there's a lot of driving, we just see an increase in that amount of commuting by foot and by bike.

So there's good examples of those in the US. It's much harder to find such examples because the cities are not set up for that kind of infrastructure, So they would need to be a much more transformative change here in cities and in living to really encourage major amounts of public transport. But having said that, I would say that the electrification of mobility has the potential to avoid

the construction of massive public transit systems. We could use emobility right, electric cars and electric scooters and vehicles to create new forms of shared transit provisions, and that has not been tapped into enough, and that is more realistic rather than building metros everywhere in the US. I do

think we need to take advantage of shared mobility currently. Unfortunately, we are actually increasing passenger demand with Uber and such forms of business, but we need to transition those to uber pool from Uber to pool right, and try and increase the use of shared scooters and car services that are as they're electrifying rather than just providing subsidies for SUVs that are hybrid and have some electricity use, because that's not that's not going to move the needle enough.

and getting permits for the land. And that slowdown is equally critical in terms of bottlenecks, because time is a pe urgency and the total even the total amount that we have to grow the electricity system is an issue. The more we need to invest, the slower we're going to reach our targets.

would be essential. More support for research into electrification of the entire transport and housing sector. So in the case of housing, we have not put enough money into electrifying homes and considering homes holistically in terms of upgrading them. For that low income communities get services that they haven't gotten yet. For example, a lot of homes don't heat and cool their homes as much as they want to because they kind of afford to their homes are of

poor quality. So there's a chance here to have an equitable kind of an upgrade to have the housing sector, which is very much part of the priorities of the government in terms of the Justice forty initiative, in which they want to direct the benefits of federal investments to disadvantaged communities, but these need to be translated into policies. I think significant investments into housing retrofits is going to be critical in the US, and they're not doing in

that realm at all. An issue with regards to the size of homes as well. New homes in the US are significantly larger than new homes in some of the richest countries in Europe, and that's something that is not something one can regulate. It's anaphema to think about reducing consumption. But if there's some way to creatively progressively tax houses, raise revenues to retrofit them to make them much more efficient, that would be some kind of a way to tackle

that issue. The food sector is untouched in this country. I think we need to have incentives policy incentives for healthier diets that are more environmentally friendly, and I would say these same sectors should be the focus in other countries as well, you know, housing, transport, and food. These are the most important sectors within which we need to make transformative change we will have the biggest impact on well being simultaneously with environmental impact.

far enough. So the direction that I'm focusing on bringing consumption directly into the center of our analysis, from which we trace the decarbonization of the rest of the economy allows us to look at well being more directly. And I do have a paper on this where I outline this future research agenda and nature sustainability that I think

is one way to think about moving forward. I do think there's increased research on how people assess their own lives in terms of life satisfaction, but we need more research to link at to people's consumption patterns and lifestyles. It's also a direction that I'd like to go that I'm working on.

are driving those calls of high well being. It could be that it could be dimensions that are not really the ones in which we're spending all our money, you know. It could be areas that are extremely benign environmentally, in which case we're spending lot of money doing things that don't matter so much to us and we don't know it ourselves. We have if we see evidence of it it may influence us.

other sub social factors as well. So that another area where we can think, are we really furthering our own social wellbeing in this kind of expensive isolationist form of infrastructure, which is also costing us in terms of climate.