Global Challenges of Climate Change, Vol.2

This chapter focuses on four root causes that could be the most important causes that are rarely addressed by governments, industries, and many environmental professionals who continue to accept the ideology that technological innovation will allow endless economic growth on a finite planet. The four root causes are: limits of human evolutionary strengths and our psychological biases; human population; anthropocentrism; and the myth that technological innovation allows endless growth in consumption of materials, energy, and land on a finite planet. There are other root causes, but unless we address these root causes, we are unlikely to make progress on addressing the global environmental crises we have created.  

There are not only global, but also location specific risks from global warming for particular countries. They come both in direct form, from changing temperatures and in indirect form, from changing economic conditions. The second is especially important for resource exporting countries. The goal of this paper is to briefly summarize those risks for the countries of the former Soviet Union (FSU), located in Northern Eurasia. Direct physical risks include changes in danger of droughts, floods and melting permafrost. Economic risks for countries specializing in oil and gas exports come from changing markets for fossil fuels under the policy of shifting to green energy.

The global problems of humanity at the present stage of development are considered. Climate change is characterized as the most important problem of our time. The acceleration of negative climate changes in the context of their possible forecasting is noted. Groups of climate risks for the world economy are identified: risks of global warming; risks of food and water security; risks of natural disasters; risks of social conflicts. It is concluded that the goal of the international community in the context of climate change should be to coordinate and synchronize actions aimed at neutralizing negative trends that undermine the stability of the global economy.

The Ramsey–Cass–Koopmans model (M-1) relies on the “neoclassical” dogma of declining marginal utility of consumer goods that can take place under non-realistic assumptions besides the dead abstraction of perfect foresight. This model consists of two ODEs—for private consumption and for capital intensity, both are related to labour input in efficiency units. A positive (strongly destabilizing) second-order feedback loop connects these variables. M-1 possesses a saddle stationary state. Linearized M-1 has a saddle path that is allegedly stable optimal solution gained through the Pontryagin maximum principle with an initial private consumption as a jump variable. An existence of such a non-resilient saddle path is practically excluded in M-1. This utter instability leads to typical outcomes outside a viable region: the first with complete destruction of fixed production assets, the second with usage of asymptotically 100% of net output for accumulation of fixed production assets. This unsound model should be not included in realistic models for avoiding wrong economic and climate projections as well as heavy policy risks. An alternative model R-1 with robust proportional and derivative control over private consumption with historically given initial conditions enables socially efficient extended reproduction.

This paper focuses on tracking a spatial shift in global capitalism that has taken place most dramatically in the last 30 years, and the ecological consequences of this shift. The paper demonstrates empirically that this shift has two key characteristics: one, a relative decline in economic power of the developed capitalist economies (mainly in the West), together with the concomitant rise of emerging economies in the East in the world capitalist economy; and two, the movement of the geographical centre of capitalist development away from economies with relatively small populations to economies with massive populations. Inequality persists globally between high-income developed/Western economies and countries in the East with relatively low per capita incomes, but the gap is narrowing swiftly. This narrowing gap is most evident in some of the key emerging capitalist economies in the BRICS region. The combination of rising average per capita income in the emerging/BRICS economies and their high populations has unprecedented ecological consequences in terms of consumption of natural resources and generation of waste. The limits placed on global ecological damage which were evident during the earlier phase of capitalist development, confined as it was to sparsely populated regions of the world, are no longer holding. A stage in global history has reached where any further development of capitalism could create conditions of barbaric ecological collapse. The paradigm shift from ecologically damaging capitalism to a new model of socialism compatible with nature (ecological socialism) has become a historic necessity. This new model of socialism stands in opposition to the old Soviet style of socialism which was environmentally as destructive as capitalism. An alternative capitalist paradigm (green capitalism) is not feasible given the inherent conflict between nature and the imperative to maximise profits. The paper concludes by outlining a few key aspects of the path of eco-socialist transition.

Research on the social justice aspects of climate change adaptation is in its infancy and focuses on organising contemporary societies to cope with emergencies rather than on a long-term vision that provides predictability and resilience in the face of climate challenges. Procedural and distributive aspects of social justice are an important part of scientific advice in this area of research. The chapter will integrate, in addition to social justice aspects, the examination of the nature-education-culture trinomial, in their causal, structural and functional interdependence, in order to identify and describe the basic relationships between the three entities that could lead us to a sustainable solution to the global challenge of climate change. Finally, the chapter draws a shortlist of macro-directions of action, based on the proposed trinomial, thus it ensures that we have the capacity to be prepared to respond to the impacts of climate change based on existing resources and capabilities.

This study evaluates the nexus between renewable and non-renewable energy, carbon dioxide emissions, labor force, gross capital formation, human capital, trade openness, crude oil prices, urban and rural access to electricity, on the economic growth. In empirical terms, we used aggregate data for the 2005–2018 period, in 22 Asian and 22 African economies, using Generalized Method of Moments (GMM) methodologies. The empirical evidence reveals that non-renewable energy has a positive and significant impact on Gross Domestic Product (GDP) per capita, for both African and Asian countries. However, renewable energy consumption presents a statistically significant and positive elasticity with economic growth for the Asian Group countries, pointing out a positive relationship between renewable energy consumption and economic growth. In addition, the growth hypothesis concerning the relationship between renewable and non-renewable energy is ratified for both the African and Asian countries. Interestingly, the elasticities reveal to be statistically significant but having negative coefficients associated, which signals that an increase in renewable energy consumption leads to a decrease in economic growth, suggesting that Asian countries may continue to use non-renewable energy sources, despite the undesirable negative environmental effects associated with the intensive use of fossil resources.

Climate change has become an essential item in the global development agenda. As a result, many countries have started to elaborate and adopt trade measures to reduce climate change risk. For example, on July 14, 2021, European Commission introduced a legislative proposal for a Carbon Border Adjustment Mechanism (CBAM). Under this mechanism, imports of certain products to the EU will be subject to a special fee based on the carbon intensity of the supplied products. CBAM will affect many EU’s partners, including members of the Eurasian Economic Union (EAEU). Estimates show that CBAM may affect up to 58% of EAEU’s exports to the EU, with Russia most affected. This chapter is devoted to analyzing the current CBAM proposal and analysis of its effects on the Russian economy. It is concluded that payments for Russian exports to the EU under CBAM are estimated to vary between 94,3 bln euro and 174,1 bln euro during 2026–2035, depending on CBAM parameters and CBAM pass-through rate to prices.

This study considers whether the ambient charge tax policy can effectively control non-point source pollution in a duopoly market. Price and production cost functions are linear, and goods are differentiated. The optimal decisions are determined in a two-stage process. At the second stage, the duopolistic firms determine their outputs, taking the ambient technologies and the tax rate as given. The first stage selects an optimal ambient charge tax rate and optimal ambient technologies. At the Nash equilibrium of the tax rate and the technologies, the government maximizes social welfare, and so do the firms their profits. It is analytically and numerically demonstrated that an increase in the ambient charge tax rate decreases the total emission level. It is shown that a larger market size increases the total production and the total emission. It is also shown that increasing the value of the marginal damage leads to a welfare decrease.

We witness an unprecedented move in different parts of the world and different countries toward establishing of the national green finance systems. Countries try to follow the examples of China and EU in this area. The core of the green finance system is the green taxonomy. More than 60 national taxonomies were adopted in different countries throughout the world. It does not help the investors, facing different national requirements. Now Armenia, Belorussia, Kazakhstan, Kyrgyzstan, and Russia, which form the Eurasian Union, understand the need for redirecting of the financial flows toward implementation of the sustainable projects. There is a growing understanding that common ground approach should be developed to facilitate transition to sustainable economy and trans-border investments. The article analyzes pros and contras of different options and presents a realistic approach for the development of such a common system.

Sustainable development in general, or climate protection in particular, has never been a systematic priority of Russian industrial policy. Unlike European countries, up to now the state policy measures for the transition to low-carbon economy in Russia have been of a recommendatory and voluntary nature. Nevertheless, they have created a legal and institutional framework for a consistent industrial policy taking into account the climate and environmental components, including carbon accounting. Despite a serious change in the agenda for the industrial policy of Russia in 2022, caused by additional sanctions, it is highly undesirable to lag behind in this area, since it is necessary both for our own technological development and for international cooperation. The proposed study examines, systematizes, and evaluates some of industrial policy measures in Russia which affect its low-carbon development.

The risks and challenges of climate change differ depending on individual countries’ industrial structure and development level. This chapter discusses how the global climate policy agenda can help reconcile climate mitigation and adaptation with industrial structural change in the developing world. Though advanced economies are already on the way toward decoupling growth from carbon emissions, this is not necessarily the case for middle- and low-income countries. Developing countries’ industrial structure is not only dependent on fossil fuel energy but also on carbon-intensive activities; for example, land-use sectors are responsible for a considerable share of global emissions arising from deforestation. We analyze carbon emission sources and industrial structure in several developing countries and revisit global climate policy instruments to set up a more comprehensive decarbonization effort in developing countries. We advocate for the targeted use of green fiscal policy, including new approaches to carbon pricing, environmental commodity taxes, conditional credit, and ecological fiscal transfers.