Montenegro

Humble contribution to the climate-change jargon:
‘Environomics’- economic development fueled by clean energy and environmental protection

Podgorica, 29 July 2009

Last month, for the first time this year, the price of oil climbed above $70 a barrel.  The optimists might misread this as a sign of a sustained global economic recovery and revitalization of the demand.  The reality is somewhat different- while the financial sector is showing meager signs of life as a result of the large bail-out governmental packages, the gradual increase in price of oil reflects that the days of ‘easy oil’ are behind us and it may not be too long that we near the last year’s peak of $147 a barrel.  This is in spite the recent British Petrol assessment that, assuming the oil production remains at last year’s levels, global supplies will last another 42 years, even if no more oil reserves are found.  The availability of large reserves does not, in spite of advancing technology, imply cheap oil, especially if we consider that the reserves are located at difficult to get areas in the earth’s core.  As a result, airline industry is suffering a combined loss this year of $9 billion pushing some to adopt unconventional cost-cutting measures such as KLM, the Dutch carrier, request that pilots volunteer for activities such as bag handling and hospitality.  Others are taking notes, briskly aiming to reform, regroup, change and adjust to the changing circumstance and circumstance have only began to change.
 
So what is actually happening?  Thomas Friedman argues that the world is becoming a hotter and a more crowded place to live.  United Nations Population Fund found that the world population will increase by 2.5 billion by 2050, which will largely be absorbed within the developing world whose total population will increase from 5.4 billion in 2007 to 7.9 billion by 2050.  On the other hand, the global middle class is growing- in the 1990s alone in India and China over 200 million people were lifted out of poverty according to the IMF.  As they move up the economic ladder, people buy a new car, house, an air conditioner, a cell phone, a computer, an iPod, a microwave- increase in consumerism corresponds with an increase in economic statute creating an increase in demand that is depleting natural resource- energy, water, land- and emitting GHGs at an unprecedented scale in human history.  Translated in a simple example- if 1 billion people wish to have one light bulb turned on for four hours per day, the world will need around 20 new 10,000 MW coal-burning power plants to satisfy this simple demand.  The 1 billion light bulbs themselves would weight 20,000 metric tons, which is equal to some 15,000 Toyota Priuses.*  

The world has yet to commit its collective resources to achieve the sustained economic growth that will continue to see the increase of middle classes and consequent spread of individual freedoms and liberties while not polluting the air and water, and depleting natural resources to the point of extinction.  Unless there is a revolutionary change in the way we power the global development that is only likely to increase (in spite phases such as the economic crisis we are experiencing today that in itself is a warning to reconsider our choices in energy) the world has not even began to see the degree and complexity of problems it will face that will only compound and intensify.   We need a new economic philosophy- environomics- that is based on resource efficiency, rational usage of energy and shift to more renewable sources, increased reliance on national production of goods and services thus reducing both import-related carbon footprint/emissions and costs, and economic development based on protection of natural resources such as regional and national parks.

Governments globally running up the biggest bill in the history in attempting to pump life back into the financial sector, improve the consumer confidence, induce consumption and revive the shocked economy.  The distribution of stimulus packages is telling vis-à-vis which sectors are expectant to yield the highest returns in terms of job generation and income creation.  South Korea has allocated $30.7 billion for clean energy production, recycling and other eco-friendly spending, or over 70% of its total anti-crisis stimulus.  It is followed by China, whose northern drought-prone region is likely to take a big hit from climate change, with over $200 billion or 35% of its package aimed at energy and water efficiency and clean energy production.  Following are France with $7,1 or 25%, Germany $13.8 o 15%, and USA with $94. 1 or some 14% of the total fiscal stimulus aimed at supporting environomics.  This data clearly reflects that the cleaner energy production is not only a necessary step in reducing the dependence on crude oil and, if not reversing, then merely halting the changing climate, but as important, it is a vehicle for employment growth and economic stimulus.

The question for us, citizens of a tiny European country of 630,000 people, is then how can we be a part of the solution?  While it is difficult to imagine that a country of 630,000 people be at a technological and revolutionary forefront of the global movement toward environomics, we could be the Ghandi’s ‘change we see in the world’ in our own back yard.  UNDP assists the Government of Montenegro in the growth of green jobs in the north (development of kayaking, hiking and biking; support to production of signature food products in the north as both income generation for the farmers and tourism service; development of Mountain Rescue Service and Leave No Trace certification programs for the soft adventure fields; ).  Jointly, UNDP and the Government brokered the first public-private partnership in energy efficiency with the Hypo Alpe Adria Group and the ProMonte that has had a domino effect in this area since, and currently work on both removing business barriers to and creating a set of criteria that will filter out the most experienced investors interested in the development of small hydro power plant sector.  These initiatives contribute to exploring the alternative source of energy in order to power our economy, support creation of jobs through national production of traditional signature products and services in the most underdeveloped yet the country’s richest region in terms of natural resources (the north), and create space for income generation that is based exclusively on uniqueness and protection of environment in Montenegro.   As important, through the UNDP led regional program in remediation of industrial pollution and hot spots as significant barriers to health and business, Montenegro is recognized as a regional leader in sustainable development.

Yet, there is much to be done.  On average, 1 in 2 households in Montenegro has difficulties making it from one month to the next, while almost 4 out of 10 Montenegrins are economically vulnerable or flat out poor, living on €162 a month in a country that has as many sunshine hours a year for solar energy as do Rome and Barcelona, European leaders, and that has hydro-potential that can be converted through mini and small plants with least negative impact on environment into up to 20% of our national production.  While waiting on large investors to pour their finances into Montenegro, we could offer incentives to individual households to manufacture photovoltaic panels, to re-insulate their homes and use energy efficient heating and cooling systems; we could mandate the hotels on our coast to use solar energy to heat water; we could reward preservation of forests that will attract the high-paying tourists and absorb CO2, uphold and maintain a functioning environment for organic and food production; we could recognize the informal waste collectors as entrepreneurs who will jump start the recycling sector.  In short, we could support national production through sustained support to the growth of environomics- the core of UNDP’s mandate that facilitates economic growth based on resource efficiency, environmental protection, and sustainable development.  We need to level the playing field between large industries and small businesses.  So far, the governmental intervention into economy produced large stimulus packages in the two economic sectors deemed essential for the Montenegrin economy- banking and the metallurgy sector.  Creating the space and providing the stimulus to small and family owned green businesses, if best international examples are anything to go by, is likely to jolt to life enterprises who will return the favor through job creation and income generation, helping the country weather the current economic storm, and provide a sustainable income and employment to our fellow citizens. 

Globally, the advances Montenegro makes in reversing the changing climate through supporting the army of small businesses who will thrive on the basis of the natural and cultural heritage with which the country has been blessed, are likely to be negligible, a mere drop in a sea.  Nonetheless nationally this could be a turning corner in our economic history, a creative destruction process that will leave the big industrial losers on the side lines and highlight the pioneer entrepreneurs.  This may be one drop in a global sea and it might be ‘a road less travelled,’** but it would be our very own, made in Montenegro and it will make all the difference. 

 
Dr Milica Begović Radojević
Economy and Environment Cluster Leader
UNDP Montenegro

 

 

 

* Thomas Friedman, ‘Hot, Flat, and Crowded: Why We Need a Green Revolution, and How it Can Renew America,’ September 2008, Farrar, Straus, and Giroux Publishing

** Robert Frost, ‘The Road Not Taken’