Climate change is a universal problem

Professor Jacqueline McGlade has been the executive director of the European Environment Agency (EEA) talks climate change ahead of a major conference in Abu Dhabi.

"The idea of the Green Economy is a way forward," says Jacqueline McGlade. Above, at the 2011 Esri International User Conference in California. Courtesy EEA

Professor Jacqueline McGlade has been the executive director of the European Environment Agency (EEA) since 2003. She is in Abu Dhabi this week attending the emirate's first UN global conference, the Eye on Earth summit, under the patronage of Sheikh Khalifa, President of the UAE. She explains why the environment is a matter of concern for us all, but especially for business and finance.

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Q: You believe there is a connection between financial crisis and environmental problems. Can you explain?

A: The links are many. Climate change and water availability affects food production. Competing demands for land (for example, for food and biofuels) have increased prices. Oil and energy prices themselves underpin food and other commodities. And the consumption of such fossil fuels contributes to climate change.

The cause of the current financial crisis is not directly linked to environmental issues. However, growing demand for energy, especially from emerging economies such as China, has contributed to peak oil prices. This in turn has created inflation fears and caused interest rates to increase. High oil and energy prices have coincided with the debt crisis. This has led to the so-called triple "f" crisis: food, fuel and financial.

The idea of the Green Economy is a way forward. The Green Economy will improve the efficiency of the natural resources we are using as well as utilising more of the natural resources available. For example, we will use more renewables and less fossil fuels, or we will consume more of the hundreds of thousands of edible species instead of relying on only a small fraction of these. This helps improve resilience in tandem with efficiency. A lack of resilience is a major characteristic of the current financial crisis.

Q: Why do you think oil is mispriced? What is the "correct" price, if not the market price?

A: The correct price should reflect damage to the environment and human health. The EEA has recently published a report where we estimate the cost of air pollution from industrial facilities in Europe. In 2009, the costs of damage to health and the environment caused by air pollution from the 10,000 largest polluting facilities in Europe were between €102 billion (Dh495.43bn) and €169bn. Carbon dioxide emissions contributed the most to the overall damage costs, about €63bn in 2009. The cost of these externalities should be included in the oil price.

Another problem is that many countries, in particular developing and emerging economies, are not using the market price when fossil fuels are sold domestically - they are subsidised. The most recent estimate from the International Energy Agency is that these subsidies each year amount to more than US$400bn (Dh1.46 trillion) globally and are on track to reach $600bn by 2015 (0.7% of global GDP). According to the annual World Energy Outlook 2011, cutting these subsidies would be the single most effective measure against global warming. If cutting down on fossil fuel subsidies could be accompanied with reduced extraction, a higher world market price could be obtained, and more stocks would be preserved.

Q: What do you hope to get out of the Eye on Earth summit?

A: The vision of Eye on Earth is to help communities around the world get easier and more timely access to the environmental and societal data and information they need to design and create a future that is sustainable and resilient to the changes and challenges ahead.

Looking ahead to Rio+20, we are clearly at a major crossroads in the struggle to achieve sustainability. As the secretary general Ban Ki Moon has said, it is the most important meeting in the history of the UN. We hope that the global public service - Eye on Earth - will help communities made up of governments, professionals and civil society find the solutions that we so obviously need.

Q: Gulf countries have the highest global environmental footprints in the world. How can they be persuaded to reduce this?

A: Carbon dioxide emissions (metric tonne per capita) from countries such as Qatar and the UAE are high compared with Europe. In Qatar and UAE it is 59.56 and 29.2 respectively. By comparison the figures for the EU27 are 8.09 and the US 17.82.

The very high levels of emissions per capita in Qatar are explained by high energy production in the gas sector and small population (only 1.7 million). Only about 16 per cent of Qatar's energy production is actually used domestically (82 per cent from gas - natural gas and LNG and 18 per cent from oil; mainly in industry). The EU is the main trading partner of Qatar (32 per cent of total Qatar exports, 95 per cent of which consist of fuel and mining products). So the high carbon footprint of countries such as Qatar is also indirectly influenced by the fossil fuels used in the West.

I think the Gulf countries, like all other countries in the world, need to tackle climate change and cut carbon dioxide emissions from energy use.

Not only will global warming become a huge challenge for future generations. If fossil fuel resources have been depleted, what will provide the future revenue flows required for a decent standard of living? Oil-producing countries should develop more sophisticated strategies for maximising the revenue yield from the fossil fuel resources so as to promote economic growth.