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Debunking the "Moral Case" for Fossil Fuels

 Last week, our story in Guyana took us straight into an issue that sits at the heart of the global climate debate: the need to address poverty, while also avoiding the worst impacts of climate change. The fossil fuel industry often positions these two aims as mutually exclusive. You can't solve poverty without fossil fuels.

 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 Dr. Narasimha Rao from Yale University to join me. Dr. Rao studies energy systems and their relationship to human wellbeing and human development, and he leads 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's gonna walk us through it right after this quick break.

 So my name is Narasimha Rao. I'm an associate professor of Energy Systems at the Yale School of the Environment. I'm an interdisciplinary researcher with a background in electrical engineering and social sciences as well. And over the course of my career, I've been interested in understanding the relationship between energy systems, especially in the context of climate change and the energy transitions, and that relationship to human wellbeing and human development more broadly.

 And can I have you describe the Decent Living Energy project and, and define what this term, decent living energy means.

 Sure. So this project addresses two very important global challenges. The first of them is persistent poverty eradication, and the second is climate mitigation. And we, these are both, in the global south, extremely important pressing priorities. We understand already that climate change is a threat multiplier for people.

It exacerbates poverty. Poor people face the disproportionate effect of climate impacts. They are more vulnerable to extreme events, to 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 a 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, dollars per day that people earn around the world. And in global international policy we use the world banks.

Originally, dollar per day, that increase with inflation to dollar 90 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 wellbeing? For many reasons, price differences for people in poverty , a large extent of services that are received non monetarily through social transfers or public services, is 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 threshold 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 or wellbeing.

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 directly. And I say material in particular because that's what we are concerned about with regards to environmental impact.

Um, of course, wellbeing has psychological dimensions, social dimensions, and what we on this project wanted to do was to translate those two material requirements so that it would then allow us to, estimate energy and material needs and translate that to climate. So basically decent living standards are the minimum invaluable 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 standard.

 Excellent. I wanna talk to you about something that's come up a lot in, um, we're, we're in the middle of doing a, a long story on oil drilling in Guyana and looking at that from a lot of different angles. And, one of the things that we hear a lot is, well, we need fossil fuels to, develop and fossil fuels are sort of the answer to solving poverty.

And I I'm just wondering, what you've seen in your research, along those lines, where that does or doesn't hold up.

 So what people need are services and maybe products. Access to basic sanitation and water and food and housing and these things, that's what they need. What is an absolutely unavoidable, instrumental need that arises from those goods and services is energy, because we are talking about the transformation of materials, of natural resources into service that people need or goods and that absolutely requires energy. So the type of energy that we use in order to create these services is 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 countries 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. But it's important to unpack that and understand that what they really need are 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 policymakers in the global south will build infrastructure using what is competitive in those countries right now.

And that tends to be fossil fuels, currently natural gas. And so that's what we are seeing. Another element to this. 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.

 What are you seeing in terms of how those decisions get made? This is like a squishy question, but I'm curious about something that has come up a lot in, in the reporting that we've been doing recently as sort of, okay, well the, the world is saying we need to reduce emissions and get off of fossil fuels and all of these things. But in many countries that have fossil resources, they are both , seen , as one of the few economic drivers and also one of the few sort of reliable energy sources. 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 and scale of alternative energy resources. How are countries thinking about this? Is there a sense that the kind of short-term choices are being made with any kind of thinking about the, the long-term climate impacts? Or is it sort of everyone is just making the decision that's best for the next 10 years and kind of leaving it to the next batch of people to figure out the rest?

 So we first need to understand that the energy transition involves a very deep transformation of all our economic activities. Okay? So this is not just a matter of building solar panels instead of coal power plants.

It's a lot more than that. It's a diverse range of technologies that will require a complete transformation of economies. So given that it'll require significant capital investments on the order of hundreds of billions of dollars globally, trillions of. 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, uh, using solar and wind technologies, up to a point, has 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 would 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 in 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 poor economies.

Having said that, there is some potential for them to scale 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 sub-Saharan Africa have the highest cost 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, you know, we think about credit risk. People need to have debt to get new debt, and that's circular and maybe inappropriate for people who've never been part of the formal 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 gonna have to be some kind of government intervention to underwrite private finance, if at all, or some broader scheme for government cooperation. And 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 longstanding. And over the last few decades, generally countries started 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 transitioning to cleaner 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, See how we can introduce climate policy and think about other benefits for development.

So that mainstreaming of climate inter 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 in at least formally thinking about climate, explicitly including them in plans, for the future, but very often conditional on support from the international community.

 One of the people that we spoke with in Guyana was saying, you know, that she feels like the Global North is doing with fossil fuels. Sort of what it did with tobacco and cars, which is dump the stuff they don't want on the global south. And then that puts the global south that much further behind on energy transition.

And I'm curious just what you think about that.

 I do think there's a couple of concerns with regards to inequality and the kind of fragmentation of the global energy system in a couple of ways. One is that you have certain countries, wealthier countries Investing in renewables, but not supporting the investment of renewables in poorer countries.

And then they would go ahead and invest in fossils. And so you'd have the segmentation where you have higher fossil lock in happening in poorer countries. But there's also the risk that investing 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're pushing for renewables, but simply by not providing lending for fossil resources, And at the same time, renewable energy is not a very affordable either. So that actually puts the risk of investing in more expensive, clean energy technologies in poor countries, well before they're 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.

So a there's a serious case of justice playing out over here, um, 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 are making the existing development problems harder by making all forms of energy expensive because we are prescribing the use of fossils without making available cheap renewable energy technologies.

 Right. You've kind of already done this in a couple of ways, but I'm gonna ask you more directly to just sort of walk me through what a decent living energy approach would look like in , a less developed country and a more developed country.

 So the decent living standard is intended to be a universal threshold that defines the minimum material requirements for people to pursue a decent life. So we are developing what we call universal satisfiers in a modern society, in a modern context, which is backed up by, you know, theories of justice, of matrix justice supported by regulations around the world.

We see for different elements of decent living standards as 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, in analytical space was the ability to project or to understand the energy requirements stemming from these particular goods and services because we by and large think 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 wellbeing.

So this project is actually creating this link between household consumption of goods and services, which provide us with wellbeing or at least our basis for it, and the broader energy and environment, environmental impact of that consumption. So what will it cost in energy terms for meeting the transportation needs of people? The basic mobility requirements where they move away from cycles and animal power to motorized transport. What will it take to get 50 million people households off of slums and into more durable housing that protects them from the elements?

What will it take to, 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 are, 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're so important is because, in contrast to safe water, sanitation, health, and education that are all services that are provided through shared capital, shared resources, right?

Networks of infrastructure that are commonly used by, by large people, populations. Cars, and houses and food is private consumption, and that ends up being a lot more energy per person, to satisfy wellbeing. 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 wellbeing. In mobility and housing, if we were to provide people options for public transit rather than just supporting a car 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 are seeing, in poor countries. Now, some elements of this are the same, even in 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. 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. And another difference is we have some path dependence, you know, in 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, uh, or Turkey for example, they all are car dependent. Over 90% of travel demand is met with cars or um, road transport.

So, you know, assuming that they can shift over to public transit completely is not very real. 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 more on energy terms in the US and in Brazil compared to, say, India or Japan.

So those are some of the differences. But otherwise, um, 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 alsoa 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.

And that's where I think this analysis translates in a different way to rich countries where we need to still study more to understand. As you increase consumption levels beyond this minimum point, at one point, at what point will you start to see diminishing returns to wellbeing? Right. 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 wellbeing?

And we, we don't have sufficient evidence to say that we only have circumstantial evidence related to income that people's self-assessed wellbeing in terms of life satisfaction. It keeps increasing with income, but not at the same rate as at lower levels of income. So 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 wellbeing 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 impactful in the environment, but still give people high wellbeing. And that's the, that's the direction that I'm moving now with this.

 Yeah. Do you find that that idea is, more or less Accepted in certain areas. Like I, I know that in the US people are loath to think about less consumption in general. And I'm curious if you find that there's any examples of global north countries where it's not such a, a big ask.

 Well, I think you do see a lot more momentum and interest, in Europe, in demand side questions around consumption and sufficiency than you see in the US. And this is indicated by the priorities in research. By the papers that are coming out. And I should mention that the latest sixth assessment report of the I P C C for the first time has a demand chapter in it that outlines a lot of the evidence that we've already accumulated to indicate lifestyle changes that would be beneficial for climate and for people's wellbeing.

A classic example being moderating meat consumption, particularly red meat, and the impact on lower cardiovascular. And significant reduction in, in environmental impacts. So there are differences, but at the same time, I, 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, 40% of food that's produced is wasted in the US and 25% 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 a 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. 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, in, in it's 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 e-mobility, 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. 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, cuz that's not gonna.

 Yeah. Yeah, it's interesting. I just was looking at this ad database thing that shows you what companies are spending on different types of advertising. And all the US automakers are spending two or three times on marketing the SUV electric vehicles than the compact efficient vehicles, which seems like a potential problem.

 Well, yes, and you know, it's, it's true that electric vehicles are generally more efficient and they will reduce emissions, but we have to think that we. Needing to increase the size of our electricity systems to support that much more electricity demand.

 And that pressure is not trivial because in the US we are already seeing a slight slowdown

in renewable investments, not because of the lack of financial investment, but because of permitting requirements for connecting to the grid and getting permits for the land.

And that slowdown is equally critical in terms of bottlenecks because time is of the urgency. And the total, even the total amount that we have to grow the electricity system is an issue. Um, the more we need to invest, the slower we're gonna reach our targets.

 Mm-hmm. Yeah. I know this is like a really, really broad question, but, are there particular policies that you think could sort of get at these things quickest? Where do you think the US attention would best be placed?

 So in the US I think we have great momentum with the Inflation reduction Act. It's a good start and there has been a lot of investments in some of the right places. But I would want to see a shift, like I said, rather than just rebates for electric vehicles at large. If we can have policies that are supporting shared mobility, shared services in particular would be really important.

Of course, more investments in in transit infrastructure. It is a political issue. But that 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 so 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 can't afford to. Their homes are of poor quality. So there's a chance here to have a equitable kind of an upgrade to the housing sector, which is very much part of the priorities of the government in terms of the Justice 40 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 . We're not doing enough in that, in that, uh, realm at all. There's 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, uh, is not something one can regulate. It's anethema to think about reducing consumption. But if there's some way to progressively tax houses in order to 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 wellbeing simultaneously with environmental impact.

 Yeah. Excellent. Is there anything else that you wanna share about, about research that you're, in the process of, or any recent publications or anything like that, that we didn't talk?

 Yeah, so I think it's really important in our research to try and mainstream wellbeing as a actual concrete measure in our policy and in our research because we need to start thinking of ways we can demonstrate synergies between lifestyle changes, technology changes that are beneficial for climate and for ourselves.

Because the current mode is encouraging only decarbonization technologies of the existing system, and that's not going to get us far enough. The direction that I'm focusing on, 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 wellbeing more directly.

And I do have a paper on this where I outlined 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 their life satisfaction.

But we need more research to link that to people's consumption patterns and lifestyles.

 that's also a direction that I'd like to go, uh, that I'm working on.

 That's so interesting. And also interesting that there's not much of that research yet.

 Yeah, I mean, people have looked at the correlation between average household income and people's life satisfaction or people's happiness. You know, if you're familiar with the Happiness Index and other

 And we do see some trends, very mixed evidence, of the saturation of wellbeing, but it's not very strong.

People's life satisfaction continues to increase its high levels of income.

 So we don't, but we don't have an understanding of what aspects of their life are driving those cause of high wellbeing.

 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, uh, benign environmentally, in which case we are spending a lot of money doing things that don't matter so much to us, and, and we don't know it ourselves. We have to, if we see evidence of it, it may influence us.

 That's so interesting. My husband is like a giant nerd for spreadsheets and data and, we spent a year, maybe five or six years ago, tracking how we spent money and time, and then rating how that equated to life satisfaction and actually ended up making a bunch of really big changes because we were like, oh, we're spending all this money to do this thing that we don't even care about that much, which is live in the Bay Area, a very expensive place.

 That's great that you, that's exactly the kind of thing, uh, you know, I would, I would want people to do,

 Yes. It changed my whole approach to work too.

 I wanted to mention one thing again. You know, so there a couple of things. There is also a hunch that I have that the lifestyles that we lead are coming at the expense of our feeling of community and social connectedness.

And the social isolationism is leading to so many social problems. Um, and it is driven at least in part by our structure of living, art, urban form and sprawl.

And many others have social factors as well. So that's another area where we can think, oh my, are we really furthering our own social wellbeing? In this kind of expansive, I isolationist form of infrastructure, which is also costing us in terms of climate. I also want to give a shout out to, you know, I know one company for example, that is investing in sustainable consumption

and Asia, and they are the only one I know that actually, you know, are profit making institution that is investing in consumption and products and services that actually, uh, encourage efficient consumption.

Transcription

The tension between addressing global poverty and acting on the climate crisis is one the fossil fuel industry, and those who carry water for it, have been increasingly leaning on in recent years. We asked Dr. Narasimha Rao to join us this week to get into the details of that conversation, where there are and aren't tradeoffs, and what his 


at Yale can tell us about how to solve both global crises at once. Be sure to check out our discussion guide on 

debunking the moral case for fossil fuels!

Guyana Documents

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