Belgian Scholar Addresses Topics of Climate Change, Sustainability and Renewable Energy

This week, the HSE Department of Theoretical Economics (Faculty of Economic Sciences) hosted Professor Johan Eyckmans of the Faculty of Economics and Business at KU Leuven (Belgium) for a series of lectures focusing on environmental economics. An expert in a number of areas concerning the economics of climate change, alternative energy and other related subjects, Professor Eyckmans spoke with the HSE news service while he was in Moscow about his research interests and his vision for the future.        

— How did you begin cooperating with HSE? Is this your first visit? What are your expectations?

— I came to HSE thanks to the efforts of my PhD student, Irina Bakalova. Irina did an exchange programme at the Faculty of Economics and Business of KU Leuven in Belgium. At that time, I was looking for a new PhD student to work on a project on how to make international environmental agreements (like the 2015 Paris Agreement or the 1997 Kyoto Protocol) more effective and stable. Irina enjoyed solid training in mathematics and game theory at HSE, which makes her the perfect candidate for the PhD project. It was Irina’s idea to organize a visit to Moscow to teach a course on environmental economics at HSE. She deserves all the credit for organizing it practically!

I already gave one class yesterday evening for about 30 fourth-year undergraduate students. I was impressed by their knowledge of microeconomics and technical skills. They are very interactive, collaborate in class and ask critical questions. They are really a nice group of students, which also makes it an interesting experience for me!

— Climate change and environmental concerns are being discussed more and more in the world, but the topic is still a new one. When and where did climate change issues appear in public debates? How have discussions evolved since then? 

— The debate is actually not that young. In 1990, I had already published a literature review on the economics of climate change in a Belgian economics journal. That is more than 25 years ago! Over the years I have seen that the scientific consensus on the causes of climate change, and in particular the role of human activities like burning fossil fuels, has grown stronger and stronger. The Intergovernmental Panel on Climate Changes (IPCC) assessment reports are very clear examples of that change. Whereas they were rather prudent with claims about observed climate change and the causality between human activities and climate change, their latest report is unequivocal and affirmative about it.

— Some industries are against introducing green standards and environmental restrictions, since they may increase production costs. Governments prefer not to tighten environmental laws out of concern that such laws may slow down economic growth. In your opinion, is there a trade-off between economic growth and environmental protection or climate change mitigation? Is it possible to avoid the trade-off?

— I think it is a false trade-off. Or a trade-off that originates from using too high of a discount rate in cost-benefit analysis of climate policies. The environmental effects of burning fossil fuels will be felt by future generations. The costs will be very high and will be much heavier than the benefits today that come from unrestricted fossil fuel use. Note also that fossil fuel use causes lots of immediate and local environmental problems such as air pollution and smog in cities. Local air pollution is really a killer because it increases the incidence of severe respiratory diseases like asthma. So there are lots of side benefits from reducing the use of fossil fuels in the short run and locally.

— There are many new technological developments in renewable energy sources. What are the most important in your opinion? Which innovations are still needed the most? 

— There have been remarkable decreases in the cost to generate electricity from renewable sources like wind and solar radiation. But the problem with renewables is that the sun does not always shine and the wind does not always blow. So you need backup capacity, for instance natural gas power plants for the times that the sun is not shining and there is little wind. At the same time, there are times during the weekend or night that there is too much electricity supply from renewable resources and that demand is too low to absorb it. It is therefore critical to develop new ways to store the electricity produced. The best technology currently is to use so-called pump storage plants. There are hydro power plants that can be reversed. In times of high supply of electricity these plants pump the water back up into the reservoir. When demand is high, the plant then operates normally by using the water in the reservoir to drive a turbine. But this technology is only available in areas with mountains. An alternative is to use batteries, but so far they are not very efficient and are still expensive. I see a lot of need for more research in battery technologies to improve storage of renewable electricity.   

— How will the development of renewable energies affect commodities markets? Will oil loose its fundamental power?

— Clearly. Renewable energy is becoming cheaper and cheaper. Wind turbines are often competitive already in comparison to older conventional power plants that use gas or oil. Ultimately, I believe that we won’t run out of oil. Long before the last barrel of oil or cubic metre of gas will be produced, other technologies will be cheaper and outcompete the fossil fuels. Or as a former Saudi Arabian oil minister said long ago, ‘the Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil’.

— In November 2016, the Paris Agreement took effect. What are the consequences for the world? It is not a binding agreement, but can it serve as a signal for future trends? 

— We know that if all signatories would stick to the agreement and do everything they promised, it will not be enough to keep temperature change below 2°C in the long run. But it is important that all countries in the world have signed it, in contrast to its predecessor the 1997 Kyoto Protocol. For example, China and India are also now on board. And there are mechanisms to revise and strengthen the commitments in the future. I think Paris is a very important step forward. But you are right to point out that it is not actually binding. But multilateral agreements can never be really binding. Signatories can always leave or just not keep their promises. The only thing we can hope for is that renewables become so cheap in the future that they outcompete the fossil fuels before we experience runaway climate change!

Anna Chernyakhovskaya, specially for HSE News service