When 185-plus countries agree to anything, it’s historic. In Paris late last year, the whole world committed to cut carbon emissions significantly. Great, many are saying, but now what?
The implications for business and energy systems are profound. A couple of core questions have been burning: Can countries actually meet their carbon reduction targets? And, going further, can we move our energy and transportation systems away from fossil fuels for good? Many people seem to believe it’s a pipe dream, but it’s already happening.
In the space of one week, I recently visited both Costa Rica and Norway. For all the vast differences in climate, terrain, food, and cultures, the countries share a deep and long-standing commitment to building clean, green economies. I observed a few common themes in their impressive accomplishments: both now have built a nearly fossil-fuel-free electricity system, implemented aggressive pro-green policies, and leveraged cultures of positivity and commitment to the common good.
Belying the myth that the clean economy is too expensive, both countries have thrived, outpacing their peers within their respective levels of economic development, in wealth and well-being (both are listed among the happiest countries in a new report). But each country struggles with deep challenges on the path to sustainability and beyond. We can learn from these test-beds of innovation in energy, transportation, and policy. Let’s look at some core components of their journey.
Clean Economy Success Factors
1) 100% renewable electricity
Many people believe an all-renewable energy system is a pipe dream. The CEO of a large company recently told me, confidently, that Germany’s quest for 100% renewables, for example, was “not possible.” But, Norway and Costa Rica already generate more than 99% of their electricity using no fossil fuels.
I took part in a small meeting, the Climate Roundtable, hosted in rural Norway by the state-owned utility, Statkraft. See below the picture I took out my airplane window on way into Oslo — holy cow.
Anyway, Statkraft delivers energy to an electric grid, the Nordic energy market, that connects Scandinavia. Norway contributes mostly hydropower and some renewables, Sweden throws in significant nuclear, and Denmark leads in both offshore wind and coal. While there are some long-standing and serious debates about the environmental impact of dams and hydropower, Norway can claim a nearly fossil-fuel-free grid.
Similarly, Costa Rica’s rich water resources give it a leg up toward a non-fossil-fuel electric grid, but the country also uses geothermal energy, and a growing amount of biomass, wind, and solar. Both countries got to this impressive place on clean electricity with some luck (lots of water), but also real policy moves.
2) Serious green policies
Many countries are moving toward some kind of price on carbon, either a tax or cap-and-trade system. China’s nationwide carbon trading system will launch in 2017. But both Norway and Costa Rica had already implemented an economy-wide carbon tax…in the 1990s.
Norway has also supported electric vehicles (EVs) in a big way. Marius Holm, General Manager of the NGO Zero, told me that all cars are taxed heavily in Norway except EVs. Thus EVs make up 20% of new car sales. With the 119th largest population, Norway is the 4th largest EV market in the world, Holm says. The country has implemented an aggressive set of policies to encourage EV adoption, and it’s working.
Norway is flexing financial influence as well to pressure investors. The country’s sovereign wealth fund, the world’s largest with $882 billion in assets, joined the divestment movement last year, pulling all support for coal. As a major investor in private equity, the fund is also applying significant pressure on PE funds to consider environmental, social, and governance (ESG) issues in their investment decisions. And in another dimension of corporate sustainability, gender equity, the country enacted policies (read, quotas) that have driven the percentage of women on corporate boards to 35% today.
For Costa Rica’s part, it’s most important role as a green leader stems from its commitment to preserving its natural resources. The country is one of the richest biodiversity hotspots in the world (0.01% of the world’s land, but 5% of the species), and people flock there to experience it. Costa Rica has set aside more than a quarter of its land and consistently banned petroleum extraction within its borders. It leads Latin America in its commitment to ecotourism and low-carbon development as well, both of which require supportive local policies.
3) Culture: Optimism and commitment to the common good
The fact that Norway, like its Scandinavian brethren, is committed to the public good is part of what the U.S. progressive movement (led by Senator Bernie Sanders at the moment) is attracted to. We can debate the merits of high social safety net, but it’s clear when you’re in Norway that they’ve settled the debate in favor of the common good.
Even the oil industry in Norway — the source of the majority of the country’s wealth — is talking openly about needing significant change in energy systems. Leaders from the national oil giant Statoil speak publicly about being an “energy company” and moving past fossil fuels (a plan that carries a strong echo of BP’s “beyond petroleum” campaign from 15 years ago). Irene Rummelhoff, Statoil’s EVP of New Energy Solutions, told the roundtable clearly, “We need to adapt to a lower carbon world.” And at the Paris climate meetings, another Statoil exec, Bjorn Otto Sverdrup, spoke some oil-industry heresy, saying, “Of course we need to stop fossil fuel subsidies.”
Even facing disruptive change, the positive, can-do attitude in Norway is infectious. Auke Lont, the CEO of the grid company Statnett, spoke at the roundtable about the rise of renewables and concerns about dealing with power that can stop when the sun goes down or wind dies out. This “intermittency problem,” Lont said repeatedly, is not a problem. He made it clear that grid companies can, and will, manage power that flows differently than it used to.
Costa Rica has a different vibe, but one that’s also relentlessly positive. Ask someone in Costa Rica how they’re doing and she’s likely to respond, “pura vida” (literally, pure life). The phrase is everywhere — including on the T-shirts at the airport — and it seems to mean the good life, but not in the sense of material wealth. People told me it’s about personal well-being, but it clearly also ties to the immense natural beauty and vibrancy of the country itself. For years, Costa Rica has protected its version of the good life, putting in place the policies needed to build a thriving society at peace with nature.
The challenge: Balancing the past with the future
Change is hard, no matter what your level of economic development or commitment to the future. Vested interests and traditions get in the way.
There’s a deep conflict at the core of the Norway’s push toward a clean economy. Most of its wealth comes from oil and gas, and Statoil is by far the largest economic entity in the country. The roundtable discussion turned a bit tense when the group debated scenarios for the future of fossil fuels and traditional vehicles. One of the world’s leading climate scientists, as well as Holm and others at the table, felt Statoil’s scenarios — and those presented by the International Energy Agency — were unrealistically pessimistic about the growth of clean tech. I agree. Estimates about the scale of investment in solar, wind, and EVs have been woefully inadequate over the last decade. Technology adoption is always faster than incumbents want to believe.
Costa Rica also faces an inherent battle between its zen-like “pura vida” attitude and the desire to grow richer and fully emerge as a modern economy. I met with an old friend, Monica Araya, who leads two NGOs focused on the clean economy and climate policy (see more on Nivela here). As we walked around San Jose, she pointed out the high-end cars and SUVs. As soon as people get any money, she said, they want the big, hulking vehicles, just like Americans.
We talked at a more philosophical level about what the pursuit of traditional wealth meant for the heart and spirit of the country. In some sense, Araya said, “pura vida is at risk.” That commitment to a larger sense of well-being can get lost in the shuffle as people pursue only financial wealth. I heard a similar theme at a large business conference I spoke at — the executives on stage talked mainly about growth alone, with no mention of the country’s natural resource wealth or it’s strong commitment to overall well-being.
So, yes, pura vida is at risk, but Araya says, “we can do something about it.” She put the whole challenge of growing sustainability in context:
“Pura vida last century meant protecting nature. This century it is about protecting our quality of life. We don’t need to ‘copy and paste’ what others are doing. We can break the curse of car-centered cities and petroleum-based transportation. So this is not simply about ‘saving the environment,’ it’s about protecting our identity.”
We can all grow in smarter ways. If anyplace has a chance to figure out a new path to prosperity in a hotter world with more resource challenges, Costa Rica might.
Norway and Costa Rica, two countries so far apart physically, are showing a new way to operate. They’re fighting through hurdles of culture and inertia to build cleaner economies that support a thriving society.
A great deal is at stake here. Climate change and energy system innovations create remarkable disruption to business and life. Navigating a new path, at scale, will be challenging, but the larger countries can learn from these smaller innovation labs around the world.