In Bali

Secretary-General Angel Gurría led a high-level mission of OECD economists and environmental experts at the UN Climate Change Conference in Bali in December. In this extract from one of his interventions at the conference, Mr Gurría explains some of the reasons why economics and markets must be at the heart of any effective and equitable strategy to tackle climate change.
“The ambitious and comprehensive policies necessary to tackle climate change are known, available and affordable.

The OECD has arrived at this conclusion after working for nearly two decades on the economics of climate change. […]

Our OECD Environmental Outlook, to be launched next March in Oslo, concludes that, to put us on the path to stabilising greenhouse gases in the atmosphere–at about 450 parts per million in carbon dioxideequivalents– would reduce global growth by only about one tenth of one percent per year (on average) from now to 2050. This is an affordable cost. […]

The post-2012 climate framework must rely on a solid economic footing to have a chance to succeed. […]

However, in our quest to limit the cost of adaptation and mitigation, we need to be accurate and to act upon evidence-based information. For example, a number of countries have focused their climate change policies on subsidising the “good” solutions, rather than on taxing the “bad” ones. This is an inefficient choice, because it tends to increase the costs of reducing GHG emissions.

Subsidising “good” behaviour risks locking in technologies that may later be considered obsolete or inefficient. On the other hand, taxing bad behaviour (emissions), provides a consistent incentive for increased efficiency and innovation. […]

How do we manage this transition to a low carbon world in an economically efficient and socially responsible manner?

Although it is frequently cited as a solution, our work shows that many developing countries may face far bigger GDP losses than the industrial world if a uniform global tax is used. For example, in the 450 ppm scenario, the OECD would lose two-tenths of a percentage of GDP by 2030, and 1.1% by 2050, but Brazil, Russia, India and China could lose five times as much.

And this is where the political economy of climate change comes in. The real problem is not how much it costs, but who pays for it. The OECD is examining ways to distribute the burden of the costs of action in an equitable and fair manner, while ensuring that mitigation action takes place wherever it is least costly. […]

Compared to the introduction of a uniform global tax, a global emissions trading permit system could significantly lower the impact on developing countries of achieving aggressive global emission reduction targets. This can be done through differential target setting and allocation of emission permits. Thus, developed countries could undertake a relatively greater financial responsibility for emissions reduction than developing countries.

The full speech, along with other interventions delivered in Bali, can be found at www.oecd.org/speeches.

©OECD Observer No. 264/265, December 2007-January 2008




Economic data

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • How do the largest community of British expats living in Spain feel about Brexit? Britons living in Orihuela Costa, Alicante give their views.
  • Brexit is taking up Europe's energy and focus, according to OECD Secretary-General Angel Gurría. Watch video.
  • OECD Chief Economist Catherine Mann and former Bank of England Governor Mervyn King discuss the economic merits of a US border adjustment tax and the outlook for US economic growth.
  • Africa's cities at the forefront of progress: Africa is urbanising at a historically rapid pace coupled with an unprecedented demographic boom. By 2050, about 56% of Africans are expected to live in cities. This poses major policy challenges, but make no mistake: Africa’s cities and towns are engines of progress that, if harnessed correctly, can fuel the entire continent’s sustainable development.
  • OECD Observer i-Sheet Series: OECD Observer i-Sheets are smart contents pages on major issues and events. Use them to find current or recent articles, video, books and working papers. To browse on paper and read on line, or simply download.
  • How sustainable is the ocean as a source of economic development? The Ocean Economy in 2030 examines the risks and uncertainties surrounding the future development of ocean industries, the innovations required in science and technology to support their progress, their potential contribution to green growth and some of the implications for ocean management.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • They are green and local --It’s a new generation of entrepreneurs in Kenya with big dreams of sustainable energy and the drive to see their innovative technologies throughout Africa. blogs.worldbank.org
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2017