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

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

Economic data

GDP growth: +0.6% Q3 2017 year-on-year
Consumer price inflation: 2.4% Nov 2017 annual
Trade: +4.3% exp, +4.3% imp, Q3 2017
Unemployment: 5.6% Nov 2017
Last update: 16 Jan 2018


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

  • Rousseau
  • Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.
  • Papers show “past coming back to haunt us”: OECD Secretary-General Angel Gurria tells Sky News that the so-called "Paradise Papers" show a past coming back to haunt us, but one which is now being dismantled. Please watch the video.
  • When someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. But I know that the reality is still so much different. By Alda, 18, on International Day of the Girl. Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • 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.
  • 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.
  • 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 .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

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 2018