Are we moving fast enough in fighting climate change?
In a word, no. Everyone acknowledges the problem, but around the world, hundreds of billions of dollars are still being spent subsidising the use of fossil fuels. Fossil fuels remain the dominant energy source. Now, there is incremental progress being made, but the trouble is it’s just not fast enough. We are already seeing the physical signs of climate damage, and our work suggests we will start to see that impacting on economic growth before too long.
Remember, 2°C of warming is already locked in. It is going to be costly enough coping with that. Any warming beyond that is going to be harder and harder to cope with. So we need to move faster, because time is the one thing we haven’t got. Delay is going to limit our choices and make things much more costly.
Is the solution to agree on concrete emission targets?
Well, it is not just a matter of setting targets; it is also a matter of meeting them. And that requires from governments a plan of action which will go right down into the engine room of the economy. This is a massive challenge, and no corner of the economy will be left untouched, because we will need to get to somewhere very different from where we are now. That is, a world in which there are net zero carbon emissions by the end of the century.
So, we need a price on carbon. That could be via a carbon tax or an emissions trading system, for instance. It is no use hoping people will stop polluting if it is free to do so. Already in 2015 carbon emissions into the atmosphere have reached new heights. We need to ensure that the regulations, which exist today to help a fossil economy prosper, are replaced with regulations which allow the penetration of clean technologies in all sectors. And then we need to be able to mobilise capital behind those clean technologies. And finally, but by no means least, we need to ensure that the costs of the transition, because there are costs, aren’t disproportionally borne by people who are not in a position to bear them.
Do we have the funds to effectively fight climate change?
Well that is always going to be a question of priorities, but in the case of developed and rapidly emerging economies, there is a big question around mobilising private investment. Governments have to make sure that their policies do not stand in the way. Now, if you take institutional investors like pensions funds or insurance companies, these interests control over US$90 trillion dollars’ worth of assets. Yet, less than 1% finds its way to investment in clean infrastructure. There are regulatory reasons for that, and those barriers need to be removed.
When it comes to developing countries, there is a case for more assistance from developed countries. The good news there is that that flow of funding is rising. Analysis by OECD and Climate Policy Initiative estimates that developed countries mobilised $62 billion to support climate action in developing countries in 2014, up from $52 billion in 2013. This is encouraging, but there is still some way to go to reach the target of $100 billion by 2020.
Adapted from video interview with Simon Upton, September 2014, see https://www.youtube.com/watch?v=jNJLxPNJ3Qc
©OECD Observer No 304 November 2015