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De minister bezoekt de informele Ecofin bijeenkomst in Zweden
Minister Bos heeft vandaag de informele Ecofin bezocht in Göteborg. Op verzoek van voorzitter Zweden heeft hij in een speech de Nederlandse visie op klimaatfinanciering gegeven. Aan de informele bijeenkomst wordt deelgenomen door de gouverneurs van de centrale banken van de lidstaten, en door de presidenten van de Europese Centrale Bank, de Europese Investeringsbank, en de Europese Bank voor Wederopbouw en Ontwikkeling.
Hieronder staat de speech die de minister heeft uitgesproken op de Ecofin.
We all know what a Ponzi scheme is: a greedy swindle that cost a
lot of people their savings and that looks and sounds very much
like the greedy swindle that caused the financial crisis, where
each new generation pays the bill that is passed on by the old
generation.
We all know that Ponzi Schemes eventually collapse, and we also
know that this can cause great economic and social damage, with the
collapse of the Madoff imperium as a recent example.
You must have noticed, as I did, that the comparison with climate
change is striking: we are staking our world and our future on a
Ponzi Scheme. We force the effect of our CO2 heavy lifestyle on the
next generations; on our children and our children's children. Even
though we know – contrary to our grandparents – that this cannot go
on forever. Yet we find it very hard to ward off the collapse,
perhaps because that may take place only in a distant future.
Apart from these similarities, there are also important differences
between the financial crisis and the climate crisis.
The financial crisis is cyclical: it will pass sooner or later, and
the economy will recover.
The climate crisis is not cyclical at all; it is just getting
worse. And we do not know where – or if – the warming will stop
once the world has warmed beyond a certain threshold.
Another difference is the response of governments and the
international community to the two crises. The financial crisis was
taken on with a global sense of urgency. Think about the billions
now being thrown at the financial crisis all around the world – not
to mention the speed at which this is being done – and compare that
with the spending to tackle climate change. The contrast is
startling. Of course, as we speak, UNFCCC negotiations are underway
in Bangkok, but progress is far too slow.
Moreover, climate change is to a large extent a distributional
issue. Although climate change threatens all countries, developing
countries are most vulnerable. The World Bank estimates that 75 to
80% of the costs of climate change would be borne by developing
countries; the countries that contributed least to the cause of
climate change!
Yet this combination of crises also presents unique opportunities.
Because now everyone is sitting around the table. After all,
countries that are asking for something at one negotiating table
have something to offer at another. We want China and India to take
more account of the climate as they strive for greater economic
growth; they in turn want better access to world trade from
us. We want a number of developing economies to amend their
interest and exchange rate policies; they want a stronger voice at
institutions like the World Bank and the IMF. Now is the time for
leadership on the world stage, to break with the past, to link the
global problems of our age together, to abandon traditional
positions and, working together, make whole what was once divided.
We have little choice. And I believe Europe has a key role to play.
The question is: how?
How to deal with climate change?
I suggest we learn from facts and science – both climate science
and economic science.
Economics not only has something to say about the most cost
effective instruments to achieve a certain target, as was just
explained by Professor Fullerton, but also about the target itself.
Climate change is characterized by deep structural uncertainty, and
therefore the economics of climate change is basically a matter of
proper risk management. In this respect, two points are worth
mentioning.
First, we cannot wait until we know everything for sure. Elevated
stocks of CO2 will persist for a very long time, and the full
impact on global temperature only materializes with a long
time-lag. So waiting until we reached that point is too risky a
strategy.
Second, the economics of climate change is all about tail risks.
Climate scientists know a lot about the earth’s climate when viewed
over the past 800,000 years. But in these data, there is no
analogue for the levels of greenhouse gas concentrations that we
observe today, nor for the pace at which they have increased or may
further increase if we do not take action. This implies that we
simply do not know what will happen next and that expected average
temperature increases are not a sufficient basis to guide our
policy choices. Rather, we must take into account the tail risks.
As we learned from the financial models that were telling us that
all was well, ignoring the tail risks gives a far too optimistic
picture of the actual risk and of what is at stake. Therefore, we
can and should not ignore the possibility of extreme temperature
increases.
So, we need to take immediate and decisive action to contain global
warming.
We need a new Copenhagen Consensus.
Not the Copenhagen Consensus of Bjorn Lomborg. His models by and
large ignore the tail risks, and he suggests that we can take our
time. That’s the Copenhagen Consensus to wait and see.
We need a new Copenhagen Consensus, not to wait and see, but to act
and commit. A Copenhagen Consensus that acknowledges the need for
immediate and ambitious action. We need a Copenhagen Consensus that
stresses that we are running out of time and that we must act
collectively.
We know what we have to do. Global emissions cannot be allowed to
grow after 2020 at the latest and must be halved by 2050 at least.
Making that happen is a shared responsibility of all major
greenhouse gas emitting countries, both industrialized and emerging
economies. We also know the costs: substantial, but manageable.
Stern has shown that the costs of action are far less than the
costs of inaction. McKinsey and Project Catalyst have shown that
limiting global warming to 2-degrees is feasible with current
techniques.
The only way to solve this global problem at a reasonable cost is
pricing carbon. Here I agree with Professor Fullerton, and his
story applies both at the national and at the global level.
Therefore, we need a new Copenhagen Consensus to act and commit
that lays the foundations for a global carbon market. That way we
can establish a global carbon price and reach our climate targets
at the lowest possible costs.
If, in such a global framework, we base each country’s emission
target on the size of its population, we will have a credible
mechanism for the necessary transfer of money from rich to poor
countries. This is the difference between a global cap and trade
system and a global carbon tax. Moreover, a realistic carbon price
will not push us back into the stone age or prevent emerging
economies to develop, as some are suggesting. The experience with
the EU ETS has shown us that ambitious environmental policy and
economic growth can go hand in hand.
It – almost – goes without saying that such a system requires the
participation of all major emitting countries and sectors. Without
this global coverage, a Copenhagen Consensus will be ineffective
and expensive.
It also – almost – goes without saying that this crisis, like every
crisis, needs leadership and prompt action. This is exactly what
the EU has done and must – and will – continue to do. And it is
exactly what we, the Finance Ministers of the EU, must – and will –
do.
We have the successful outcome of Copenhagen in our hands and our
heads.
Agreeing on the size and scale of the problem is not enough. We now
need solutions.
Solutions that take all parties, both developed and developing
countries, into account
Solutions that invite all these parties to take their
responsibility.
For the EU this means that we must be very clear on what we are
willing to offer, and what we expect in return.
And with clear I mean: mentioning concrete numbers and giving
specific financial commitments. Of course the cost estimates for
2020 are relevant. But the most important number right now is how
much money we are going to put on the table in Copenhagen for the
2010-2012 period. Money to break the deadlock and build trust
between developed countries and developing countries. Money for
fast-start financing. Money to enable countries to come up with
coherent low-carbon growth plans, set up emission inventories and
monitoring systems, and to enable them to use carbon market
financing. According to the Commission, the EU should make an
annual contribution between 500 million and 2,1 billion Euros for
the 2010-2012 period. I think 2 billion a year is the figure we
should be talking about. I like to hear your opinions on this,
because it is essential we agree on our contribution in our meeting
of October 20.
Of course, this money is by no means charity. This money is largely
an investment in an architecture to spend our future climate
investments more effectively.
But this money is just a first instalment. Much more will be needed
for the post-2012 period; in this we can and should endorse the
estimates of the Commission. The Commission estimates that climate
change will cost 100 bln a year starting in 2020. Public investment
needed from developed countries in that respect amounts to about
some 30 bln. We need to discuss which part of this we should take
on our shoulders. In my opinion 20-30 percent of it would be our
fair share. We need a result on this very soon and I suggest that
we give a mandate to the EFC to come with a proposal in time for
the next Ecofin Council.
To convince developing countries that we will scale up the
financing, and to give us the confidence that other developed
countries will contribute their share, we need to create a credible
and effective mechanism that will ensure the money will be raised.
That must also be part of the Copenhagen Consensus.
It is crucial that our financial support is matched effectively
with the climate actions of developing countries. That is a huge
challenge. But without mutual trust no system will work. Our
financial offer will be the first step towards this mutual trust.
It also means that we live up to our international financial
commitments. Let us be frank: why should developing countries trust
our promises regarding climate financing if we don’t keep our
promises regarding ODA?
When it comes to credibility and effectiveness, I also see an
important role for the EU budget. First of all, the EU budget has
well-established rules and procedures: these would make funding
through the EU budget reliable and transparent. Second, the EU as a
whole would be one of the main providers of international public
financing. That gives the EU a strong voice in ensuring that the
necessary money comes on the table. Of course this would require
new priorities in EU expenditure; priorities that will make clear
once and for all that climate change is one of the main political
challenges we face today!
Because we can not hide away in The Age of Stupid; 2020, that is
almost tomorrow.