Hello and welcome, to this special event from WithLiberty, I am James Rice, your host and founder of WithLiberty.
So what is climate change, exactly? The Climate crisis is ongoing. Greenhouse gas emissions hit a new high in 2019, and 2020 has brought accelerated warming due to the reduction of cooling pollution or smog. The Glaciers are melting at unprecedented rates, while monsoons, hurricanes, and forest fires threaten our communities across the globe. The Permafrost in Siberia and Northern Canada is melting, while the ice cover at the poles is shrinking every year.
But first, why do we care about climate change and what are governments doing to combat it?
We care because we are all children of the world. In the future, the likelihood that natural disaster could strike anywhere on the planet, disrupting our way of life and threatening our lives, is increased immensely. The atmosphere, a delicate balance of gases which cultivated the birth of life and humanity, is being altered by humans. This change upsets the balance, creating huge risks to us by way of rapidly changing weather patterns, deadlier storms, heat waves, and instability. This will be the main force shaping our natural world for decades if not centuries to come, and it has happened faster than any change ever before in the history of our atmosphere and the history of earth.
But we have known about this for some time now. Governments, slow as ever to react, are beginning to take action. The rest of this speech will be an update on the current scientific state of climate change and international climate policy.
The Paris Climate Agreement which calls for a reduction in Greenhouse Gas emissions so as to meet the target of less than 2 degrees Celsius warming by 2100, is not on track to being met. Greenhouse Gas concentrations in the atmosphere continue to rise. In 2019 Global greenhouse gas emissions were 59.1 gigatons of carbon dioxide. That is 59.1 thousand million tons including the effects of land use change. Since 2010, Greenhouse Gas emissions without land use change have grown at 1.3 per cent per year on average. Over the last decade, the top four emitters (China, the United States of America, The European Union plus UK, and India) have contributed to 55 percent of the total Greenhouse Gas emissions without land use change. The top seven emitters (including Russia, Japan and international transport) have contributed to 65 percent, with G20 members accounting for 78 percent of total emissions. It is the wealthy people in developed countries who have to make the change if we are to avert this crisis.
The emissions gap is defined by the UNEP as the difference between the greenhouse gas emission levels consistent with a specific probability of limiting the average global temperature rise to below 2°C or 1.5°C in 2100 above pre-industrial levels and the GHG emission levels consistent with the global effect of the nationally determined contributions, assuming full implementation from 2020.
The United Nations Secretary-General is calling on governments to use COVID-19 recovery as an opportunity to create more sustainable, resilient and inclusive societies. Aligned with this, the United Nations Framework Convention on Climate Change has stressed that governments can integrate and specify some of their post-COVID-19 recovery plans and policies in their new or updated nationally determined contributions (NDCs) as well as in their long-term mitigation strategies.
Collectively, G20 members are not on track to achieve their unconditional Nationally Determined Contributions based on current policies. Nine of the sixteen G20 members, counting the European Union plus the UK as one member, are likely to achieve their unconditional Nationally Determined Contribution targets under current policies. These members are Argentina, China, the European Union plus the UK, India, Japan, Mexico, the Russian Federation, South Africa and Turkey. Among them, four countries (Argentina, India, the Russian Federation and Turkey) are projected to reach emission levels that are 14–34 per cent lower than their respective NDC emissions target levels.
For five G20 members, Greenhouse Gas emissions by 2030 are projected to fall short of their unconditional Nationally Determined Contribution target and require further action of varying degree: Australia, Brazil, Canada, the Republic of Korea and the United States of America.
Nationally Determined Contributions are submissions by countries that have ratified the Paris Agreement which present their national efforts to reach the Paris Agreement’s long-term temperature goal of limiting warming to well below 2°C. New or updated Nationally Determined Contributions are to be submitted in 2020 and every five years thereafter. Nationally Determined Contributions thus represent a country’s current ambition/target for reducing emissions nationally.
All countries urgently need to strengthen their mitigation ambition and accelerate action to change current emission trends and get on track to achieving the long-term temperature goals of the Paris Agreement. This is especially the case for G20 members, who account for about 78 percent of global emissions. Most G20 major emitters have only made marginal progress in shifting their future emissions trajectories downward, with several others not even on track to meet their Nationally Determined Contributions.
The COVID-19 crisis begets an opportunity in the face of these facts. To rebuild the economy in a way that is sustainable we can do a few different things at the national and state policy level. First, we can invest in green jobs. The transition to a net zero carbon economy will produce vastly more new jobs – jobs that are also healthier and safer than jobs in the fossil fuel industry. Climate action, with a focus on the energy sector, can generate 24 million new jobs by 2030. The IEA estimates that 9 million jobs could be created every year for the next three years with the proper investments in sustainable energy. The New Nature Economy report found that a new economic model based on working with nature rather than against it could generate up to $10.1 trillion in annual business value and create 395 million jobs by 2030.
Public spending in key areas can help drive economic and job growth while reducing climate impacts. Areas ripe for these investments include:
- Infrastructure investments that range from renewable energy assets, (storage, sustainable hydrogen, grid modernization) to health and social care, social housing, and the digital economy.
2. Buildings that are energy efficient including renovations and retrofits with improved insulation, heating, and domestic energy storage systems.
3. Education and training to help people who have lost their jobs due to COVID-19 find new and gainful employment and to address the structural shifts required to decarbonize the economy.
4. Investing in nature- for ecosystem resilience and regeneration including restoration of carbon-rich habitats and climate-friendly agriculture.
5. Research & development to assist rural economies in embracing sustainable agriculture, ecosystem regeneration, or accelerating renewable energy installations.
The second thing we can do the rebuild the economy in a way that champions renewables is to refuse to bailout polluting industries and sectors. WithLiberty believes that companies that understand the risks of climate change on their bottom line and which are able to identify opportunities to pivot to sustainable business models are likely to be more financially sustainable than others and will create more value for their shareholders, their customers and their communities. Government funding – in the form of direct subsidies or other forms of financial support – should therefore depend on clear climate commitments from businesses. At a minimum, public bail-outs could include certain obligations by companies. These could include an obligation to provide climate-related financial risk disclosures, as well as obligations to set clearly defined initial decarbonization targets for 2030, in line with an objective of net-zero carbon emissions by 2050. Additionally, companies that receive taxpayer money should have an investment plan outlining how new investments will contribute to the companies’ emissions reduction trajectory.
In the interest of aligning our national economy with the Paris Climate agreement, taxpayer money should never go to industries that are doing nothing to reduce their emissions. This is not in the interest of any citizen.
Next, we must end fossil fuel subsidies. Making carbon intensive industries and products more expensive to operate and produce creates incentives to divest from these industries, and frees up money for renewables. In 2019, $150 billion went to subsidize oil products, $115 billion for electricity, $50 billion for natural gas and $2.5 billion for coal. This is unacceptable. The damage done by these products is almost irreparable in our lifetimes and the costs almost insurmountable. No taxpayer money should be going to these industries.
By creating new sources of public finance, carbon pricing can help governments invest more in other priority areas such as healthcare, education or infrastructure, and ensure a just transition of the workforce. For instance, workers whose jobs could be affected by a transition to a world powered by sustainable energy – like those working in the fossil fuel industry – should not be left behind. Instead they should be supported to find new and better income-generating opportunities.
In oil and gas producing countries and coal-rich economies, fiscal stimulus could usefully be invested in an early phase-out of the least competitive assets, the diversification of their economy, and supportive measures for workers and regions which will be impacted by the transition.
Assessing the size of climate-related risks on the financial system, requires developing new analytical tools that, for example, integrate climate scenarios into regular “stress tests.” Stress tests are already conducted by regulatory authorities to assess the resilience and strength of banking institutions in adverse situations.
Central banks and financial supervisors must ensure that climate-related risks are well incorporated into individual financial institutions’ strategies and risk management procedures. While voluntary disclosure of climate-related risks is a necessary first step, it is increasingly urgent that this becomes mandatory to strengthen and ingrain the integration of climate-related risks into the system.
Financial institutions should better understand climate-related risks and consider them in their risk management procedures and investment decisions, as well as in their longer-term strategies. The changes in climate policies, new technologies, and growing physical risks will prompt reassessments of the values of virtually every financial asset, and firms that align their business models to the transition to a net zero world will be rewarded—while those that fail to adapt will be heavily penalized.
There has been a surge in interest from companies in adopting sustainable business plans and science-based targets that are compatible with a 1.5°C scenario, yet with a few notable exceptions, markets and major financial institutions have yet to take climate related risks seriously.
The Paris Agreement is built on cooperation between countries. Emissions anywhere affect everyone, everywhere, so it is imperative that countries work together to reduce emissions, build resilience, and reduce the worst impacts of climate change.
International cooperation and multilateralism are essential to recover form the economic crisis ushered by the COVID-19 pandemic. Most countries have experienced a decline of their revenues with a simultaneous increase of their spending due to the pandemic. For many developing economies this means more public debt and bigger deficit. The pressure on governments, particularly in developing countries, to service these growing external debts limits their ability to roll-out policy measures that promote investments in productive sustainable assets (like renewable energy, or sustainable transport solutions). Addressing this widespread sovereign debt crisis is necessary to create the fiscal and policy space for governments to invest in a strong decarbonized, fair and resilient recovery.
Climate action is a growing need in the world economy, and will be a growing sector of industry as the world awakens to the real and dangerous risks which climate change poses. Awareness of these risks, advocacy, and action are the first steps. In order to hold our governments and commercial industry accountable, we must also hold ourselves to account. WithLiberty knows that climate action must be undertaken now, today, in order to secure the future for ourselves and our posterity. We believe that change happens in the mind, and also in the hearts of US citizens. And that hope for the future will be our guiding light when all others have gone out.
Climate change is near and dear to me as well. It hurts me to think how past generations have unwittingly harmed the world and put all of our futures at risk. Read the UNEP report on the emissions gap from 2020. Understand the position we are in. And finally, ask yourself what it is you really believe in.