The world has already started on the journey towards a zero-carbon, climate-resilient future – testifying to the landmark global agreements of 2015 and 2016 on climate action and sustainable development, strongly supported by actions by national, state and city governments as well as businesses, investors, and civil society . And momentum is growing: In early September, I joined business leaders, policymakers and investors at the Business and Climate Summit in New Delhi where we discussed how low-carbon strategies can be good for business and good for development. But whether we shift to the right path in time to avoid the worst impacts of a changing climate depends on action on three fronts: clear and credible policy that can unlock capital at scale and unleash an era of low-carbon innovation.
International co-operation will be critical as a lever to strengthen and more effectively distribute the flow of new ideas and technical capacity, mobilise and scale up finance and help overcome concerns about loss of competitiveness and increase the scale of markets. By working together, countries, businesses, cities and others can move faster and achieve greater gains.
First, on the policy level, governments play a key role in delivering the right enabling conditions. For instance, collectively, they could signal decisively that high-carbon, highly polluting development comes at a significant cost. This could include, for example, the introduction of meaningful carbon prices and reform of fossil fuel subsidies which are estimated to have amounted to US$325 billion in 2015 alone.
Today, more than 42 countries and 25 sub-national regions have, or are actively planning, a price on carbon; and an estimated 50 countries have started or accelerated fossil fuel subsidy reform. But the carbon prices and coverage of emissions are too low in almost all schemes. A new OECD report on Investing in Climate, Investing in Growth, shows how the use of carbon pricing and other efficient climate policies, together with structural reforms, can enhance both short-term and long-term growth. Ramping up efforts, such as those led by the Carbon Pricing Leadership Coalition, will be key to progressing the May 2016 announcement of G7 leaders to eliminate inefficient fossil fuel subsidies by no later than 2025.
Second, we need to mobilise and align finances so that the right kinds of investments are made. This includes utilising public finance in ways that can leverage private finance. Multilateral development banks play a key role in this, including mitigating risk, providing concessional finance and bringing private capital to the table, especially in less developed economies.
Other welcome signs of momentum include initiatives like Partnering for Green Growth and the Global Goals 2030 (P4G), a green growth engine that creates space for partnerships of businesses, national and city leaders, financiers and community advocates to join forces in the development and deployment of targeted opportunities that can accelerate the delivery of sustainable development. They are offering practical solutions, and they also carry an important message: not only is the transition to a low-carbon economy possible, but it can be good for business’ bottom line.
At its core, our efforts to secure a safe and sustainable growth path depend on coalitions of governments, investors, businesses and civil society working together to accelerate this transition: the opportunities are there, we just need to seize them.