Lloyd [Blankfein], many thanks for that kind introduction. I am delighted to be here at the Council of Foreign Relations, to discuss the vital subject of climate change with all of you.
It’s the right subject for the CFR because climate change is no longer the reserved province of the environmental community. It is an economic issue. It is a development issue. It is a health issue, a migration issue, an agriculture issue, a fisheries issue, an energy and transport issue. Because climate change is going to affect all these areas of our lives, and we are going to have to adapt. Indeed just recently I have announced that during the next five year term of the European Commission, we will assess how all our European policies must adapt to the realities of climate change. I also intend to create a Commissioner for Climate Action.
But climate is also of course a foreign policy and security issue as well. Climate change is likely to trigger and exacerbate. It risks undermining our efforts to bring development to the poor parts of the world. And we will see potentially dangerous disputes: about water, about maritime resources, about population migration.
But most of all, given the difficulties in the negotiations in the run up to Copenhagen, the whole foreign policy community needs to be involved: in urging movement, in pushing for progress from everyone involved. So you are right to be concerned, and I urge you to continue your focus on this.
Let me, in this short introduction to our discussions this morning, review where we are and spell out what the EU wants to see in Copenhagen.
I will be brief on the science, because audiences, in general, no longer have to be convinced about the need for climate action. We have moved past what I call the polar-bear-isation of the debate, about how terrible climate change is going to be. People want to hear more about solutions.
But it is important to re-state what climate scientists are telling us, because the more we hear, the more compelling is the case. Indeed climate change seems to be happening even faster than the International Panel on Climate Change predicted only two years ago. Continuing with “business as usual” almost certainly means dangerous, perhaps catastrophic, climate change during the course of this century. This is not just one of those inter-generational threats likely to hurt us at some point in the future. We need to find solutions now.
The first step is international agreement based on the science. So it was vitally important that the G8 and the Major Economies Forum both recognized in July in L’Aquila what science tells us: namely that we must keep average global warming to no more than 2 degrees Celsius, or 3 and a half degrees Fahrenheit, above pre-industrial levels. This in turn means that global emissions will need to peak before 2020 and then by 2050, be reduced to at least half their 1990 levels.
Again, this in turn means that we both have to get on with emissions reduction now; and we have to plan for tomorrow’s low carbon economy. This means taking steps now, for instance, towards decarbonising our electricity supply and the transport sector by 2050.
In fact, the economic case is just as strong. Acting against climate change is of course a moral imperative to current and future generations. But it is above all an immense economic opportunity.
The cost argument is getting clearer. Tackling climate change will be expensive. However, climate change expert, Nick Stern, tells us that failing to act will cost much more: at least 5% of the world’s GDP every year.
But it’s about more than minimizing the pain, it’s about surfing the next wave of economic development. Take Europe’s climate and energy package, for example, which we agreed in 2008: cutting emissions by at least 20% below 1990 levels by 2020 and doubling the share of renewable energy to 20% within the same time-frame. We think this will generate some 90 bns ($130 bns) of additional investment in renewables, and some 700,000 new jobs in this sector, as well as reducing our oil and gas import bill by around 45 billion ($70 billion) a year by 2020.
So the Commission is determined to green Europe’s economy via energy efficiency, for example, via clean car technology, and carbon capture and storage. We want to position Europe as one of the first movers in developing the technology. There is going to be a lot of healthy low carbon competition in the next couple of decades and Europe must be ready.
So if the science is clear, and if there’s a strong net economic upside, what’s the problem? Copenhagen should be an easy conference, right?
No. In fact, at this point, I confess that I am very worried by the prospects for Copenhagen. The negotiations are dangerously close to deadlock at the moment.
And let me spell out what that means. This may not be a simple negotiating stand-off that we can fix next year. It risks being an acrimonious collapse, delaying action against climate change perhaps for years. And the world right now cannot afford such a disastrous outcome.
So I hope that as world leaders peer over the edge of the abyss in New York and Pittsburgh this week, we will collectively conclude that we have to play an active part in driving the negotiations forward.
Part of the answer lies in the process of the negotiations themselves. We fully back the UN process: no-one is trying to undermine or short circuit that. But now is the time for putting offers on the table, offers at the outer limits of our political constraints. This is what Europe has done, to be frank, and we will be pushing others to do the same.
But part of the answer lies in identifying the heart of the potential bargain that might yet bring us to a successful result, and here I think that the world leaders gathering here in New York can make a real difference on this.
The first part of the bargain is that all developed countries need to clarify their plans on mid term emissions reductions, and show the necessary leadership, not least in line with our responsibilities for past emissions. If we want to achieve at least an 80% reduction by 2050, as in fact we are committed to doing, developed countries must strive to achieve the necessary collective 25-40% reductions by 2020. The EU is ready to go from 20% to 30% if others make comparable efforts.
Second, we must now explicitly recognise that all developed countries have to play a significant part in helping to finance mitigation action by developing countries.
Our estimate is that by 2020, developing countries will need roughly an additional 100 billion euros (around a hundred and fifty billion dollars) a year to tackle climate change. Some of this will be financed by developing countries themselves, particularly the advanced emerging economies; and the biggest share should come from the carbon market, if we have the courage to set up a robust global scheme in the coming decade.
But some will need to come in flows of public finance from developed to developing countries, perhaps from 22 to 50 billion euros (30 to 70 billion dollars) a year by 2020. Depending on the outcome of international burden sharing discussions, the EU’s share of that could be anything from 10% to 30%, i.e., up to 15 billion euros, or 22 billion dollars, a year.
We will need to be ready, in other words, to make a significant contribution in the medium term, and also to look at short term “start up funding” for developing countries in the next year or so. We discussed this last week in an informal European Council meeting, and I am pleased that the Commission’s proposals on financing were well received, but we will need to discuss this again at EU level in late October.
So we need to signal our readiness to talk seriously about finance this week.
The counterpart of this grand bargain is that developing countries, especially the economically advanced amongst them, have to be much clearer on what actions they are ready to take to mitigate carbon emissions as part of an international agreement. They are already putting in place domestic measures to limit carbon emissions but they clearly need to step up such efforts. They understandably stress that the availability of finance from the rich world is a pre-requisite to mitigation action on their part, as indeed agreed in Bali. But the developed world will have nothing to finance if there is no commitment to such action.
So, in short: no money, no deal. But no actions, no money
Ladies and gentlemen,
We have less than 80 calendar days to go till Copenhagen. As of the Bonn meeting last month, the draft text contains some two hundred pages. A feast of alternative options. A forest of square brackets. If we don’t sort this out, it risks becoming the longest global suicide note in history.
Copenhagen is probably the best chance to shift, collectively, onto an emissions trajectory that keeps global warming below 2 degrees C.
At the moment, as I have said this morning, rather bluntly, I don’t believe we are on track for a successful meeting in Copenhagen. We need to get back on track as soon as possible.
So the fightback has to begin this week in New York.