Our Common Future Under Climate Change

International Scientific Conference 7-10 JULY 2015 Paris, France

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Friday 10 July - 11:30-13:00 UNESCO Fontenoy - ROOM II

L4.1 - The climate, finance and trade nexus

Large Parallel Session

Chair(s): K. Töpfer (Institute for Advanced Sustainability Studies (IASS), Potsdam, Germany)

Lead Convener(s): J.C. Hourcade (International Research Center on Environment and Development (CIRED), Paris, France), R. Meléndez-Ortiz (ICTSD, Geneva, Switzerland)

11:30

Introduction and Opening remarks

K. Töpfer (Institute for Advanced Sustainability Studies (IASS), Potsdam, Germany)

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Introduction and Opening remarks
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11:34

Upgrading finance and price signals in an adverse economic context

J.C. Hourcade (International Research Center on Environment and Development (CIRED), Paris, France)

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Upgrading finance and price signals in an adverse economic context

JC. Hourcade (1)
(1) International Research Center on Environment and Development (CIRED), Paris, France

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The current context of the world economy in the aftermath of the 2008 financial crisis makes difficult to implement a quickly rising carbon price to trigger ambitious low carbon transition (competitiveness issues, unemployment, political reluctance to transfers compensating the segments of population the most affected by higher energy prices).

 

This presentation will demonstrate that the emerging calls for upgrading climate finance will also confront this adverse context because of the tightness of public budgets. It will then propose to turn the question upside-down through making climate finance a lever to upgrade the efficiency of the current financial intermediation in directing saving towards long term infrastructure investments.

 

It will then display the basic principles of financial devices apt to a) lower the investment risks on low carbon projects based on an agreed upon notional value of carbon which can be increased at a pace higher than this of a carbon price b) redirect to these investments private savings which go currently in speculative investments and liquid financial products c) foster a sustainable growth recovery out of the current fragile economic context.

 

It will conclude in showing how such a framework will a) reduce tensions due to the asymmetry of trade- impacts of carbon prices amongst sectors and countries b) fulfill the CBDR principle and c) increase the incentive efficiency of carbon pricing, hence its political acceptability.

11:46

Using trade policy to ensure the viability of massive use of low carbon technologies

R. Meléndez-Ortiz (ICTSD, Geneva, Switzerland), R. Meléndez-Ortiz (International Centre for Trade and Sustainable Development , Geneva, Switzerland)

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Using trade policy to ensure the viability of massive use of low carbon technologies

R. Meléndez-Ortiz (1)
(1) International Centre for Trade and Sustainable Development , Geneva, Switzerland

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The recent IPCC-report clearly demonstrates the need to shift to a cleaner energy mix if we are to stay within the agreed 2-degree target of global temperature rise. In order to do so, costs of renewable energy must go down and markets need to be strengthened so as to allow for a scale-up of innovation, production and deployment of sustainable energy technologies.

Trade policy has an important role to play in this respect. Reducing tariffs and barriers to trade in services related to clean energy will make it easier for private actors to optimize their supply-chains, thereby pushing down costs. In order to further enhance trade opportunities it will also be necessary to address less tangible but nevertheless significant non-tariff barriers such as standards.

In the past few years, there has been a surge in the use of trade remedies in the area of clean energy. Whereas this to a great extent reflects a natural consolidation of the market with steeply falling prices, the pressure is strong on governments to put in place trade restrictions to protect its domestic industry.

Similarly, whereas decision-makers across the world recognise the need to scale up clean energy at home, it can be challenging to put in place policies that may be perceived as costly unless there is an encouragement specifically for the domestic industry. This has led to the proliferation of trade restrictive policies like local content requirements, which demand that a certain amount of inputs in different clean energy projects be produced domestically.

Ironically, many of these trade restrictive policies maintain costs of climate-friendly technologies artificially high.

There are several options for addressing these trade obstacles. First, there are regional trade agreements- many of the world’s leading trade nations are currently involved in the negotiations of “mega-regionals” such as the T-TIP and the TPP. Second, there is a negotiation underway under a sectoral initiative aiming towards an Environmental Goods Agreement, EGA. Last, there is the option of unilateral trade reform.

The engagement and support of the climate constituency in these efforts would ensure a better alignment of trade policies with pressing climate change goals.

11:58

Connecting emerging initiatives; the lessons for the UNEP finance inquiry

N. Robins (UNEP, London, United Kingdom)

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Connecting emerging initiatives; the lessons for the UNEP finance inquiry

N. Robins (1)
(1) UNEP, London, United Kingdom

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The UNEP Inquiry was launched in January 2014 to identify and advance policy options that can better align the US$300trn global financial system with long-term sustainable development. The Inquiry has worked through partnerships at the country level - including Bangladesh, Brazil, Colombia, France, India, Indonesia, Kenya, South Africa, Switzerland, the UK and the USA - as well as with international institutions. Its findings show that a growing number of governments, regulators, standard-setters and market actors are incorporating sustainability into the rules that govern the financial system. Across the Inquiry's work, climate change has emerged as a key cross-cutting issue, and the Inquiry has recently published an emerging framework for linking financial reform and climate security. This framework identified four priority areas: risk management and prudential regulation; capital mobilisation; system transparency; and strengthening financial culture. Cutting across these priority areas, the strategic role of central banks has emerged as a critical theme. In this session, the Inquiry will present its findings, suggesting ways in which international cooperation could be strengthened.

12:10

Panel discussion

K. Töpfer (Institute for Advanced Sustainability Studies (IASS), Potsdam, Germany), P. Canfin (World Resources Institute, Washington, United States of America), D. Dasgupta

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Panel discussion
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