Economic Policy Archives - Page 17 of 39 - An Economic View of the Environment

Opportunities and Risks for Green Economic Recovery

In our most recent (August 19^th) webinar in the series of Conversations on Climate Change and Energy Policy, sponsored by the Harvard Project on Climate Agreements (HPCA), I had the pleasure of hosting Rachel Kyte, Dean of the Fletcher School of Law and Diplomacy at Tufts University. This webinar series features leading authorities on climate change policy, whether from academia, the private sector, NGOs, or government. In this case, my guest has had her feet planted firmly in more than one of those realms. Previously Dean Kyte served as a Special Representative of the U.N. Secretary-General, and before that was Vice President and Special Envoy for Climate Change at the World Bank. A video recording and transcript of the webinar are available here.

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Due to the global COVID pandemic, the webinar was executed remotely. The consequent economic downturns have made many countries think about the design of their respective economic recovery packages, including the possibility of greening recovery policies and instruments. This was the topic of Rachel Kyte’s presentation, “Using the Pandemic Recovery to Spur the Clean Transition – Opportunities and Potential Pitfalls.”

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Citing the fact that 180 nations are in severe recessions, with some possibly teetering on the brink of depression, Dean Kyte describes the current moment as an opportunity to “pivot to a trajectory that would get us closer to being on track for the kind of economic pathway forward that we would need to reach zero net emissions by mid-century … in order to combat the worst impacts of climate change.” Leveraging that opportunity, however, will be complicated, Kyte explained, noting that the severe economic stress caused by the pandemic is “testing the boundaries of international solidarity.”

“We are about to see over the fall, I think, some of the cumulative impacts of the economic crisis on our financial systems. And we can see that the traditional mechanisms and multinational cooperation which we rely upon in order to attack issues of global public good are straining. They are straining with COVID and they are straining with the impacts of climate change,” she says.

It is imperative, she argues, for citizens, institutions, and governments to recognize the severity of the situation, and muster the political will to address the severe economic pains caused both by the pandemic and unmitigated climate change.

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“We will really be putting pressure on the systems that are normally in place to support that – the IMF, the multinational development banks, the role of central banks,” she points out. “In these economic crises, it is the least well off, the most vulnerable, and the most vulnerable to climate change, who are impacted the most. And what we’re looking at is wiping out the advances that have been made in poverty alleviation over the last few years. That has huge impacts for the way we think about vulnerability to climate change going forward.”

Over the short-term, however, Rachel Kyte acknowledges that economic contractions have reduced carbon dioxide (CO₂) emissions, as global energy demand is expected to fall by about six percent in 2020, compared with 2019. But demand will pick back up when economies rebound, she notes, unless there are systematic efforts to change it. Those efforts, she remarks, can be strategically incorporated into economic relief packages that will continue to emerge.

“There are, I think, a number of think tank groups, [and other] regional bodies now suggesting that there are clear policy priorities in order to be able to hit that sweet spot of short-term recovery, but also a cleaner and faster pathway down the energy transition,” she remarks. She specifically cites the need for green “shovel-ready” projects aligned with rescue plans for distressed industries that adhere to a pathway of deep decarbonization and increased energy efficiency. Rachel also discusses the need for smart private finance and investment in green technologies, and sufficient international cooperation necessary to spare developing countries crushing debt loads that would cripple their climate change mitigation efforts.

Referring to the nature of such a green energy pivot, she remarks that, “We’re at a moment where we need both scaffolding and scholarship or new design. The scaffolding is that we have an international system that helps us respond to pandemics, that helps us respond to economic crises, and that should help us to respond to climate change. And that system is really underperforming, at risk, and under strain. So, we have to in this immediate phase put scaffolding around it and help it limp forward and help us all limp forward together.”

During the webinar, after concluding her presentation, Dean Kyte fields questions from the audience, including the risks of economic rescue packages that worsen the effects of climate change, the potential for reductions in Overseas Development Assistance budgets to the developing world, the challenges of green aid in Africa, obstacles facing the United Nations Framework Convention on Climate Change (UNFCCC) in making substantive progress, Mexico’s mixed record on climate change policy, and potential incentives to encourage developing countries to adopt green recovery trajectories.

All of this and more can be heard and seen at this website. I hope you will check it out.

Previous webinar in this series – Conversations on Climate Change and Energy Policy – have featured Meghan O’Sullivan’s thoughts on Geopolitics and Upheaval in Oil Markets, and Jake Werksman’s assessment of the European Union’s Green New Deal.

The next HPCA Conversation on Climate Change and Energy Policy is scheduled for September 8^th with guest Joseph Stiglitz, University Professor at Columbia University. Click here to register in advance for that webinar.

The European Green Deal

From his perspective as Principal Advisor to the Directorate General for Climate Action in the European Commission (EC), Jacob Werksman is cautiously optimistic about the direction of international climate policy. Werksman was my guest in the second webinar of our new series of Conversations on Climate Change and Energy Policy, held July 9^th, sponsored by the Harvard Project on Climate Agreements (HPCA). A recording plus transcript of the webinar is available here.

Stavins and Werksman during remote conversation, July 2020

Jake Werksman’s role since 2012 as Principal Adviser to the Directorate General for Climate Action in the European Commission has focused on the international aspects of European climate policy. His responsibilities include leading aspects of the European Union negotiations under the Paris Agreement and – more broadly – the United Nations Framework Convention on Climate Change.

Jake is an international lawyer, and holds a Bachelor’s degree from Columbia University, a J.D. degree from the University of Michigan, and an LL.M. degree from the University of London. He has been involved in international climate change efforts for more than a decade since he began consulting for the Danish Government leading up to the 15^th annual Conference of the Parties (COP-15) in Copenhagen in 2009. It was during that meeting, Werksman remarks, that two different models of international climate policy – the bottom-up ‘pledge and review’ approach versus the top-down legally binding agreement approach – first collided, all but derailing substantive action.

Jacob Werksman

“Logistically there were huge problems,” he says. “A lot of people would certainly characterize it as not being the success at least that was hoped for.” (But, I would note, it did lay the foundation for Cancun, and everything after that, which in a sense, led to Paris.)

The Paris Agreement, reached at COP-21 in 2015, obligates signatories to establish and achieve meaningful emissions reduction targets through the use of nationally determined contributions (NDCs), which, when aggregated, are intended to limit the increase of global temperatures to less than two degrees centigrade above pre-industrial levels.

While that goal is obviously jeopardized by the Trump Administration’s decision to withdraw from the Paris Agreement, Werksman is encouraged by the global response to that decision.

“The immediate impact of the Trump Administration’s withdrawal from Paris was that it helped to galvanize the international community around Paris. And you see that in the way in which no other party followed suit,” he says. “There may have been some that were on the edge of joining what they might have seen as a populist rejection of Paris and climate policy, but that didn’t happen.”

Much of our discussion focuses on the European Green Deal, the European Commission’s proposed ambitious roadmap to address climate change by increasing the production of renewable energy and increasing energy efficiency, more stringently regulating emissions from industrial and energy sources, and seeking to reduce emissions in the building and transportation sectors.

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Description automatically generated — *Werksman representing the European Union in international climate talks*

“There were a lot of bold proposals in the original European Green Deal,” Werksman says. “As they relate to the international process, they also contain a proposal to move from our existing Paris Agreement targets of at least 40 percent reduction of emissions from 1990 levels by 2030, to a 50 to 55 percent emissions reduction target. And it contains a climate neutrality goal by 2050. So, the EU has committed to being a net zero economy, the first net zero region, by 2050. So, these are very ambitious pushes in the direction of low-carbon and a climate-resilient economy.”

Werksman says that with the exception of the climate-neutrality goal, which has already been endorsed by EU leaders, all of the other action items in the European Green Deal will still require approval by the European Parliament and the European Council (where each member state has one vote).

A webinar viewer asks Werksman for his assessment of the $100 billion dollar climate pledge made by the richest countries in 2009, prior to the Paris Agreement. Werksman responds that the Organization for Economic Cooperation and Development (OECD), which tracks the fund raising efforts, estimates that $70 billion had been raised by 2018, while also stating that more needs to be done to better leverage private finance.

“There are significant public resources available, but we need to get better at using those through leverage and guarantees, participating with private sector banks in the shaping of softer loans in order to get the money flowing to a larger scale,” he remarks.

I wrap up the webinar by asking Jake his opinion of the youth climate movements that swept through the United States and Europe last year, and Werksman responds that he finds them both “inspiring and sobering.”

“They had two messages. One was, we agree with everything that people like me have been saying about the need to act and to act urgently. And why haven’t you succeeded? Why haven’t you done better if we can talk in incremental terms about the kind of progress that we’ve been able to make moving from the Framework Convention to the Paris Agreement? But you try to explain to a young activist who doesn’t see change on the ground how that is success after 30 years of effort and you quickly run out of words,” he says.

“I very much hope that when they’re allowed back on the streets and back into the classrooms that they won’t have forgotten this, and in particular when they’re allowed into the voting booths, they won’t have forgotten this and they will help make up for some of the shortfalls of the efforts that our generation has been making.”

As I noted at the outset, a recording of the webinar with Jake Werksman, including a complete transcript, is available here. I hope you will check it out.

The previous webinar in this series – Conversations on Climate Change and Energy Policy – featured Meghan O’Sullivan’s thoughts on Geopolitics and Upheaval in Oil Markets. And the next one is scheduled for 9:00 am (Eastern Time USA), August 19^th, when my guest will be Rachel Kyte, Dean of the Fletcher School of Law and Diplomacy at Tufts University and long-time participant in international climate change policy research and action. Click here to register in advance for that webinar.

Geopolitics and Upheaval in Oil Markets

I’m very pleased to announce that we have launched a new webinar series from the Harvard Project on Climate Agreements – “Conversations on Climate Change and Energy Policy,” which features presentations, interviews, and other engagements with leading authorities on climate change and related energy policy, whether from academia, the private sector, NGOs, or government.

We were fortunate to be able to launch this new series on June 3, 2020, with Meghan O’Sullivan, the Jeanne Kirkpatrick Professor of the Practice of International Affairs at the Harvard Kennedy School, where she directs the Geopolitics of Energy Project. Her most recent book, published by Simon & Schuseter in September, 2017, is Windfall: How the New Energy Abundance Upends Global Politics and Strengthens America’s Power. A recording of the webinar — plus a complete transcript — is available here.

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Description automatically generated — *Megan O’Sullivan*

I think it is fair to say that Professor O’Sullivan is the quintessential Harvard Kennedy School faculty member, because in addition to her extensive and relevant scholarly research, she has had abundant experience in the policy world as a practitioner, including work in policy formulation and negotiation as a Special Assistant to President George W. Bush.

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Description automatically generated — *On location in the Middle East during the Bush 43 administration*

The webinar begins with Meghan’s presentation on “The Geopolitics of the Global Upheaval in Oil Markets,” in which she touches on the recent impacts on global oil markets of both price competition and the demand shock associated with the COVID-19 pandemic. Following her presentation, I pose some questions, drawing – in part – on ones submitted by webinar participants.

Again, a recording of the webinar with a complete transcript is available here. I hope you will check it out.