This past little while has seen some statements from unlikely sources about the critical economic importance of dealing quickly with climate change.
President Barack Obama led off the batting with his inaugural address, calling on Americans to take the lead in developing the technologies necessary for the emerging low-carbon economy. He pointed to the drought and Hurricane Sandy as the most recent evidence that our climate is changing for the worse.
But the most startling statements came from the heads of those bastions of economic orthodoxy: the World Bank and the International Monetary Fund. Speaking at the World Economic Forum in Davos, Switzerland, Christine Lagarde, the managing director of the IMF and a former finance minister in the conservative government of Nicolas Sarkozy, pointed to critical pivot points for the economic future.
Her final pivot: “Increasing vulnerability from resource scarcity and climate change, with the potential for major social and economic disruption: This is the real wild card in the pack.” She went on to call climate change “the greatest economic challenge of the 21st century.” This from the head of the IMF.
Ms. Lagarde concluded with a call for a new kind of economic growth. “So we need growth, but we also need green growth that respects environmental sustainability. Good ecology is good economics. This is one reason why getting carbon pricing right and removing fossil fuel subsidies are so important.”
In response to a question from the audience, she said: “Unless we take action on climate change, future generations will be roasted, toasted, fried and grilled.”
Jim Yong Kim, president of the World Bank, went so far as to insist that climate change be at the top of the Davos agenda, along with finance and growth, “because global warming imperils all of the development gains we have made.”
He went on to say that “the world’s top priority must be to get finance flowing and get prices right on all aspects of energy costs to support low-carbon growth.” Achieving a predictable price on carbon that accurately reflects real environmental costs is key to delivering emission reductions at scale. Correct energy pricing can also provide incentives for investments in energy efficiency and cleaner energy technologies.
A second immediate step is to end harmful fuel subsidies globally, which could lead to a 5-per-cent reduction in emissions by 2020.
These statements are not from the head of Greenpeace or from David Suzuki. They come from the heads of the bulwarks of the international financial system.
For years, the IMF has resisted straying into the realm of environment and finance, viewing it as a side issue best left to international environmental organizations. And while the World Bank has invested in low-carbon futures and has been active in climate talks, the issue has not been raised to the top of its agenda. Until now.
Climate change as the main economic discussion point at the annual meeting of the rich and famous leaders of governments and multinational enterprises? Will our Prime Minister or Finance Minister be the next to see the light?
David Runnalls is a senior fellow at Sustainable Prosperity, an Ottawa-based think tank.