Environment

Betting the planet: A climate reality check

 

Climate Week NYC 2015 signature event keynote address by Angel Gurría,

Secretary-General, OECD

New York City, 28 September 2015

(As prepared for delivery)

 

 

Honoured leaders, Ministers, distinguished guests, Ladies and Gentlemen,

 

As we approach COP21 it is becoming increasingly clear that more ambition is needed to get us on a 2 degree pathway.

 

But it is not just about committing to emission reduction targets by 2030. Governments need to demonstrate how their policies will credibly put them on a pathway to even deeper reductions.

 

It is time for a climate reality check. Subsidising fossil fuel production and consumption does not pass. The OECD’s latest inventory of support to fossil fuels found that in a range of countries covering 80% of the world’s energy use, over the period 2010-14 subsidies amounted to about USD 160-200 billion a year. Many of the subsidies supporting consumption of fossil fuels disproportionately benefit the wealthy. There have been recent signs of decline in countries like India, Indonesia, and Mexico, but there is still a long way to go.

 

The same reality check finds that coal remains the least heavily taxed of all fossil fuels, despite being the most carbon-intensive fuel available for electricity generation. Without a concerted change, it is projected that by 2050 coal generation will have burnt half of the remaining carbon budget for staying under 2°C.

 

Not all fossil fuel can be replaced overnight. But of all the fossil fuel burnt today, coal is the easiest to replace – both technically and economically. Coal is not cheap. Or at least, it is only cheap if you ignore the costs it imposes in terms of public health, land disturbance and water, dust and noise pollution.

 

Governments are constantly urged to be realistic. So let’s be realistic. Let’s do what we can today, to ensure that we do not mortgage away tomorrow. A gradually rising carbon price is one sure way of sending that signal in a realistic, cost-effective way. But climate policy alone is not enough.

 

Leaving fossil fuels behind implies a transformation that will cut across every corner of the economy. Our report on Aligning Policies for a Low-Carbon Economy sketches the scale of this transformational challenge.

 

Governments cannot afford to treat this year’s COP like just another round of an endless diplomatic or trade negotiation. The international community has many priorities and only so much time to devote to them.

 

Since the failure of the Copenhagen COP, it has taken six years to get back to the same level of focus. It is a bit like landing the Rosetta probe on a comet. It took ten years to align them. Windows for alignment and decision making are short and fleeting – we do not have time to wait for another ten years.

 

Any workable deal will have to be grounded in trust. All countries, especially emerging and developing economies, need to have faith in the global process. Meeting the commitment made by developed countries at Cancun in 2010 to mobilise USD 100 billion per year by 2020, from both public and private sources, would go a long way towards strengthening trust.

 

Putting in place the requisite financing will help those countries facing large-scale infrastructure investment requirements to ensure that they filter out proposals that may be affordable but that are neither modern nor sustainable.

 

At the OECD, we are working to measure and track progress towards the Cancun commitment and identify new sources of funding. Our work with Bloomberg Philanthropies on green bondsis one such area, where we are supporting the transition from a market for green and climate bonds which is valued at 600 billion, to one in which the entire 100 trillion bond market reflects the low-carbon transformation.

 

Ladies and Gentlemen, a climate reality check leaves no doubt that the costs of inaction are far higher than any of us could responsibly justify.

 

The OECD can help countries navigate the necessary transition and conduct the reality checks needed to ensure that we stay on course. But negotiators at COP21 need to acknowledge what any reality check will say: the carbon clock is ticking and there is very little time left.

 

Thank you.