Remarks by Angel Gurría
Washington, USA - 19 April 2018
(As prepared for delivery)
Distinguished Guests, Ladies and Gentlemen:
I am delighted to join you at this Second Summit of the Global Commission on the Economy and Climate to discuss the opportunities and challenges for accelerating the better climate, better growth agenda.
The OECD is a longstanding supporter and active member of The Global Commission on the Economy and Climate. Together, we have demonstrated that ambitious action against climate change is the very foundation of our future economic well-being! Indeed, last year’s OECD report, Investing in Climate, Investing in Growth, found that a package of strong fiscal and structural reforms — combined with coherent climate policy — can increase long-run GDP by up to 2.5% on average in 2050 relative to a continuation of current policies.
The “Arc of Ambition” is about setting us on a global trajectory to turn better climate, better growth into reality.
It starts with the Paris Agreement, which has the potential to measure up to the scale and urgency of the global climate challenge. But to transform this potential into concrete results, we must finalise the Paris Rulebook as soon as possible to support its effective implementation.
We also need to go further. The aggregate of current commitments in nationally determined contributions (NDCs) is not nearly enough to meet the Paris Agreement’s goals. At this rate, we’ll be lucky to reach the 2 degrees goal, let alone 1.5 degrees! The Talanoa Dialogue later this year will provide an important opportunity to take stock and see how we can lift our game.
Honouring existing commitments is the next part of the Arc — implementation, implementation, implementation! This includes core climate policies such as carbon pricing and fossil fuel subsidy reform.
Despite its fiscal and climate benefits, carbon pricing is grossly underutilised. OECD analysis shows that across 41 OECD and G20 countries, around 90% of all carbon emissions are not priced at a level reflecting even a conservative estimate of their climate costs. Sixty per cent of emissions are not priced at all! Carbon pricing is scarce, and fossil-fuel subsidies are prolific. This is neither smart climate policy nor smart fiscal policy. Fossil fuel subsidies are a large fiscal burden to governments, and are incompatible with policies that aim to cut emissions.
That is why, at last year’s One Planet Summit, I launched the Paris Collaborative on Green Budgeting, with France and Mexico. The Paris Collaborative is the first cross country initiative designed to support governments in integrating climate considerations into their budgetary measures and fiscal policies.
Finally, to accelerate our progress across the Arc, we must steer trillions of dollars towards low-carbon and climate-resilient investments. This means mobilising climate investment from the public and private sectors.
The OECD, World Bank and UN Environment have launched a joint initiative — Financing Infrastructure for Climate Futures — to develop new insights and challenge existing mindsets on low-carbon infrastructure planning and financing.
All of these actions need to be done in a way that is inclusive and progressive. We must facilitate the transition of exposed businesses and households. We need to plan early to avoid stranded assets in fossil-fuel-intensive industries and stranded communities alongside them. I am pleased that Sharan Burrow is on our panel to highlight this important issue.
Ladies and Gentlemen:
We have shown that a combination of structural and fiscal reform with strong climate policy is good for the economy. Now, together with the Global Commission, we are helping countries to turn better climate, better growth into a reality. The 2018 New Climate Economy report, with its focus on accelerators and real-world examples, is an excellent contribution. Congratulations!
We have exciting opportunities ahead to accelerate the better climate, better growth agenda. But time is not on our side. We must set off quickly, decisively and collectively on our Arc of Ambition. The OECD is ready — count on us! Thank you.