Opening Remarks by Angel Gurría
Paris, France - 13 November 2018
(As prepared for delivery)
Excellencies, Ladies and Gentlemen:
I am delighted to welcome you to the 5th OECD Forum on Green Finance and Investment. Thanks go to the Japanese Ministry of Finance for their support on this critical area for sustainable growth.
I would also like to recognise Mr. Yasuo Takahashi, Japan’s Vice-Minister for Global Environmental Affairs, and Mr. Michael Liebreich, Chairman of the Advisory Board of Bloomberg New Energy Finance (BNEF), who will deliver our opening keynotes.
We are already living with the alarming consequences of global warming. Weather events this year — record-breaking heatwaves, wildfires, heavy rains, major tropical storms, diminishing Arctic sea ice — have given us a taste of what will happen if climate change intensifies.
We are seeing some signs of progress on combatting climate change. But our actions are not taking place at the required scale or level of urgency. It’s time to move beyond the current model of policymaking to deliver transformational — not marginal or incremental — change! We need to keep global warming below 1.5°C.
Last month, the UN Intergovernmental Panel on Climate Change (IPCC) launched a special report on 1.5°C. It explained how a number of climate change impacts could be avoided by limiting global warming to 1.5ºC compared to 2ºC, or more. For example, by 2100, the rise in global sea levels would be 10 cm lower with global warming of 1.5°C compared with 2°C, which means that up to 10 million fewer people would be exposed to the risks of sea level rise. The likelihood of an Arctic Ocean free of sea ice in summer would be once per century with global warming of 1.5°C, compared with at least once per decade with 2°C. Coral reefs would decline by 70-90% with global warming of 1.5°C, which is already a tragedy, but with 2ºC more than 99% would be lost, practically wiping out coral reefs altogether.
The impact of our way of life on climate is already going to be huge, but we need to act so that it is not catastrophic.
The financial system can make a powerful contribution. In fact, many new and exciting initiatives are emerging to improve the capacity of the financial system to ensure a low carbon future, including the European Commission’s new Action Plan on Sustainable Finance and its Technical Expert Group, and the Central Banks and Supervisors Network for Greening the Financial System, which was launched at last year’s One Planet Summit.
The OECD is supporting both of these initiatives as an official observer. Our own Centre on Green Finance and Investment, established in 2016, is leading the way, providing a global platform to support the transition to a sustainable global economy, fostering the exchange of ideas between the private sector, government and regulatory institutions, academia and civil society.
Last year’s OECD report, Investing in Climate, Investing in Growth, prepared at the request of the G20, lays out the case for governments to pursue an integrated policy approach that combines climate action with fiscal initiatives and structural reforms. Such a climate-compatible policy package can increase long-run GDP by up to 2.8% on average across the G20 in 2050.
The key message of the report is that policymakers need to take a “whole-of-government” approach to ensure that broader investment conditions are supportive of low-emission growth. This means rectifying policy misalignments, putting a price on carbon, improving planning processes and regulations and reforming fossil fuel subsidies.
The OECD’s Global Outlook on Financing for Sustainable Development, launched yesterday at the Paris Peace Forum, shows how governments spend USD 500 billion in fossil fuel subsidies that, rather than supporting the Sustainable Development Goals (SDGs), encourages damage from the use of oil, gas and coal at an estimated cost of nearly USD 5.3 trillion.
What is needed is a systemic shift of investments away from carbon intensive to low-emission, climate resilient infrastructure. That will be the focus of tomorrow’s sessions.
The OECD estimates that around USD 6.3 trillion of annual infrastructure investment is required until 2030 to meet global development needs. Ensuring these investments are “climate-compatible” will only add around 10% to immediate costs, but in the medium- to long-term will yield significant savings, for example in fuel.
Let me highlight two current OECD initiatives that can help countries to deliver on the Paris Agreement through investments in quality sustainable infrastructure.
First, the OECD World Bank UN Environment initiative on Financing Climate Futures: Rethinking Infrastructure, supported by the German government, identifies six priority action areas for driving transformational change. These are planning infrastructure for a low-emission and resilient future; unleashing innovation to accelerate the transition; ensuring fiscal sustainability; resetting the financial system in line with long-term climate risks and opportunities; rethinking development finance; and empowering sub-national governments. We released the key messages last September during New York Climate Week, and we will launch our final report in the next fortnight. I encourage you all to take a close look!
Secondly, tomorrow, we will launch a new OECD study, Developing Robust Project Pipelines for Low-Carbon Infrastructure. The will show that governments need to strengthen significantly their efforts to develop “project pipelines” to meet their climate ambitions. Without detailed infrastructure investment plans, it is unclear what project investments are needed, where and when they should be built, how they could be financed, or whether they are in line with long-term climate and development objectives.
Ladies and Gentlemen:
The OECD stands ready to support the efforts of countries, investors, business and civil society to mobilise green finance and investment. Greening our financial sector and investments is one of the single most powerful things we can do to tackle climate change and put our societies and economies on a sustainable growth path.
We can achieve this, but we need to confront the challenge head on. I urge you to seize the opportunity of this Forum to shape collective bold, decisive and urgent action. Thank you.