Session 1: Unprecedented Challenges and the Road Ahead – Exploring Key Policies to Address Climate Change in a Globally Constrained Environment
Remarks by Angel Gurría
Paris, France - 12 October 2020
(As prepared for delivery)
Dear Ministers, Ladies and Gentlemen,
I am pleased to address this important Coalition.
We are at a pivotal moment for the global recovery. In our latest Interim Economic Outlook, we foresee a 4.5% contraction of global GDP in 2020. And many countries are still struggling to control the virus.
Governments are recognising that the choice between lives and livelihoods is a false dilemma. They are making unprecedented efforts to address the health crisis while designing and implementing recovery strategies. This becomes even more complicated as governments also need to address climate change and other urgent environmental crises, such as biodiversity loss.
The financial sector is also reacting: a new fund that weighs sovereign bonds according to national climate risk was recently launched. And green stimulus packages total around 300 billion USD. This public investment can catalyse private sector investment. However, several countries continue funding measures that are hampering environmental efforts.
The OECD has been working to help governments to implement green recovery packages.
Let me highlight three key priorities:
First, carbon taxes and pricing tools can ensure that stimulus packages align with climate objectives and contribute to public revenues. We estimate a carbon tax of 30 EUR per CO2 tonne would yield around 1% of GDP across the OECD and other major economies. Yet, 70% of energy-related CO2 emissions remain untaxed.
Second, we urge countries to adopt green budgeting. The OECD has developed guidance under the Paris Collaborative on Green Budgeting initiative and in conjunction with this Coalition.
Third, financial markets can deliver greener outcomes. Sustainable investment funds have grown steadily in recent years. Governments can further support this with appropriate regulatory tools and more reliable systems to incorporate environmental, social and governance (ESG) factors in financial and investment decisions.
The OECD, as your Institutional Partner, stands ready to support your efforts to include a strong environmental component in our recovery plans. Thank you.