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Think 20 Solutions – Climate Policy: An Investment in Modernizing the Global Economy


Climate Policy


To keep global warming below 2 degrees Celsius and avoid destabilizing ecosystems vital to mankind, we must decarbonize the global economy by mid-century. G20 countries make up 80 percent of global energy use and C02 emissions, and their efforts are urgently needed to implement the Paris Climate Agreement. Despite concerns some policies could hurt economic growth and development, fighting global warming is an investment in human development, in modernizing the global economy, and in ensuring equality, peace, and security.

Members of the Think 20 community (T20) have come up with many excellent proposals to address the challenges for G20 countries. Below we are presenting some of these ideas. All Policy Briefs can be found here http://www.g20-insights.org/.

The G20 should leverage market forces for low-carbon growth.

 

Investing in sustainable infrastructure, mobilizing sustainable finance, and implementing carbon pricing will stimulate low-carbon growth and help meet Paris Agreement targets and the Sustainable Development Goals (SDGs). The G20 should encourage Multilateral Development Banks (MDBs) to set targets for scaling up sustainable infrastructure. G20 countries should work with the Financial Stability Board (FSB) on disclosure rules for climate-related financial risks. And they should encourage MDBs, export finance institutions, and banks to adopt shadow carbon pricing in internal decision-making, to help reduce climate-related risk in their investment portfolios. MDBs should be encouraged to create roadmaps for translating the Paris Climate Agreement into investment plans. The G20 should discuss ways to double the level of emissions covered by carbon pricing mechanisms. The G20 should establish an expert advisory commission on energy transformation. Countries should support specialized consumer solar finance intermediaries in creating markets for solar products, and encourage MDBs and global private capital to invest in these. The G20 should aim to eliminate fossil fuel subsidies by 2022.

Bak, Céline, Amar Bhattacharya, Ottmar Edenhofer, Brigitte Knopf, “Towards a Comprehensive Approach to Climate Policy, Sustainable Infrastructure, and Finance,” T20 Policy Brief, March 16, 2017 (http://www.g20-insights.org/wp-content/uploads/2017/03/Towards-a-comprehensive-approach-to-climate-policy-sustainable-infrastructure-and-finance.pdf)

Dao Nguyen, Thang, Ottmar Edenhofer, Gianluca Grimalda, Michael Jakob, David Klenert, Gregor Schwerhoff, Jan Siegmeier, “Policy Options for a Socially Balanced Climate Policy,” T20 Policy Brief, March 13, 2017 (http://www.g20-insights.org/policy_briefs/policy-options-socially-balanced-climate-policy/ )

Colombier, Michel, Yu Cong, Patrick Criqui, Christoph Frei, Carl Friedrich Gethmann, Philipp Großkurth, The Rt. Hon John Gummer, Lord Deben, Baroness Brown of Cambridge DBE FREng (Julia King), Franck Lecocq, Andreas Löschel, Jyoti Parikh, Dirk Uwe Sauer, Robert Schlögl, Christoph M. Schmidt, Frithjof Staiß, Cyril Stephanos, Kanako Tanaka, Eberhard Umbach, Matt Wenham, Du Xiangwan, Koichi Yamada, Tian Zhiyu, “Establishing an Expert Advisory Commission to Assist the G20’s Energy Transformation Processes,” T20 Policy Brief,  April 10, 2017, ( http://www.g20-insights.org/policy_briefs/establishing-expert-advisory-commission-assist-g20s-energy-transformation-processes/ )

Samans, Richard and Nicholas Davis, “Advancing Human-Centered Economic Progress in the Fourth Industrial Revolution,” T20 Vision Brief, 5 May 2017 (http://www.g20-insights.org/policy_briefs/advancing-human-centred-economic-progress-fourth-industrial-revolution-leadership-agenda-g20-governments/)

Bhandari, Amit, Akshay Mathur, Purvaja Modak,”A decentralized, consumer -driven model for the solar eco-system,” T20 Policy Brief, April 7, 2017 (http://www.g20-insights.org/policy_briefs/decentralized-consumer-driven-model-solar-eco-system/ )

 

The G20 should support transformative sovereign wealth funds for climate protection.


Transformative sovereign wealth funds, or future funds, can be used to leverage investment in climate protection. They can help support workers, regions, and sectors adjust to structural change due to decarbonisation by adopting pro-active employment, training, and industrial policies. Future funds would draw revenues from CO2 taxes and emissions trading, as well as from estate taxes, to invest in climate protection.

German Advisory Council on Global Change, “Development and Justice through Transformation: The Four Big ‘I’s” T20 Vision, May 4, 2017 (http://www.g20-insights.org/policy_briefs/development-justice-transformation-four-big-2/ )

The G20 should promote small- and medium-sized enterprises (SMEs) in green-tech.


G20 countries should help make innovative, low-carbon SMEs attractive to investors. They should track the health of emerging green-technology firms and assess the resilience of financial institutions through stress tests of various climate scenarios. Public funding can also remove the risk of scaling up low-carbon innovation by SMEs, and can be used to “signal” innovative green technology SMEs to investors. SMEs should be included in designing green finance platforms.

Anbumozhi, Venkatachalam, Céline Bak, Joël Ruet, Elena Verdolini, “Innovative Green-Technology SMEs as an Opportunity to Promote Financial De-Risking,” T20 Policy Brief, May 8, 2017 (http://www.g20-insights.org/policy_briefs/innovative-green-technology-smes-opportunity-promote-financial-de-risking/)


The G20 should standardize green finance practices.


G20 countries should promote green finance principles, indicators, and reporting procedure. They should work together to develop green bond rating criteria and a monitoring system for assessing the implementation of green principles. The G20 should mandate the FSB to develop an adequate regulatory framework for green finance and promote disclosure guidelines for environmental risks and related financial risks.

Alloisio,Isabella, Céline Bak, Kathrin Berensmann, Amar Bhattacharya, Gerd Leipold, Lawrence MacDonald, Qingqing Yang, Hannah Schindler, Tian Huifang, Ulrich Volz, “Fostering Sustainable Global Growth through Green Finance – What Role for the G20?,” T20 Policy Brief, May 5, 2017 (http://www.g20-insights.org/policy_briefs/fostering-sustainable-global-growth-green-finance-role-g20/)


Media Contact:


Guido Warlimont
Kiel Institute for the World Economy
T +49 431 8814-629
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Tanja Vogel
German Development Institute /
Deutsches Institut für Entwicklungspolitik (DIE)
T +49 228 94 927-264
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