In September, the Global Commission on the Economy and Climate (chaired by former President of Mexico Felipe Calderón and Lord Stern) published its major report, The New Climate Economy Report. This report is playing an important role preparing the need for a global commitment on climate change, hopefully at the climate conference in Paris in 2015.
There were several working papers prepared to support and complement the Global Commission’s report. Recently, Llewellyn Consulting in London published two working papers relating to infrastructure and structural change issues and another on international cooperation is forthcoming.
The importance of these was signalled in the New Climate Economy Report. Reflect on what the report states about investment in infrastructure:
Investment in infrastructure underpins modern economic growth. Low-carbon forms of infrastructure are essential to reduce current emissions trajectories. Yet many economies today are failing to mobilise sufficient finance to meet their infrastructure needs. This is not due to a shortage of capital in the global economy. It results, in many countries, from a lack of public financing capacity and the market perception that investments are high-risk. Financial innovations, including green bonds, risk-sharing instruments and products which align the risk profile of low-carbon assets with the needs of investors, can reduce financing costs, potentially by up to 20% for low-carbon electricity. National and international development banks should be strengthened and expanded.
Llewellyn Consulting were given the challenge to frame “the key questions and propositions and integrating this narrative into the wider project.” The Llewellyn papers can be summarised by the following points:
- Successful economies undergo continual, and cumulatively extensive, structural change.
- Good structural adjustment policies do much to facilitate such change and thereby to promote economic growth.
- Climate change is one – albeit big – factor to which economies have continually to adjust.
- Investment, including in innovation, is central to effecting structural change.
- Global infrastructure requirements are colossal – perhaps exceeding the value of the current stock.
- Such large-scale investment offers great scope to:
- Decarbonise economies;
- Strengthen climate resilience; and
- Ensure sustainable growth.
- International cooperation will be central to achieving sustainable growth while also reducing climate risk.
- Cooperation at the international level does not always have to mean agreement at the global level.
- Cooperation can take any one of a number of (different) forms, which can be undertaken simultaneously.
The papers were co-authored by John Llewellyn and Ben Combes. John will be familiar to EiD readers by his July post on the world needing a game changer. The papers are available here: on infrastructure; on structural adjustment.
Energy in Demand - Sustainable Energy - Rod Janssen 