World Economy

COP21 Told Not to Thwart Jobs, Growth

COP21 Told Not to Thwart Jobs, Growth
COP21 Told Not to Thwart Jobs, Growth

As the world gathers in Paris for the two-week UN climate summit, known as COP21, the December 2015 issue of Finance & Development magazine explores the tensions—and complementarities—between combating climate change and fighting for growth.

One of society’s most pressing questions is how to balance the demand for sufficient energy to power economic growth and development with the urgent need to sharply reduce carbon emissions, the chief contributor to climate change, notes F&D’s editor-in-chief Jeffrey Hayden. The question fuels intense debate, he says—one that has become increasingly polarized and frequently puts growth and sustainable energy in opposition, IMF reported.

But Nicholas Stern of the London School of Economics argues the twin challenges of fighting poverty and climate change are not mutually exclusive. Massive infrastructure investment will be needed in the next 15 years to foster poverty reduction and economic growth in the face of rapid urbanization. But this investment offers an opportunity, says Stern—with international collaboration and deliberate planning—to promote sustainable development, including by reducing the use of fossil fuels.

The International Labor Organization’s Peter Poschen and Worldwatch Institute’s Michael Renner say we need not choose between green and jobs. Indeed, protecting the environment can go hand in hand with economic prosperity and job opportunities.

ILO and other research concludes that if emissions are cut in line with the goals set for the Paris climate discussions, the result would be net gains of about 0.5 to 2% of total employment.  

 Carbon Tax

In a primer on carbon pricing, IMF economist Ian Parry looks at the practical problems of setting a price for carbon that reflects its true costs. He argues that falling energy prices and positive momentum for action on mitigation after the Paris talks make this the perfect time to phase in carbon taxes.

An analysis of the four major declines in oil prices in the past 30 years by World Bank economists finds the most recent collapse has an eerie similarity to the prolonged slump that began in 1986, which may portend a long period of low prices.

 Forging a New Global Treaty

More than 150 world leaders, along with negotiators from 196 countries, have descended on Paris for a United Nations climate conference with the goal of forging a new global treaty to require deep carbon emission reductions and to help poor countries that can’t afford to cope with the effects of global warming.

The treaty is meant to keep global temperatures from rising more than two degrees Centigrade (3.6 degrees Fahrenheit) over what they were in preindustrial times.

UN Secretary General Ban Ki-moon put the onus of leadership on the largest nations at the table, saying that the G20 countries “account for more than three-quarters of greenhouse gas emissions.”

In anticipation of the need to pay for the changes, the World Bank Group unveiled a new plan that will require $16 billion for Africa to adapt to climate change, the details of which will be unveiled at the Paris conference. Some experts, including World Bank President Jim Yong Kim, believe the commitments countries have made before even showing up to Paris are the key to success.

“Ahead of the Paris talks, more than 160 countries have submitted their national plans–the Intended Nationally Determined Contributions–that show trillions of dollars of potential demand for climate investments... We pledged a one-third increase in direct funding for climate and, overall, could see an annual funding total of as much as $29 billion by 2020,” World Bank President Jim Yong Kim told CBS News. “Climate change is a grave threat to all of us, undermining stability and peace by intensifying stress over water access, food insecurity, and vulnerability to storms and heat waves.”

The INDCs, experts say, are the indicators of what the biggest polluters, including the United States, China, Europe and India, are really willing to do.