By Joni Akpederi
Luckily for the world, the US’s anti-climate change stance reflected in the President Donald Trump’s controversial trivialisation of the consequences of global warming has in no way diminished global interest in pursuing a low carbon future.
The Per Jacobsson Foundation-sponsored seminar Economic and Financial Issues Related to the Impact of Climate Change proved that the global community is in fact taking the preservation of the world’s ecosystem as seriously as leaders did at the Paris Climate summit a couple of years ago.
Climate finance, according to moderator Pilita Clark and guest speaker Ashley Schulten, Head of Responsible Investing, Global Fixed Income, is becoming mainstream, arousing the interest of players in the capital market. Mark Carney, another distinguished panellist at the seminar, reckoned that the green bond market could be worth $100 billion by year-end with potential to grow exponentially in the short to medium term.
Stern’s problem with the climate change issue, though remains the inadequacy of extant economic models for assessing climate risks.The London School of Economics don noted that researchers and analysts did not anticipate that solar power price would crash to as low as three cents per kw/hr in India. Nor have they fully understood the impact on global economy of a rise of say three degrees centigrade in temperature. Worse, there is still much uncertainty about the value of loss of DP in relation to sea rise low-lying coastal countries such as Bangladesh and how much would be needed to mitigate the effects of loss of land, movement of people etc.
Some estimates put the resources needed for climate-friendly investment at $3 trillion a year, making climate finance, especially for infrastructure, the area to watch in the coming years.
Countries are already positioning themselves to benefit from the growth in the market. University of Maryland’s Professor of Economics, Maureen Cropper, disclosed that experts estimated the social cost of carbon at $45 a ton under the Obama Presidency and is a little disturbed that it was recalculated and dropped to about $6. She told participants at the seminar that some lobby groups in congress recently proposed a tax of $40 per ton of carbon dioxide emitted into the atmosphere but doubts if anyone would do anything about it in the current dispensation.
The private sector will have to provide leadership, in Schulten’s opinion. While agreeing to the role and contribution of the private sector, Carney believes that a lot still depends on the attitude of governments. He disclosed that the Bank of England and the People’s Bank of China are working on standardisation of metrics for use in the carbon market. All, however, agree that the sovereigns must step up incentives such as tax breaks, support for Research and Development, subsidies and other creative policy initiatives to make climate finance do what it must do to help sustain human development and ultimate survival.