Leaders of the G-20 governments meet in London on Thursday. Their common aspiration is to set the world on a pathway of sustainable and widespread economic growth.
While the discussions will be complex, one thing is clear: We must revive growth in the world economy. A low-growth recovery is unacceptable.
This is why governments of the major economies are gearing up to spend about $3 trillion among them to stimulate growth. However, here is the conundrum: A recovery strategy based on high-carbon energy sources will not create sustainable economic growth that the world needs—it will ultimately choke itself on rising hydrocarbon prices and a hostile physical environment created by climate change. There is no “business as usual” to which we can return.
To ensure our future prosperity, we need a high-growth and low-carbon world economy.
This may sound aspirational. Yet, many business leaders around the world are increasingly convinced of the long-term growth potential of the low-carbon economy. The scale of new jobs, technologies, practices, services and products required to shift to a low-carbon economy is vast. Last year, in an initiative led by the World Economic Forum (WEF), at least a hundred chief executives from across the world prepared a detailed set of climate policy recommendations for G-8 leaders, including a series of practical proposals to stimulate low-carbon growth opportunities.
A more recent series of UN reports commissioned by the United Nations Environment Programme (UNEP) supports these CEO recommendations. The UNEP work suggests that millions of new jobs can be generated now and over the coming years via a Global Green New Deal, setting the stage for a low-carbon, resource-efficient economy for the 21st century. It is estimated that up to 20 million jobs worldwide can be created in renewable energy alone by 2030, twice that would be achieved with a fossil fuel-based energy.
This means that low-carbon economic prosperity is not just an industrialized country issue; it is very much an agenda for sustainable international development, especially in emerging markets. Analysis suggests that building a low-carbon global economy will require significant, long-term financial flows into developing countries, of at least an additional $100 billion a year, as well as ongoing help to develop, demonstrate and deploy the latest technologies. When combined with the jobs, energy poverty reduction and broader growth potential that this flow of finance and technology will stimulate, low-carbon growth offers developing countries a historic opportunity to jump onto a new, more sustainable growth path.
To deliver this, a set of practical policies and incentives is urgently required to help remove the obstacles to more low-carbon finance and technology. This will enable green recovery packages to have maximum impact both in the short-term and into the future. Tariffs, subsidies and other protectionist devices that act as barriers to low-carbon growth must be removed. An open global economy is critical if we are to make the swift and fundamental transition we need. A concrete first step would be for leaders at the G-20 summit to signal support for the development of a set of specific recommendations on these issues. This would also show a clear intent among governments of the major economies for an ambitious—and practical—outcome from the wider UN-led negotiations on a new international climate agreement, due to be completed in Copenhagen in December.
But this is not a task for governments alone. As the key delivery agent of low-carbon investment, innovation, products and services, business needs a voice at the table. The business viewpoint on the practical policies that will be the most effective accelerators of this change process is vital. We welcome the doors that have been opened by governments at the UN climate change negotiations for direct business engagement in response to the Bali Action Plan. The World Business Council for Sustainable Development has been working with leading global CEOs to support negotiators in this process by recommending specific policy mechanisms that might contribute to a cost-effective and environmentally sound climate framework. But this business government dialogue needs to be deepened.
This is why business leaders and experts in finance, economics and climate change from around the world have responded so rapidly to the invitation from British Prime Minister Gordon Brown earlier this year at the WEF in Davos to form a business-expert task force on low-carbon prosperity to report to the G-20 summit. Building on business engagement to date, over 75 specialists from companies and expert organizations around the world, convened by WEF, are ready to work with officials from the G-20 on these matters. Key questions include:
• How can market mechanisms be developed to price carbon that takes its true cost into account?
• How can governments and businesses work together to offer consumers real choice and effective standards in low-carbon products, technologies and services?
• How can energy efficiency measures best be scaled up globally? What does a smarter, lean-energy economy look like, and what technologies and policies do we need to invest in to get there?
• Crucially in today’s world, how can we get investment flowing into the technologies that will deliver jobs and cleaner, more secure energy, especially in developing countries?
This is important and practical work. As stimulus packages are designed and implemented over the next several months, we need to identify the specific projects and ideas that will both create jobs in the short run and catalyse the longer term shift to a low-carbon global economy.
Businesses and organizations such as ours are committed to this process. That is why we are part of this unique initiative. We look forward to working with others in the task force to deliver a truly “game-changing” set of proposals to world leaders at the UN in September.
Samuel A. DiPiazza is chief executive officer, PricewaterhouseCoopers International Ltd. He is also chairman of the World Business Council for Sustainable Development. Klaus Schwab is founder and executive chairman of the World Economic Forum. Achim Steiner is executive director of UNEP. Comment at email@example.com