–G7 outcome highlights chance of climate deal, multilateralism, new system of planet-friendly trade via G20 by June
By Mathew Carr
Feb. 18-20, 2021 — LONDON:
OPINION: The world now needs carbon prices of about $100 a ton in 2030 to spur sufficient climate action to meet the 1.5C temperature increase goal in the Paris climate deal.
That is about double the level targeted just a couple of years ago by the Obama administration. The higher price is required because global emissions are still very high, even though nations have become more ambitious, with many adopting mid-century net-zero targets.
The required price could be even higher. Lawmakers realise they need to embrace widespread climate measures across the economy, so carbon prices now need only do part of the emissions-cutting work, and clean technology has advanced apace.
Still, this paper by prominent economists Nicholas Stern and Joseph Stiglitz, makes a case that the U.S. needs to aggressively lift its estimate of the social cost of carbon, which will guide policies across the board and corporate assumptions for carbon prices in business plans.
Some commentators are skeptical there’s enough political will in the U.S. to tackle climate action cost effectively and install such levels.
Robert Stavins, the A. J. Meyer Professor of Energy and Economic Development at the Harvard Kennedy School, is one who was last month pessimistic about prospects for getting the required 60 senators: https://www.lawfareblog.com/biden-administration-and-international-climate-change-policy-and-action
I’m heartened by the seven Republican senators who voted to impeach former president Donald Trump. It shows the Republicans are far from a lost cause.
Three more level heads than in the impeachment vote seems very possible indeed.
I reckon Biden-Harris can convince the ten because the U.S. now has a chance to catch up with, and even overtake, Europe by setting a logical policy framework for cost-effective emission cuts.
Europe’s climate policies have proved fairly effective, but they are still way too complicated and far from cost optimal. That stems from the nature of EU policymaking, nationalistic geopolitics and compartmentalized public debate.
The prospect of moving ahead of Europe will prove too tempting for at least 10 Republicans.
The prospect of the U.S. biting at its heels will make the EU even more ambitious.
The U.S. senators will be convinced not because they are becoming more progressive or leftist, but because U.S. companies don’t want to face a tax on Europe’s borders as they seek to boost exports post pandemic. Trillions are going to be spent on the climate transition during the next 10 years — that’s a considerable carrot.
The flipside stick is the EU plan for a so-called carbon border adjustment mechanism by 2023 on nations without climate policy that’s ambitious enough.
The G7 leaders meeting Feb. 19 — the day of the U.S.’s reentry into the Paris agreement — acknowledged the importance of a global trade regime that serves the planet.
“We will work together and with others to make 2021 a turning point for multilateralism and to shape a recovery that promotes the health and prosperity of our people and planet.”
Here is another key G7 passage:
We will: champion open economies and societies; promote global economic resilience; harness the digital economy with data free flow with trust; cooperate on a modernised, freer and fairer rules-based multilateral trading system that reflects our values and delivers balanced growth with a reformed World Trade Organisation at its centre; and, strive to reach a consensus-based solution on international taxation by mid-2021 within the framework of the OECD. With the aim of supporting a fair and mutually beneficial global economic system for all people, we will engage with others, especially G20 countries including large economies such as China.
So higher carbon prices could include taxes or markets.
The mention of China is crucial because unless the world’s biggest emitter and most populous nation is drawn into the climate and trade solution it’s difficult to see how the Paris limits can be met.
U.S., including climate envoy John Kerry, has engaged with India and Brazil in recent days.
Here’s the Google Translation of the following embedded tweet from the Brazil Foreign Affairs Minister: Min. Ricardo Salles and I had a conference call today with Secretary John Kerry, US Special Representative for Climate Change. Dialogue and cooperation on environment and climate will be another aggregating element in the Brazil-USA partnership that we continue to build.
Kerry is cleverly not just cajoling big emerging countries to join the climate fight but touting the red-hot nature of the investment opportunities:
U.S. President Joe Biden and India Prime Minister Narendra Modi in a call earlier this month said they’d renewed a partnership on climate change.
Because a G20 deal on trade and climate is in the frame of possible outcomes this year, self interest will prevail in the U.S. Senate.
If it doesn’t — if the U.S. fails to act ambitiously now (in the next 2 years), it’ll miss a rare chance and potentially be defeated by Europe and China (and others) in what’s firmly become a global climate-transition race.
See global climate policy begins to align: https://carrzee.org/2020/12/14/britain-touts-world-first-net-zero-carbon-market-as-it-leaves-eu-and-seeks-trade-deal-with-australia/
(Updated Saturday with G7, Tweets, context, links)
NOTES: The Group of Seven (G7) is an intergovernmental organization consisting of Canada, France, Germany, Italy, Japan, the United Kingdom and the U.S. The heads of government of the member states, as well as the representatives of the EU, meet at G7 gatherings/video conferences.