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Subsidizing fossil fuel is “brutal example of policy contradictions”: Angel Gurria

Date
26 October 2015
Subsidizing fossil fuel is “brutal example of policy contradictions”: Angel Gurria

NEW YORK: Governments must stop subsidizing fossil fuels because it is the “greatest misallocation of resources,” says Ángel Gurría, Secretary-General of the Organisation for Economic Co-operation and Development (OECD), in The Climate Group’s latest exclusive Climate TV interview.

“We are moving toward a low carbon economy. In fact, we are late,” explains Ángel Gurría. “We should have started to move more decisively a long time ago. And the problem is that every year, every month, every day of inaction, makes getting into the right trend more difficult and more expensive.”

WATCH CLIMATE TV

With the pivotal climate talks in Paris this December, the G7 leading the shift away from fossil fuels and Climate Week NYC 2015 showcasing how the world’s leading businesses and governments are driving this shift, now is the moment to seize the low carbon economy according to the Secretary-General.

“It is the right time, absolutely,” confirms Ángel Gurría. “The stars are aligned.”

Today we will plant the seeds for the green technology of the future, he suggests. “But we are not going to call it ‘green tech’ anymore. I think we’ll remove the ‘green’ part, because it’s the only thing that there is going to be. There will be just one choice, and that’s clean, green technology.”

CHALLENGES AND OPPORTUNITIES

“There will be also technological transformation and movement, where there will be a kind of first-mover advantage: the ones that move into that territory will capture a bigger part of the action.”

However, governments still lag behind such low carbon transformation – and this is why the OECD is helping policymakers to transition away from fossil fuels. “One of the things we are doing is making sure that the governments are consistent in their policies,” says Ángel Gurría, talking about OECD’s latest report. “It is not difficult to tell governments what they should do and what [they] are not doing. What is very difficult is for governments to accept they are doing things wrong, that they need to change or stop doing that.”

On subsidizing fossil fuel, he affirms: “It’s like we’re doing something with one hand and undoing it with the other hand. The lowest number that we have determined for these subsidies – fossil fuel consumption and production – is US$200 billion. Isn’t that twice the amount of money that we are looking for in order to support developing countries moving toward a low carbon economy?

What you have is one of those brutal examples of policy contradictions. I once visited a very poor country in South-East Asia where the budget for subsidies for the consumption of fossil fuels was higher than the budget for education. Can you think of a greater misallocation of resources?

Angel Gurria

GOVERNMENTS’ CALL

The Secretary-General calls governments to “take a hard look at all these contradictions. That’s the lower hanging fruit. Before you go away to very great transformational decisions, just be consistent.” Then, he suggests, policymakers have the power to direct technology and investments, adapting the framework where businesses must operate. As The Climate Group’s CEO Mark Kenber wrote recently, climate pledges should be seen as a significant investment prospect for forward-looking businesses.

The third step to shift toward the low carbon economy is to move from coal to gas, says Ángel Gurría. “That’s not the end of the story, but it’s already a lot of progress. In the meantime you halve the emissions. And we’re still discussing whether we are going to be financing coal plants. Again, it’s a question of consistency and coherence.”

Such measures are necessary because for the future, “it’s not that it’s going to be a better world: the difference is if there’s be a world. And with the other one we don’t even know. We know that inaction is by far the most expensive course of action. The problem is how we get there.

“Everybody is talking about 2050; by that date, you still are going to have plants that you are opening today. This is why you have to plan with an eye on 2100, not on 2050. All these things require leadership and political courage, but we now know a lot more about climate and the consequences of inaction.

If we had known half about the financial crisis that we know today about climate, we probably could have avoided it. We have our eyes open, we have the information, and then we have really no excuse but to move ahead.”

MESSAGE TO COP

The message for the climate negotiators that will soon gather in Paris for COP21 is then to “get on with it, be ambitious,” concludes Gurría.

There are trade-offs and there are rewards. I don’t say rewards for early actions, because we’re late – but for not delaying more. Also, we are going to have to help the developing countries in order to finance, to support the acquisition, the installation and the implementation of some of the strategies and the technologies that are going to be required.”

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by Ilario D'Amato

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