Rachel Kyte, World Bank: Climate action is an economic "opportunity game"

Author:
Ilario D'Amato
19 October 2015

Rachel Kyte, Vice President and Special Envoy for Climate Change, World Bank

NEW YORK: The Intended Nationally Determined Contributions (INDCs) which nations are setting out in the run up to the forthcoming climate summit in Paris “should be understood as emerging investments plans,” said Rachel KyteVice President and Special Envoy for Climate Change at the World Bank in the latest exclusive Climate TV interview from The Climate Group.

“What we need from the negotiators is a negotiated text which would be just one part of a Paris agreement. […] That negotiated text has to speak loudly to economic actors all around the world that this is about low carbon growth, and it’s about resilient development; and you may peacefully go off making long-term investments and know that’s the direction we are moving in.”

This year’s Climate Week NYC demonstrated once again the strong business case for climate action, convening The Climate Group’s high-level network of leaders from businesses, governments and civil society to share best practices on tackling climate change and building strong low carbon economies.

“It’s very clear from the economic evidence that we have marshalled from the OECD and from other renowned international economic bodies that the cost of inaction is going to be higher than the cost of action,” adds Rachel Kyte.

Countries will need macroeconomic and fiscal policies that will support low carbon growth, allowing investment in resilience. “Every country’s challenge is different,” she says, “but every country has a challenge and it’s universal. The INDCs are the conversation piece that allows the investors to be part of that conversation.”

CARBON PRICING

To achieve that goal, many countries and subnational governments are increasingly putting a price on carbon, so as to account for the ‘hidden costs’ of pollution while reinvesting resources in local, low carbon activities.

However, even if robust carbon prices are important, “carbon pricing is a necessary but insufficient policy tool,” says Rachel Kyte, “if we are going to move at a decent pace towards that low carbon growth.”

“Carbon prices that are steadily rising reflect the innovation that we expect to see in the economy as we learn how to build growth that is not so carbon dependent. For many years, we worked on the technical level, supporting countries. We are now working on a sort of political level, in the formation of carbon pricing leadership coalitions, which we expect to be launched in Paris.”

BUSINESS CASE

For many years, the debate about the opportunity of a low carbon economy has been quite rhetorical, continues Rachel Kyte, but now we are seeing a “remarkable shift […] to really wrestling with the internal consequences of understanding where profits and growth are going to come from in a carbon-constrained world.”

Countries that will be in the forefront of a  clean industrial revolution will be the first to grasp such opportunities: “Those jurisdictions in which companies are going to move understand that there will be jobs created, there will be taxes paid, there will be growth, there will be economic activity and there will be buoyancy,” remarks Rachel Kyte. “This is an opportunity game, not just a risk game.”

This is the reason why the climate negotiations in Paris are so important, even if they don’t represent the end of the story: “This isn’t any past negotiations,” she says. “This is a text that must speak and resonate with finance ministries, with CEOs, [is] translatable into a public discourse where people need to believe that there is a possibility for their increased prosperity, their children’s prosperity, in a world where we’re not dependent on carbon. If the negotiators can do that, then they will have served an enormous purpose.”

Share
Facebook icon
Twitter icon
LinkedIn icon
e-mail icon
Google icon