New Climate Economy Newsletter: January 2019
NCE Update: January 2019 View this email in your browser *Table of Contents*
– Looking Ahead to 2019 <#m_-509234711223547996_mctoc1> – WEF Global Risks Report 2019 <#m_-509234711223547996_mctoc2> – What will the rest of 2019 bring? <#m_-509234711223547996_mctoc3>
*Looking Ahead to 2019* The IPCC 1.5 C report was a stark reminder of the economic and human risks of climate change. It was made all the more apparent by record heatwaves in 2018, devastating wildfires in North America, deadly typhoons in Asia, and droughts in East Africa. Protests in France demonstrated the consequences of policies that fail to adequately consider the need for an inclusive and just transition, and the urgency to step up action.
The 2018 NCE Report and other analyses also brought good news in 2018: bold climate action can deliver real economic and social benefits, and we now have a wealth of examples of successes. The challenge for 2019 is to seize these opportunities and move from piecemeal action and leadership to tipping points. Ensuring that the transition to the low-carbon economy is a just one is fundamental to building a safe, sustainable and prosperous future. *WEF Global Risks Report 2019*
A new report from the World Economic Forum underlines the urgent need to step up ambition. Each year the WEF Global Risks Report works with experts and decision-makers to identify the most pressing risks that we face. For leaders surveyed for the latest edition, *environmental threats dominate the list for the third year in a row* — both in terms of impact and likelihood. “Of all risks, it is in relation to the environment that the world is most clearly sleepwalking into catastrophe,” the report warns.
*The Global Risks Landscape 2019* (WEF)
The WEF Global Risk Report comes the week before the World Economic Forum Annual Meeting in Davos, where discussions between business and government leaders should help galvanise greater climate ambition. By taking bold leadership and setting the bar high for climate action, businesses and investors can demand more of their governments, catalysing ‘ambition loops ’ whereby governments and businesses push each other to go further, faster. *What will the rest of 2019 bring?* The answers 2019 brings to the following questions will be of critical importance to the advancement of the climate and sustainable development agenda this year:
*Will geopolitics stymie international climate action?* Political shake-ups in several major countries make the future of international climate action uncertain. Brazil’s government swung toward the right in 2018 with the election of President Jair Bolsonaro, Mexico moved left with new President Andres Manuel Lopez Obrador. Looking ahead, voters in Indonesia and India will cast ballots while in early 2019 China faces the challenge of an economic slowdown.
Amidst political uncertainties, carbon pricing may be one bright spot in terms of national climate action in 2019. 70 national and subnational jurisdictions across the world — representing about 20% of global emissions — are putting a price on carbon pollution, which raised about US$33 billion in government revenue in 2017. In Canada, for example, after working with provinces to help design flexible plans, the federal government is implementing a coordinated nation-wide carbon price, beginning at $20 per tonne in 2019. British Columbia is an excellent example of successfully aligning climate policies with inclusive growth and efforts to reduce inequalities. Their carbon tax brought in CAN$1.2 billion in revenues in fiscal year 2015/16, with low-income households better off with the carbon tax than they would be without it.
*Carbon Prices Around the World* The UN Secretary General’s Climate Summit in September is a key moment when heads of state come together to discuss how to ramp up action to address the climate challenge. Major economies in particular will need to send a clear signal that they are planning to enhance ambition through their next round of national climate commitments, due in or before 2020.
*Will action in the real economy and at subnational level outpace national governments on bold climate action?* Last year’s Global Climate Action Summit in San Francisco brought together leaders from states and regions, cities, business, investors and civil society to join forces to step up climate action ahead of 2020. The Summit underlined the transformational action they are already pursuing:
More than 500 companies representing nearly US$10 trillion in market value have committed to set science-based targets . And more than 500 companies and organisations with combined market capitalisation of over US$7.9 trillion have publicly committed to support recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). In addition, 160 financial firms responsible for over US$86 trillion in assets have indicated their support for TCFD.
With hundreds of businesses pursuing bold climate solutions and countries updating national climate plans in advance of 2020, the opportunity for greater ambition abounds . In December, Maersk, the world’s largest container shipping group, boldly pledged to cut carbon emissions to zero by 2050 . Increased business investments in climate solutions send strong signals to government in support of ambitious climate policy.
*Will climate adaptation rise on the agenda?* Climate change is already devastating communities around the world, hitting the poorest and most vulnerable first and hardest. The number of extreme climate-related disasters, like droughts and floods, has doubled since the 1990s . Disasters triggered by weather- and climate-related hazards were responsible for thousands of deaths and US$320 billion in losses in 2017. Some countries are already taking action. Yet, there’s a lack of global leadership, metrics and finance to help people adapt to the results of a changing climate.
That could change this year. A new Global Commission on Adaptation , led by Global Commissioner *Kristalina Georgieva*, *Ban Ki-moon* and *Bill Gates*, was launched in October 2018 and aims to raise the profile of adaptation and accelerate action around the world. The Commission will release a flagship research report in September along with several action tracks to address specific adaptation challenges. And the World Bank recently announced that half of its new climate investments will now go toward adaptation.
*Will the Belt and Road Initiative support green growth?* The New Climate Economy finds that we expect to invest about US$90 trillion in infrastructure to 2030 — ensuring that this infrastructure is sustainable will be a critical determinant of future growth and prosperity. China’s Belt and Road Initiative is a major global development endeavor, involving the construction of roads, ports and other infrastructure in more than 100 countries. The Belt and Road Initiative is expected to involve an estimated US$1.5 trillion investment in infrastructure in the coming decade.
A priority will be for Chinese leaders to integrate their approach to “ecological civilisation” in all aspects of the Belt and Road, to ensure these investments are sustainable. However, the latest research shows that much of the recent energy investments still favor fossil fuels over renewable energy.
A major 2019 forum on the Belt and Road Initiative is a good moment to start crafting sustainability guidelines for the initiative’s projects. Other signs of progress will be whether China ramps up renewable energy investments abroad, as it has already done domestically, and whether partner countries’ climate plans help guide Belt and Road investments.
*These stories and more were featured in WRI President Andrew Steer’s Stories to Watch presentation. Click here for more insights on emerging trends in the economy, politics, environment and international development.*
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