Leaders of the G20 governments meet in London this week. 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 crystal 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 US$ 3 trillion among them to stimulate growth. However, here is the conundrum: a recovery strategy based on high-carbon energy sources will not create the 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, over 100 chief executives from all sectors and regions of the world prepared a detailed set of climate policy recommendations for G8 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 many 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 the level of job creation 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 the creation of significant, long-term financial flows into developing countries, of at least an additional US$ 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 new economy, 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 G20 London 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 this year.
But this is not a task for governments alone. As the key delivery agent of low-carbon investment, innovation, products and services, business needs to have a voice at the table. The business viewpoint of 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 to the UNFCCC 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 future 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 Prime Minister Gordon Brown earlier this year at the World Economic Forum in Davos to form a business-expert Task Force on Low Carbon Prosperity to report to the London Summit.
Building on business engagement to date, over 75 specialists from international companies and expert organizations around the world, convened by the World Economic Forum, are ready to work with officials from the G20 on these matters. Key conversations they wish to have will include:
How can market mechanisms best be developed to create a price for 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, clean-energy economy look like, and what technologies and policies do we need to invest in to get there?
And 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. It must begin now. 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 United Nations in September.
Samuel A. DiPiazza is Chief Executive Officer, PricewaterhouseCoopers International Limited and Chairman of the World Business Council for Sustainable
Klaus Schwab is Founder and Executive Chairman, World Economic Forum
Achim Steiner is Executive Director, United Nations Environment Programme (UNEP)