Jouni Keronen’s speech at Contribution of Business for a Carbon Neutral Europe event at COP25, 13 December 2019, Madrid
We need to have more systemic solutions for climate mitigation
Ladies and Gentlemen,
climate change is accelerating and GHG emissions continue to increase.
The available carbon budget for the 1.5°C target will be exhausted in less than ten years.
In order to limit global warming to 1.5°C above pre-industrial levels, the level of ambition and the action taken will need to grow five-fold.
We need to have a step change in clean investments.
A large majority – more than 90% of the investments – need to come from the private sector. Governments can ban fossils but there is not enough public money on the table for the investments.
Investments from the private sector will not be forthcoming unless the new business is profitable and involves fewer risks than the one it replaces.
The most effective way to impact profitability is by carbon price. When polluting businesses need to pay more, less polluting businesses will become more profitable.
There has been much talk about carbon price but using it is nowhere near where it should be:
- only about 20% of global GHG emissions have any kind of price and
- only in a fraction of carbon pricing initiatives, the prices are effective
- the use of carbon pricing has grown only at about 1%/year over the past 6 years
- in 2018, carbon pricing revenues were USD 44 billion, the pre-tax fossil subsidies were close to USD 300 billion and the post-tax subsidies for damage and health issues were around USD 5 trillion
The system works still “upside down” and fails to create adequate carrots for clean investments.
Risks can be eliminated via long term climate policies that do not change after every election. This is important, since in the EU alone, for example, there will be close to 200 parliament elections by 2050.
And due to the shrinking carbon budget, we need to take it also to our baseline and set our targets and tracking based on it. We need to start to manage carbon like money.
Until now, our long-term climate policies have been too vague, too unpredictable and the use of carbon price far too modest to trigger a sufficient level of investment.
CLC, representing several businesses, has proposed that the EU
- sets a clear climate target, including a carbon budget, to achieve climate neutrality by 2050
- plans and agrees a more systemic solution via extending the ETS and factors in verifiable carbon sinks
- creates a green fund to support the transformation of society and a just transition
- introduces several measures to improve and enhance a level playing field for competition
We warmly welcome the EU’s long-term goal for 2050 agreed last night and the proposal for the European Green Deal. They are major steps forward and would create a basis for a systemic solution.
We are also pleased to notice that the EU will do its best to engage other countries parties into more ambitious climate policies. EU is in a excellent position to develop systemic solutions used as such or partially also elsewhere and we propose the development and escalation of systemic solutions for the key theme for next year and COP26 in Glasgow.
Terhi Lehtonen, State Secretary at Ministry for the Environment, Government of Finland made the opening keynote.
Ulf Gehrckens, Senior Vice President Corporate Energy and Climate Affairs, Aurubis AG, Sebastien Soleille, Global Head of Energy Transition and Environment, BNP Paribas and Dr. Dieter Vollkommer, Corporate Vice President Sustainability, Resource and Energy Efficiency, Siemens AG made presentations with Dr Keronen.
Elina Bardram, Head of International Relations Unit, DG Clima, European Commission and Bernhard Schwager (Robert Bosch GmbH), Sebastien Soleille (BNP Paribas) joined for the panel discussion moderated by Regina Karakina, Policy manager, ICC Germany e.V.