Governments must step up regulation of businesses to address the climate crisis, former Bank of England Governor Mark Carney has urged because financial free markets will not reduce greenhouse gas emissions alone.
Carney, who left the Bank of England last year before the first Covid-19 shutdown, is now one of the most influential figures working on Cop26, the vital UN climate talks to be held in Glasgow in November. He is a UN envoy on climate change and Boris Johnson’s financial advisor on climate.
He said that for the world to meet its climate targets, governments would have to force industries to follow clear rules, in everything from power generation to construction to transportation, and set carbon prices that would drive investment toward ends. green and shut down fossil fuels.
“We need clear, credible and predictable regulation from the government,” he said. “You need air quality rules, building codes, that kind of strong regulation. You can have strong regulation for the future, then the financial market will start investing today, for that future. Because that’s what markets do, they always look ahead. “
Without such robust government intervention, markets would not be able to tackle the crisis. “It would not happen spontaneously on the part of the financial sector,” he said. “But we can’t get there without the financial sector.”
People must also pressure political leaders to act, Carney said. “When people have made it clear that they have that goal [of tackling the climate crisis], and if there is a public policy that translates those wishes into real actions, a carbon price, the regulation of internal combustion engines, for example, then the financial markets, capitalism, will find the solutions to give people what they want. they want ”.
He pointed to Johnson’s promise to ban new diesel and gasoline car sales from 2030. Auto companies are responding: Nissan has announced a 1 billion pound electric car hub in Sunderland, while Vauxhall owner, Stellantis, is investing 100 million pounds in the Port of Ellesmere. “We’ve seen the auto industry say, wait a minute, we have to make big investments to be able to supply cars to people in the future,” Carney said.
However, Carney still sees a future for fossil fuels. In May, the International Energy Agency said that if the world stayed within 1.5 ° C of global warming, there could be no further exploration or development of fossil fuel resources.
Carney argues that countries and companies could still continue to exploit fossil fuels, despite this advice, if they use technology such as carbon capture and storage or other ways to reduce emissions. “It has to be assumed in specific projects. Yes [fossil fuel] producers can, through considerable investment in carbon capture and storage, go to net zero, so that creates some room in the carbon budget. “
In Canada, for example, where Carney is from and partly lives, and where rumor has it he is considering a political career, he said oil sands producers could continue to develop their high-carbon resources, if they reduce their emissions and Canada can make changes elsewhere. “Canada has a goal of reducing emissions by 40% to 45% by 2030,” he said. “I’m not going to dictate exactly how that is accomplished, but the bottom line is the aggregate.”
Companies should also be able to use carbon offsets to meet climate targets, Carney insisted. The practice of offsetting – financing tree planting or forest protection, or other carbon-reducing projects, to offset a business or individual’s emissions – has become increasingly controversial. Some fraudulent schemes have been discovered, in which carbon credits did not exist or did not represent a real reduction in emissions. Other schemes have been found to fail to protect forests, allowing logging to continue while selling carbon credits based on keeping forests standing.
Carney has received criticism from environmental groups for his support for compensation, but he remains a strong advocate. “I am of the opinion that offsets can play a role because they expand the carbon budget,” he said. “It’s a bit like when we think of people living on a very tight budget. If you can find ways to save a little money here and there or earn a little more money, go for it. That’s what this is. “
Part of the purpose of carbon credits is to protect threatened forest areas, such as the Amazon or Southeast Asia, with the added benefits of preserving natural ecosystems and helping indigenous peoples. The world has yet to find other ways to protect the rainforest, he said. “We may not like that it makes sense for private companies to pay to stop [the burning] But it makes a lot more sense to do that and preserve the rainforest than to just let it happen. Unfortunately, we just let it happen. “
Despite criticism of “greenwashing” companies before Cop26, and despite their recognition that “we have left it too late” to start seriously cutting emissions, Carney believes that harnessing capitalism and the power of money will bring the necessary changes in time to avoid climate change. breakdown.
“With adequate regulation, with a rising carbon price, with a financial sector that is oriented like this, with the public accountability of the government, financial institutions, companies, yes, then we can, we certainly have the conditions to make it. [holding global heating to 1.5C], “he said.” That’s our goal. “
George is Digismak’s reported cum editor with 13 years of experience in Journalism