A “public finance shock”, an “absolute transformation” of the global financial system. These were the calls made respectively by the French head of state, Emmanuel Macron, and his Barbadian counterpart, Mia Mottley, at the opening of the Summit for a New Global Financial Pact on Wednesday 21 June in Paris (see EUROPE 13206/13).
The event, which was organised by the French President in the wake of the Bridgetown initiative, aims to overhaul the international financial system and increase economic commitment, both public and private, to support vulnerable countries in the South in the face of the climate challenge and poverty.
To address these issues, world leaders, heads of international organisations, representatives of civil society, foundations and the private sector met for a series of conferences and six round tables.
Towards concerted action. During the panel on ‘Partnerships for Green Growth’, the President of the European Commission, Ursula von der Leyen, called for concerted action. She praised flagship initiatives such as the EU’s ‘Global Gateway’ strategic investment programme (see EUROPE 13082/10), which plans to invest $300 billion in sustainable projects in partner countries, and the ‘Just Energy Transition Partnership’ initiative in support of South Africa.
The President of the Commission also called for private investors in emerging markets and developing economies to be “enticed”. She proposed new initiatives on green bonds, which she said were “essential for all countries, whatever their size”, pointing out that access to financial markets and pension funds was necessary to support the transition to a greener economy.
Carbon pricing. Finally, Ms von der Leyen highlighted the importance of carbon pricing and the introduction of a scheme such as the EU Emissions Trading Scheme (see EUROPE 13141/12), which “could generate considerable funding”. The President of the Commission has encouraged the creation of carbon pricing mechanisms in developing countries, highlighting the economic and environmental benefits.
Speaking at the round table on “innovative instruments and financing”, the President of the European Council, Charles Michel, agreed with her on this last point, stressing the importance of carbon pricing as a “useful option” in addition to the mobilisation of innovative financing. According to Mr Michel, who welcomed the “steps forward” that have been made in this area in Africa and China, this is an effective way of encouraging the private sector to invest in more environmentally-friendly solutions.
Taxing industries. For her part, Laurence Tubiana, President and Executive Director of theEuropean Climate Foundation, argued in favour of taxing the freight transport industry, which she said could represent “$800 million or even $1 billion a year”. “To make industries pay and to ensure that the money goes back to the most vulnerable people”, Ms Tubiana called for greater creativity in looking at all possible financial options, from a financial transaction tax to contributions from oil and gas companies. “This could be a good time to let our imaginations run wild”, said Ms Tubiana, who will be speaking at the ‘Prologue’ to the Summit, which closes on 23 June. (Original version in French by Nithya Paquiry)