Yahoo Finance Evening Standard Comment: London can lead the world in climate fight
Boris Johnson will today address fellow policymakers at the Leaders Summit on Climate. He has new ambitious targets to announce — this week, Britain raised its commitment to cut carbon emissions by 78 per cent by 2035 compared with 1990 levels.
Our Prime Minister should be roundly applauded for his commitments to climate change. And COP26 is the UK’s chance to lead globally.
These new targets align with recommendations from the Climate Change Committee’s Sixth Carbon Budget, and will for the first time include aviation and shipping.
Such a ramping up of ambition is welcome and necessary. But, as shadow business secretary Ed Miliband put it, “targets without delivery” will get us nowhere. And these objectives can only be achieved through a fundamental reordering of large swathes of domestic and industrial activity.
That means changing how we heat our homes, power our factories, even what we eat. Climate change is, amongst other things, a gigantic example of market failure.
Humanity’s inability to tackle it will lead to climatic conditions that, quite apart from the ecological and human tragedy, may cut future global GDP growth by between five and 20 per cent every year.
Investment is critical. Figures from the UN Environment Programme suggest that the transition to a low carbon world will require at minimum an additional $60 trillion between now and 2050. This will, inevitably, require funding from financial institutions.
The encouraging news is they are rising to the challenge. Climate risks are at the heart of horizon planning for banks and corporations. And financial institutions are aware they can be the facilitator of the transition, rather than a blocker.
So the establishment of the Glasgow Financial Alliance for Net Zero, announced by former Bank of England governor Mark Carney yesterday, is also hugely encouraging. It has assembled more than 160 businesses with assets exceeding $70 trillion to accelerate the transition to net zero.
Investment will also require stable policy signals — ambitious targets followed by freezes to fuel duty or cuts to air passenger duty muddy the waters for both financial institutions and consumers.
The reality is that the world is running out of time to meet the Paris Agreement’s 1.5C target. Negotiations will be tough. Special interest groups retain huge power, while poor countries understandably feel aggrieved at being denied resources that rich countries were able to exploit.
But rising ambition from governments and the fire-power from global financial institutions gives us hope. And London should seize this opportunity, as we recover from the pandemic, to be the leading global city when it comes to combating climate change.
A city of our scale can pioneer the roll-out of low carbon technologies, such as zero exhaust emissions buses or electric vehicle charging infrastructure, which are critical in transitioning the capital away from fossil fuels.
But above and beyond that, we must leverage London’s position as a global financial hub, driving the financing of green projects around the world. Here, the Chancellor should use the UK’s new Infrastructure Bank, announced at the Budget, to provide the patient capital required to drive the transition and unlock private investment at the scale necessary.
London has what it takes to do this: the financial muscle, the scientific expertise, world-class universities, data analysts and researchers. We must grasp this opportunity, and be the global capital that leads the charge to a net zero world.
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