Tackling climate crisis could yield debt dividend

The inaction of the world’s governments in the face of climate change is a wonder to behold. A friend who has become professionally involved in the area and who has attended some of the international climate change conferences, says the extent of paralysis is terrifying.

Last week a proposed Bill on climate change was to be presented by Minister for the Environment Phil Hogan to the Cabinet. It seems the work-in-progress was not suitable and has been sent back for revision. The issue has received very little media coverage.

Some might wonder why a column in the business section of this newspaper is raising the problem of climate change, but a moment’s consideration should disabuse most readers of such thoughts.

The most scary line in this newspaper in recent weeks came from one of Ireland’s leading experts on climate change, Prof John Sweeney of NUI Maynooth. He said the world has about eight year s to tackle global warming, before we fall off a climate cliff.

“We are staring at a climate cliff face and if we don’t act now we face a future of reduced crop production, shrinking of Irish wetlands, greater frequency in freak weather events and rising seas,” he said.Climate change threatens one of Ireland’s most successful indigenous sectors – the food sector – and is a spectre hanging over the future of one of our most powerful lobbying groups, the farmers. But if there is a sense of urgency abroad in Irish policymaking circles, it is well hidden.

The relative indifference is in marked contrast to the anger about debt from the bank sector being shifted on to the shoulders of future generations.

Extreme weather events

It is a given that future generations will live in a world of frequent extreme weather events; and the upheaval and loss of wealth which that involves. (Extreme weather events have cost a minimum of $1.5 trillion since 2000, according to the United Nations.)

Some believe there is a link between globalisation and the failure of the world’s leaders to address climate change with the urgency it requires. The idea is that because the globalised economy has, to a very real extent, escaped the control of nation-state governments, the people who run governments have become unused to taking charge of the big challenges facing humanity, of which climate change is surely the greatest.

Leadership has lost confidence in its ability to lead.

Similar notions might cross your mind when considering the appalling tardiness with which the crisis in the euro zone is being addressed.

With each passing year it looks more and more like those who have been arguing that the prescribed medicine (austerity) is in danger of killing the patient, have been on the money.

This is not to argue that countries such as Ireland, that have significant deficits in public financing, don’t have to raise more tax revenues and cut back on spending. But without growth the numbers don’t add up, particularly when the enormous amount of private debt that exists, is taken into account. Europe needs to find a way to fund a stimulus for the continent’s economy.

So if we have to confront climate change, and have to boost the European economy, why not try to marry the two?

One possibility is the creation of a pan-European multi-hundred billion euro investment programme, using leveraged public funds, designed to combat climate change.

Climate change is a transnational crisis and is therefore suitable to such a transnational effort. Economist and member of the board of the Central Bank Alan Ahearne and Guntram B Wolff, deputy director of the Bruegel Institute, have suggested such a fund being used to invest in a European energy network.

Global consensus

Others have suggested that green agenda construction investment can have a greater multiplier effect than more conventional investment.

There is a huge problem involved in trying to address climate change without a global consensus. Carbon emissions continue to increase and the world appears unable to marshal the required response. But even looking at the issue from a perspective of despair, there is still a huge need for investment in climate change adaptation – an area with potential and scope for investment.

Europe needs a stimulus package, it needs to put its weight behind slowing climate change, and it needs to prepare for extreme weather events. Surely there is scope for symbiosis?