In order to halt climate change, close to 100% of the world's scientists agree that we must drastically reduce the level of greenhouse gas emissions. But how? I explored some key areas to address during my recent interview with the World Economic Forum and would like to share them with you here:
As one fair and efficient way to reduce the level of greenhouse gas emissions, carbon markets will certainly be part of the answer. They essentially work as follows: A government gives an emission reduction target to an entire industry. Where and how exactly the industry achieves the emission cuts is up to the individual players. They can either invest themselves in measures such as energy-efficiency improvements, or can pay their peers to do so through the carbon markets. The market thus ensures that the least cost-intensive opportunities are identified and made use of. In other words: The maximum amount of CO2 is reduced for a given amount of dollars.
Outside of markets, leaders must also take action to combat climate change. At the moment, there is an amazing amount of business leadership on climate change - more than the world has ever seen before. To name a few examples:
Governments around the world urgently need to gear up ahead of the Paris climate conference. Expectations to reach a meaningful global deal including binding emissions reduction targets are very low. Therefore, attention now centers on action on national or even city level. The most important task for governments is to create rules and regulations, under which low-carbon business can unfold, including a price on carbon.
Leadership must nonetheless go hand in hand with the deployment of technologies that offer the most potential for helping address climate change. Technology to address climate change is readily available, and covers a vast amount of sectors: decarbonized and decentralized energy production systems, battery storage, efficient building technology, low-carbon transport and communication systems, climate-smart agriculture, just to name a few. The problem we have now is the lack of a substantial price on carbon that would improve market conditions for all these great technologies.
The take-aways I would like to end with is that we need to put a price on carbon and let companies find the most cost-effective way to cut emissions. Last but not least, we need to create financial confidence, incentives and instruments to create a built environment that is net zero-emissions and resilient.
This post first appeared on WEF's Agenda blog in the run up to the Summit on the Global Agenda in Abu Dhabi.