Global financial forum official links green recovery and sustainability
A green recovery, centered on lower carbon emissions and faster industrial upgrading, will make global economic growth more sustainable in the post COVID-19 era, a key official of an international financial think tank said.
Such recovery needs to be realized through market-based approaches and candid cooperation among countries, he said.
Zhu Xian, the newly appointed vice-president and secretary-general of the International Finance Forum, said that China’s commitment to peak carbon emissions by 2030 and achieve carbon neutrality by 2060 has provided businesses and the domestic market a clear timetable for industrial upgrading.
The Beijing-based IFF was established in 2003 by more than 20 key international organizations.
The IFF secretary-general’s comments follow the start of online trading in China’s national carbon market on Friday, a significant step to help the country reduce its carbon footprint and meet emission targets.
China, like many developing economies, is pressured to meet carbon emission reduction goals, he said. Most developing economies are still in the process of transforming their growth models, while striking a balance between growth and sustainability is a challenge they all will face in the post-COVID-19 era.
Market-based approaches will be crucial in this process.
“On the one hand, the government needs to scale up policy support and have better incentives for green development. On the other, businesses must be sufficiently aware that the clock is ticking to meet the goals. They need to move faster in technological improvements, or else risk being weeded out,” Zhu said, adding that businesses shall map out their own timetables to match national goals and pivot toward new energy.
Technology-based industrial upgrading will be immensely important in this process. With decades of experience serving development financial institutions, this is one of the few areas where developing and developed economies like China and the United States can work on jointly, Zhu said.
A recent policy proposal released by the International Monetary Fund on scaling up global carbon pricing urged that the world’s largest carbon emitters, namely China, India, the US and the European Union, to take the lead in carbon pricing.
Zhu said he believes the precise level for carbon pricing will eventually reach a global consensus. Yet, for the time being, affordability for developing and developed economies is still starkly different. Reaching a globally applied carbon price will be a long process.
Noting that the EU started relatively earlier in carbon emission trading and set up its own emissions trading scheme in 2005, Zhu said there are numerous areas that China can learn from the EU in carbon trading. One of them is good public education.
“Reducing carbon emissions is an effort toward sustainability for all citizens, businesses and the government. Individual consumers need to contribute in this process.”
He said EU countries have done notably well mainly because of their success in reaching public consensus that fighting against climate change is the responsibility of everyone.
Consumers are willing to have the cost of carbon emissions factored into their energy-consuming activities. He suggested China should draw on such experiences from the EU and other developed economies.
Zhu retired from his post as vicepresident and chief operations officer of the New Development Bank and joined the IFF on July 7.
He said the IFF is willing to serve as a platform to facilitate effective communications and interactions on such topics as economic growth among countries. Communication and exchange of views, which were severely disrupted by COVID-19, would be key when the world needs growth.