Climate: the risk of polarisation – Annual Report 2023
Jean Pisani-Ferry, Chair of I4CE
For a long time, I4CE battled against indifference: our analyses and warnings were often sympathetically received by decision-makers, but there were always other more urgent or important issues. After a great deal of persistence to overcome this obstacle, the climate issue is now widely recognised as a major challenge.
Yet as it is developing, the climate debate is simultaneously becoming polarised. This is true in the United States, where Paul Krugman recently observed that climate has become an issue in the culture war between Democrats and Republicans. It’s true in Europe, where conservatives have gone on the offensive against the Nature Restoration Act, and the German Finance Minister is railing against Brussels’ green plans.
It’s true in the UK, where Prime Minister Rishi Sunak is tempted to present himself as an advocate for the middle classes and a defender of a way of life put at risk by decarbonisation targets. It is true, of course, in France.
It is in this new, more difficult context that we must intervene. Before, we only risked being met with indifference. Now we run the risk of being used as instruments in the political and cultural controversies of others. We’re going to have to be extremely vigilant to prevent these dangers, and very firm in our stance: our only cause is that of climate action, which we want to be swift, impactful and socially just.
The forthcoming debates on the French finance bill and, very soon, the campaign for the European elections, will be a test of our mettle. We will approach them well aware of the risks and determined to live up to our responsibilities.
Benoit Leguet, Managing Director of I4CE
The debate on the financing of the ecological transition, the backbone of ecological planning, has now been launched in France. The report by Jean Pisani-Ferry and Selma Mahfouz “The economic implications of climate action”, which assesses the need for public funding for this transition, is the first building block. The public authorities will now have to provide answers over the long term, and draw up a financing plan for the transition, specifying what needs to be done, how much public money will be required and how much private money will be needed. The debate has therefore begun, but it is far from over. It goes without saying that I4CE is proud to have contributed to the fundamental aspects of these debates in France, and will continue to be involved.
The same type of debate will have to be held in Europe, when the Parliament and the Commission come up for re-election in 2024, because the European Union will now have to finance its Green Deal. Faced with the Inflation Reduction Act in the United States and China, it cannot be both the best performer in terms of environmental regulations and the worst performer in terms of financing.
In particular, we need to stop treating the financing of the Green Deal in silo with the Stability and Growth Pact and European debt, when we know that the need for private and public money will increase to finance the transition. In 2022, I4CE set up a dedicated team to contribute to these debates, and to ensure that Europe also adopts a plan for financing the transition.
Internationally, the same questions arise, and in an even more complex way for developing countries. It is true that they are drawing up long-term strategies to reconcile climate and development, but how will they finance them? They too need a financing plan that enables them to manage their transition, corresponds to their needs, and intelligently combines their national resources and external resources, particularly those provided by international development banks. I4CE works with these banks and helps developing countries to equip themselves with tools for analysing and financially managing their transition.
This annual report details our contributions and our impact on these issues. And on others subjects, always linked to the financing of mitigation and adaptation. As much on France, more about Europe and more international. We are continuing to build on our momentum.