Sunday, November 8, 2009

Climate finance

Today’s G20 communiqué reminds finance ministers of another reason to take financial reform seriously – climate finance.

A paragraph at the end of the two-page document mentions the need “to increase significantly and urgently” the scale of finance to secure an ambitious climate agreement at Copenhagen next month.

Banks have been taking up a lot of public attention and money but they will soon have to compete with energy reform, which could make financial reform look easy by comparison.

“An agreement [at Copenhagen] must include mitigation, adaptation, technology, and financing,” leaders agreed at Pittsburgh in September.

As a minimum, this means public investment in clean energy research, the withdrawal of fossil fuel subsidies and help for poor countries.

In the longer term, it could mean massive spending on new energy sources while paying for whole sectors of the economy to be ‘greened’.

With that expenditure in the wings, any government that fails to make banks insure or curtail their riskier activities should be unelectable. A second bail-out is unthinkable, and Brown's call for a tax, backed by the IMF, shows he knows it.

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