Practical climate politics for the 2020s - prospects for global capital markets
Dr Mohamed A El-Erian, President of Queens' College; and Professor Kamiar Mohaddes, Professor in Economics and Policy, Judge Business School, joined the second seminar of the 2023 Christ’s College Climate Seminar Series, chaired by Lord Simon McDonald, on 26 January 2023 at Christ’s College Cambridge. They discussed the relationship between climate change policy and the global markets, and the debate broadly was divided into optimistic and pessimistic outlooks of how global markets are reacting to the challenges faced by climate change.
The failures of the current economic system and the search for a new growth model
Stressing the two-way causal relationship that occurs between climate policy and global markets, Dr El-Erian said that appropriate conditions for an effective climate policy are closely related to the strong global economy. He discussed that the global economy is in a dire state due to the recent shocks that occurred in the last three years, and so climate policy is in a precarious position. He also stressed that governments are undermining long term climate goals to combat the current energy crisis.
However, Dr El-Erian argued that the combination of political will, stakeholder alignment and an emphasis on accountability helps us to take ourselves out of this vicious cycle. After arguing the current growth models for the economy have been exhausted, he discussed that there is a need for new and green growth models focused on genuine productivity and inclusion with better safety nets available.
Reasons to be cheerful – governments are finally taking climate policy seriously
Emphasising the persistent failure of the international community to tackle climate change, Professor Mohaddes argued that we are seeing a turning point in how governments are now starting to take climate policy seriously. He further discussed that the Inflation Reduction Act (IRA) of 2022 is the most significant climate legislation ever, authorising $370 billion to be spent on climate change policies. After analysing recent elections in the US, where the IRA was hardly mentioned, Professor Mohaddes also highlighted the importance of the non-politicisation of IRA legislation, which focuses on spending and subsidies to help climate change.
Being optimistic about the future of climate change policies, Professor Mohaddes emphasized the fact that the discussion of climate compensation payments, which has often been a topic of discussion at climate change conferences, is now progressing. He stressed that a large segment of COP27 focused on this issue of climate payments to the poorest areas of the world where global warming is having the most detrimental effects.
Furthermore, he discussed the shift in values espoused by the political generation coming up and argued that climate policy is a priority for the new political generation and this is perhaps the greatest reason why we can be cautiously optimistic about combatting climate change.
At the end of the seminar, a question and answer session was held with audience participation. During the session, a range of topics was covered with a particular focus on the role that China will play in global efforts to combat climate change. The discussion further broadened on the intricacies of the new growth model stated by Dr El-Arian, the metrics by which we measure growth in the global economy and whether the way we define growth needs to change.
26 January 2023, 5:30pm
The 2023 Christ's College Climate Seminar Series will focus on the big questions facing UK policy makers as they seek to accelerate action on climate change in the face of geopolitical challenges.