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fuel efficiency), investment in research and development (R&D), green public procurement, and labelling and information-based incentives.
- The major economies, led by the G20, should put a price on carbon of at least US$40—80 by 2020, with a predictable pricing pathway to around US$50—100 by 2030, as recommended by the High-Level Commission on Carbon Pricing.46
- All major economies should phase-out fossil fuel subsidies and harmful agricultural subsidies and tax-breaks by 2025, with others doing so as soon as possible, and use some of the revenues saved to provide better-targeted support to tackle energy poverty and ensure more sustainable food and land use systems.
- Lessons gained from successful carbon pricing and subsidy reforms in countries around the world should be utilised to help design reforms in order to address concerns about potential distributional and competitiveness impacts, as well as the challenges around vested interests.
- As recommended by the Global Commission in 2016, companies and investors should be required, as a matter of good corporate practice, to disclose their climate-related financial risks and how their business strategy is compatible with the Paris Agreement, following the TCFD recommendations.
2. Second, all economies should place much greater emphasis on investing in sustainable infrastructure as a central driver of the new growth approach.
- The first step is not about the money. Rather, it is to build stronger leadership and technical capacity to shape robust growth strategies, investment plans, and institutional structures that can align with sectoral policies and facilitate the flow of private investment to sustainable infrastructure. This includes better designed buildings, transport, energy and water systems, and cities but also investments in the natural infrastructure that underpins our economy, such as the forests and wetlands that purify water and provide valuable flood control.
- MDBs and other DFIs need to double their collective investment in infrastructure and make sure it is sustainable, aiming to invest at least US$100 billion per year by 2020. DFIs should also aim to more than double their mobilisation of private sector investment, including from institutional investors. This will entail working closely with governments and private investors to unlock investment and scale up blended finance, as well as ensure a continued strong capital basis for the MDBs. This would include greater use of risk mitigation instruments and structures and country-led sector infrastructure plans and investment platforms. More broadly, the DFIs can play a critical role in accelerating this new growth approach, but their portfoliowide activities will need to be aligned to support the sustainability transition.
- Together with major private financial institutions, the G20 should continue its work on infrastructure as an asset class, on incorporating sustainability criteria into its core definitions, and on developing the tools needed to both support implementation and deepen the pools of green finance. A deeper recognition of the value of natural infrastructure, and effort to attract the finance to maintain and restore it, is needed.
- Global and national-level platforms that pool expertise in project preparation for sustainable infrastructure investment should be scaled-up and replicated.
- Developed countries should fulfil their commitment to mobilise US$100 billion per year in climate finance from public and private sources for developing countries by 2020, and the climate finance architecture must be strengthened to utilise these resources for maximum impact and leverage.
3. Third, the full power of the private sector and innovation needs to be harnessed. Many companies and investors are already demonstrating leadership, and others are ready to align around this agenda with the right policy signals.
- By 2020, all Fortune 500 companies should have science-based targets that align with the Paris Agreement. Shifting their brand and marketing to products that are climate positive will engage consumers as active agents of the solution. For only the top ten global retail companies, this could translate into almost US$4 billion each day of purchasing power moving toward the lowcarbon economy.
- Companies and investors are ready to advance on this agenda, but they cannot get there on their own. Current regulations, incentives and tax mechanisms are a major barrier to implementing a low-carbon and more circular economy. For example, they slow-down the penetration of new building materials in construction activity. In agriculture, they subsidise the application of too much mineral fertiliser, diverting innovation activity away from more sustainable forms of farming. They make it cost-competitive to deploy single-use forms of plastic packaging, contributing to the plastics crisis we are now seeing in the oceans. They make it hard to design products in a way that maximises component reuse. Along with getting carbon pricing right, we also need to tackle a host of other policies which are protecting the old inefficient, polluting economy.
- A big push on innovation is needed, with at least US$50 billion of new capital by 2020 committed to breakthrough climate challenges beyond the energy sector. Today’s progress on renewable energy, energy storage and lowcarbon mobility is not an accident. It is at least in part the outcome of decades of investment by governments, universities, foundations and the private sector in mission-driven innovation. Recent technological developments (and new partnerships) have, for example, helped to advance the radical transparency and accountability necessary to achieve deforestation-free supply chains, although there is more to be done to achieve these in practice.
- We need to put in place and capitalise privatepublic partnerships in each major sector to pilot, scale and share learning around the deployment of new low-carbon and climateresilient technologies. We have plenty of examples about how to do this well (and badly). What is currently lacking is sufficient political and business leadership.
4. Fourth, a people-centred approach is needed to ensure lasting, equitable growth and a just transition. It is good economics and good politics.
- If managed well, the low-carbon transition offers the potential for new opportunities and more equitable growth. Active, targeted regeneration can support economic diversification and the delivery of quality jobs. In developing and emerging economies, the low-carbon transition provides an opportunity to leap-frog the inefficient and polluting models of the past.
- All governments should establish clear Energy Transition Plans to reach net-zero energy systems, and work with energy companies, trade unions, and civil society to ensure a just transition for workers and communities. Successfully diversifying local economies as we shift away from coal and eventually other fossil fuels will require multi-stakeholder dialogue, strategic assistance, re-training, and targeted social protection.
- Diversification and regeneration funds should be targeted to affected areas. There are multiple examples of areas previously reliant on industrial or mining activities that are now seeing new growth as a direct result of repurposing the assets, networks and capabilities of the old economy. Better food and land use systems can deliver vital jobs, better incomes, and more inclusive growth to disadvantaged rural communities. Businesses, universities, and city governments can work with national governments, workers, and civil society to help revitalise and ensure prosperous communities.
- Women will play a critical role in delivering this agenda in an inclusive and people-centred way. In countries where more women participate in political life, parliaments are more likely to set aside protected lands and ratify international environmental treaties, while ensuring their full participation in the economy could, by some estimates, boost global GDP by as much as US$28 trillion per year by 2025.
This Report is a roadmap for how we can accelerate action to turn better growth and a better climate into reality. We can eliminate extreme poverty, prevent dangerous climate change, and improve the lives and livelihoods of millions. But only if we set out to do so decisively now. This is not just about avoiding a future we do not want. It is about creating the future that we do want