A bubble? Not exactly, but at the point we are at we need to be cautious. Support for renewable energy by states can ruin budgets. Already today the costs are very high and if the trend is not reversed in 2050, public debt will be half of GDP. The International Monetary Fund believes that the private sector has not yet fully entered the game to reduce CO2 emissions.
National policies that want to combat climate change are at the center of complex and often ineffective strategies, as we see in world summits. Despite such inconsistencies, an article in the forthcoming Fiscal Monitor, which analyzes state budgets, Washington economists say that "the private sector will have to fill the bulk of the climate financing needs." Countries that intend to commit to these policies face a "trilemma", that is, a conflict between reducing emissions, ensuring that budgets are sustainable and making anti-pollution measures operational. “In other words, pursuing two of these objectives comes at the price of sacrificing part of the third,” say the authors of the study, reports the Agency Askanews.
We do not live in a united world, but for industrialized countries we should insist on carbon pricing, to give an economic value to CO2 to be respected on a global scale. Is this the solution that deflates the bubble? No, because one measure alone is not enough to block emissions. Furthermore, Europe already regulates the trading of ETS emission quotas with some appreciable results.
Public and private together, but who is committed to the climate?
The mixed system - public and private money - which not even the UN has managed to get off the ground, is in theory the fairest. On the side of public budgets, the IMF analysis discounts, however, the difficulty of many economies in organizing with the industries specific emission reduction plansthe. Furthermore, there is also the impracticality for millions of entrepreneurs to move money towards renewables when they are still producing with fossil fuels. The climate problem is not among their major concerns and powerful states let it go. In other words, the private financing desired by the IMF can only grow in those countries where the economic system has reached maturity using fossil fuels and is now switching to renewables. A cycle has closed and another is opening, but on all continents the direction of travel is not unique. Even the public subsidies (100 billion dollars a year) promised in the latest climate COP have not been paid by anyone. On the other hand, the controversy over taxing the extra profits of energy companies without having clear ideas on the final destination does not stop either. The IMF talks about supporting families but you put the money on one side or the other.
On carbon pricing, the Fund's economists write that revenues "should be shared partly between countries to facilitate the green transition". A just transition would include fiscal transfers to vulnerable families, workers and communities. Goodbye green investments? The price of polluting carbon should also be integrated with other measures for the development of low-mission technologies. The conclusion is that public debt, using mixed measures, would stand at 2050 and 10 points of GDP by 15. Washington economists don't even leave out estimates of 2 trillion dollars of investments per year by the International Energy Agency. But is there an updated map of the countries that are really against climate change?
