Recognizing that global warming is a threat to more than just the health of the planet and its occupants, financial ministers from around the world and the International Monetary Fund (IMF) are joining discussions on how to reduce emissions without harming global and national economies.
On Monday, forty nations gathered at the UN climate conference in Bali to discuss strategies for combating global warming without disturbing worldwide economic growth.
The meeting, which was not officially part of the Bali talks, demonstrates the seriousness with which nations are approaching the economic issues at the herat of global warming debates.
Indonesian Finance Minister Sri Mulyani Indrawati said, "Having this meeting…having the finance ministers meeting..itself is a breakthrough."
Today, 20 finance ministers are expected to continue talks, which have centered on the difficulty of creating trade agreements for "green" goods and funds for transferring clean energy technology to developing nations.
"The role of the finance ministers is to lead this discussion so that we have wider policy options," Indrawati said.
Yesterday Yvo de Boer, head of the UN Climate Change Secretariat, drew attention to the U.N. report calling for investments of between US$200-$210 billion by 2030 to sufficiently reduce global emissions.
The UN Climate Panel, which collected the Nobel Peace Prize on Monday, has said the efforts needed to offset global warming will–at the most–slow annual world economic growth by 0.12 percentage point.
In comparison, the panel has said the effects of climate change, including more severe storms, droughts, famine, political unrest and rising seas, could be far more damaging economically.
"We’ll talk about the theoretical basis but I don’t think we will decide on measures during this finance ministers’ meeting," Gabriel Kuehne, deputy director of the German Finance Ministry, said concerning the talks this week.
The IMF announced last week that it will be holding meetings in early 2008 to research and discuss the economic implications of climate change. This will be the first time the IMF addresses the issue.
Takatoshi Kato, the IMF’s deputy managing director who is in Bali this week, said, "This research will analyze in greater depth the macroeconomic implications of climate change and policy responses to it, both in terms of mitigation and adaptation."
In addition, he said the IMF is considering new tax mechanisms and other fiscal measures for countries affected by climate change.
Charles Collyns, deputy director for research at the IMF, has said that international carbon cap-and-trade schemes hold tremendous economic potential, especially for developing nations, but he added that, so far, the programs have had a minor effect on emissions levels.
"Until investors are faced by a set of prices that prices in the true cost of carbon emissions, there won’t be a full response," Collyns said, "which is why it is important to move ahead with a successor to the Kyoto Protocol in order to establish carbon prices not just in the near term but also in the longer term."
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