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Implications of addressing climate change
Jean Pisany-Ferry, a senior fellow Bruegel and at the Peterson Institute for International Economics, writes this article calling to political leaders to be clear about the economic transformation required to addressing the climate change as people will need to change their lifestyles and the transition costs will be substantial.
The highlights of the article would be the following:
- Capitalism has begun to turn green, and companies want to be part of a cleaner future. This would explain why Tesla is now valued seven times higher than General Motors, despite having sold 14 times fewer cars in 2020. In this regard, the article states that “today’s defining battle is not between climate activists and capitalism, but rather between two strands of capitalism”.
- People will need to change their lifestyles and the transition costs will be substantial. Even if capitalism becomes totally green and technology comes to the consumer society’s rescue, people will need to change their lifestyles and will suffer economic losses through exposure to stranded assets (those unlikely to pass the carbon-neutrality test) and job losses in traditional carbon-intensive sectors. In summary, consumer welfare will take a hit, decreasing in the short term and improving in the long term.
- The article calls to the political leaders to be clear about the economic transformation required to addressing the climate change. It is right to speak about the potential opportunities and economic growth that will bring the new carbon neutral economy, however “the best way to convince people to embrace decarbonization efforts is not by minimizing the challenges ahead, but by describing them accurately and explaining how they will be addressed”.
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According to @McKinsey, banks must prepare for a new growth curve. Strategic precision —the ability to combine technology, capital discipline, and deep customer insight— will distinguish the leaders from the laggards.
According to Kristalina Georgeva IMF Managing Director, lifting growth requires three things: one, regulatory housecleaning to unleash private enterprise; two, deeper regional integration; and three, preparedness to harness AI.
According to The European House – Ambrosetti, the European Union has an opportunity to boost competitiveness and growth by simplifying regulatory and supervisory frameworks, particularly in the areas of sustainability and the financial sector.
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According to @ECB, in moments of acute stress, the public often turns to physical currency as a reliable store of value and a resilient means of payment, underscoring the crucial role it plays above and beyond everyday transactional convenience
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According to the Bank of Spain, in a context of strong growth in transactions and prices, the conditions under which new mortgage loans are granted currently show no signs of easing in lending standards.
McKinsey notes that European private capital is half the size of the U.S. and must play a key role in boosting competitiveness, by driving innovation, scaling firms, and mobilizing the investment needed to close the gap with other regions.