We are meeting at a time of financial turmoil. The question is being asked: will climate action now have to wait? Do not forget the experience of recent years: the Stern report clearly established, once and for all: it's impossible to think about the economy without also thinking about the climate.
Stern asserted: GDP can decline by up to one-fifth if climate change is not stopped in time. By comparison, this corresponds to the costs of a world war. He showed that the resources needed to stop the degradation of the climate are much smaller. The global need for further investments and financial flows is estimated at a maximum of 0.5 per cent of GDP, around one per cent of global investments up until 2030. Now also up to me and other ministers of the environment to remind people: there will be no change for the better or progress without success with the climate. And vice versa. It is not possible to separate the economy from the climate.
The climate is not concerned about where emission reductions are made. The responsibility is collective - but nevertheless different among the countries of the world. The rich parts of the world have grabbed by far the largest part of the earth's carbon dioxide resources and have a certain responsibility.
But also a particular responsibility: open, democratic societies with market economies and free organisations are a prerequisite for dealing with climate challenges.
Stern points to the fact that only developed technologies can deal with the climate without undermining prosperity and welfare. Only democratic, open societies can mobilise the market economy's enormous capacity for change, energy and development potential. Only open societies can find undiscovered potential, technological development and technological advances.
Mobilising the market economy properly means that we need to recognise property rights, set up statutory ground rules and build institutions that ensure compliance with systems. Well-functioning, predictable financial policy levers can be developed in the market economy. If the business sector knows what to expect in the future, the necessary investments can be made.
Free research finds solutions and newfound discoveries that are tested against one another and where, moreover, there is a chance of constantly discovering new solutions. That's a prerequisite for technological development. Broad international cooperation and trade can be developed to deal with environmental challenges, with open societies as the drivers.
The market economy is a foundation for us, the liberals. It is also the best way to meet the climate change. 6 liberal prime ministers, 64 liberal ministers, 9 liberal commissioners: We - in the Liberal Family in Europe - have rarely had such a great opportunity to get our policies through.
Now we take the next step: making our positions into strong tools for greening the future!
We put price on carbon. Polluting the environment must cost money, and environmentally sustainable measures must be financially profitable. That's fundamental in ELDR's manifesto.
Since the early 1990s, Sweden has put a price on emissions via carbon dioxide taxes. It is a very effective way of reducing the emissions without a serious impact on economic and social development.
Another method for putting a price on emissions is the emissions trading scheme in the EU. It is a market economic means of reducing emissions. We politicians set the framework: binding rules and an emissions ceiling. Below this ceiling, the price is set based on trade. With this trade, emissions are reduced when it costs more to produce emissions than it does to change production methods or technologies at individual companies. Companies and industries make emission reductions when they are most cost-effective.
We make legislation environmentally demanding, but leave to the market to choose best technology and solutions. What we as politicians should do is to set the bar for the level of environmental ambition. And that automatically push for the best available technology. Thanks to the muscles from the free and open and liberal market!
One example is the carbon dioxide requirements from light cars, draft legislation currently before the European Parliament and Council. Politicians set targets for maximum carbon dioxide emissions from cars, and companies then have to deliver. We don't say how to achieve the target, we set the bar for environmental requirements. It's up to companies to make cost-effective improvements
Only with the power of the free market can we mobilize necessary recourses for green investments. ELDR's manifesto also brings up the importance of mobilizing research and development. The state also has a crucial role complementing the market investments in new green technology and to mobilize the resources necessary commercializing new technology to enter the market.
Green investments are a way out of the crisis. Pachuari said: what is the cost of doing nothing? Turning the question around in the same way, action for our climate becomes an investment. Today's investment decisions are our future: they will determine our emissions for decades to come.
Current resources and investments are totally inadequate. A key issue for reaching an agreement that covers all countries. The role of the private sector is crucial. It is responsible for 86 per cent of total investment flows globally. Compared with development assistance: equivalent to less than 1 per cent.
ELDR's manifesto also addresses the link between climate change and economy - spells out the relation between climate change and the possibility to increase innovation and growth in Europe. The world needs to develop and at the same time adapt, particularly means of transport, ways of building and housing. Europe can be a pioneer in both mobilizing the market economy and developing solutions that meet demand in the rest of the world.
What we do in Europe makes a difference. For example, again the Emission trading system - without this trade, the costs of the emission reductions made in the EU emission trading scheme would have been double.
More and more countries look at Europe as a role model, trading systems are being developed or planed for example Norway, Switzerland and a few states in US. Both presidential candidates want to see some kind of trading system. In the USA and several other countries, primarily regional initiatives and through the introduction of various voluntary systems for emissions trade. Canada, Australia and Japan are planning the outlines of systems. New Zealand is planning to introduce a compulsory trading system by 2010.Emission trading systems in and with these countries would mean a great deal for reducing emissions and preventing countries from gaining competitive advantages by destroying the climate.
