[MUSIC] You mentioned the Paris Agreement on climate change, what are its implications? Not just for governments around the world, both in the global North and global South, but also critically for investors for the private sector. What does it mean? Does it provide the certainty we need, moving forward? >> It's certainly the closest we've got to certainty moving forward. One of the challenges for investors is they need to see long term signals, in order to be able to do a cost benefit analysis of their investments. One of the challenges we've had is different countries having different frameworks. If there is a global cost of carbon and that is implemented across economies across sectors then investors will know exactly what's going on. At the moment we have quite a wide range of frameworks. We have quite a wide range of reporting mechanisms, which are supposed to educate investors as to the risks that the climate risks and the sustainability risks around the sectors in which they invest. However without a unified approach, it's incredibly hard for investors, especially those who might be skeptical, to factor in those elements into their investment decisions. This is true not just of equity investors but also companies themselves when they make investments within their own supply change. When they look at what countries to operate in, when they look at the sustainability of their entire operations. >> The commitments, the contributions are not within the framework of the Paris Agreement, legally binding themselves. And this is where a lot of people throw their hands up and think well, it was easy to sign on. And the Paris Agreement looks like it's going to come into force, enter into force possibly this year, early next year. So if the commitments aren't legally binding, is that an effective international agreement. But I believe that it's a good mechanism with the appropriate procedures, the appropriate support. And there's key elements in the agreement that developed countries have to honor their commitment which for technology transfer, for finance, and for capacity building to developing countries. Mechanisms have been set up for that. The green climate fund has been established previously. The technology mechanism has been established. There are also external to the Paris Agreement initiatives taking place which can be counted into the global stock take. They come under this acronym called NACSO, which was a National Action Civil Society platform, which includes business in cities. So for example, Mexico, in Mexico. The City of Pueblo this year, has committed to reducing its city emissions by 90% by 2050. Now that's a developing country, a city which is going to grow as development obligations poor people. It sees the opportunity to develop in a low carbon world and this is the key, is that the Paris Agreement is an opportunity if grasped, it's a tool to transition to a low carbon world. And there are many benefits to doing that, and those benefits are way beyond reducing greenhouse gases. It's health, increased GDP in countries that invest in particular types of technologies and things. There's lots of opportunities, but there are lots of questions about what kind of world that will be. And that comes down to policy and governance and law, what will this world look like in terms of the transition? The Paris Agreement itself is merely a tool, a mechanism, how that plays out is going to be extraordinarily interesting that's what makes the next 50 years very interesting in terms of energy policy. Because at the end of the day, the Paris Agreement and the UNFCCC, they are about energy. Be that fossil fuel energy, renewable, nuclear or bioenergy, they are about that and about our economy and our livelihoods, and how we structure those. You can laugh the Paris Agreement off, as some people do in a very cynical way. Others see it as something that is got more traction than I think without recognizing it's political will that's necessary to take it forward. But it really is a tool and I think that honestly there's a need to get behind it and use it as a mechanism, a platform in all countries, and all countries are going to be parties to it. >> There've been huge challenges over the last few years with mobilizing public finance, let alone private finance. There's been concern from a number of countries in the Global North that in fact aid finance has been repurposed for climate finance. Once you start tracking where the money goes, it does become more complicated. One of the thing's private finance, sorry, public finance, however has proved immensely successful at is priming to pump for public, sorry for private investment. You actually look at the Internet which has transformed the global economy in last 15 years. That huge amounts of the development work was actually financed by the US military. Only governments have the money and the time and the focus to invest heavily in speculative technologies, in things which have the potential to do great good. What the international policy environment should be providing is a framework through which private finance can see how it can turn those new technologies, those new processes into successful alternative ways of operating. So for example, in the transportation system there's been huge interest in electric vehicles, self-driving vehicles. This in itself has led to new business models, shared transportation systems. We are at the earliest stages of this, but you do see a lot of private money now going into these areas because they can see there is a future to it. There is a transformation that's going on, and one thing to remember about private money is it's not about doing good. Private money is about making more money. Which means you have to provide the private sector with the sense that something will come of it that will better where they're investing. Now one of the hugely interesting areas is this idea of how we reengineer the finance system. For example, the idea that cash is the only thing to be valued in the value of a business. Which has historically been how things have worked, certainly in the public markets. There are a number of people now active looking at social values, social impact. Looking at the cost of carbon, the cost of water, trying to actually work out the real cost of operating in the way in which we do. >> It's an opportunity for international financial institutions in particular to rationalize some of their lending behavior. The idea that we're still funding very large scale fossil fuel infrastructure projects, at the same time we are advocating decarbonization. It's a schizophrenic policy and basically I think it's time that some of the leadership within some of these institutions recognize that there are certain types of lending practices. Which are perhaps no longer appropriate given the political commitment that was made in Paris. As well as some of the local developmental policies that are built around a lower carbon future that certain countries have put forward. So I would like to see some rationalization on the part of certain institutional lenders. And I think that they have a very strong role to play in backing up, providing some of the assurances that certain private sector investor would be looking. For example, the opportunity to develop types of renewable projects in part of the world are not family, because of the economics of the project in of it in itself. There's a lack of confidence in the capacity of the local government to actually stay the course to deliver the kind of conditions that the investors would require for the money to flow as it were a certain type of return. And international financial institutions could play a very strong role in supporting local capacity, indeed, local capacity building. Perhaps backstopping some of the pledges which national authorities are making you try to attract private investment, I see that as a great opportunity. A more kind of general point on technology specific lending. It's clear that atomic energy has a very big role to play in the vision put forward in Paris, at least from my point of view. And there's a role around the project economics when it comes to lending that could do more to support more atomic energy. Particularly in Asia where, if you look at the Asian power sector, that's where the greatest concentration of emissions is likely to be over the next 20 years. It doesn't have to be coal for that base load requirement that the composition of the economy and whatnot will call for. It could be nuclear, and it'll be something that the IMF and the World Bank could do to further the decarbonization agenda agreed at Paris. [MUSIC]
