Speech at SIDA - Stockholm on trade, climate and development

Trade, climate and development 

Speech at the Swedish International Development Agency (SIDA)

Stockholm, Sweden

May 23, 2017

A Swiss investment bank has an interesting slogan: “A long view improves our view of the short term.” This is a very special month to me. Earlier in May my grandmother turned 102 and she keeps lucid and in good health. Also, any day now –hopefully not today- my wife will give birth to our second child. If this child enjoys the life expectancy of my grandmother, he or she will be alive in the year 2119. So when we speak about end-of-the-century scenarios I take it personal even though I will not be here.

I wish to mention briefly six issues that relate to our topic of today. First of all, the multilateral trading system is showing serious dysfunctions between what it should be doing and what it is doing. It should be doing all it can, as fast as possible, to implement all trade policy mechanisms that will allow us to reach the Agenda 2030 Sustainable Development Goals ideally way ahead of their deadlines. Instead, what we are doing is better illustrated by a Spanish fable of a group of rabbits that were hanging out in the forest when suddenly one yelled “dogs are coming!” One rabbit went to have a look and determined it was a pack of retrievers. “They are retrievers”, he announced. Another rabbit went to verify and corrected, “no, they are hounds”. And so the discussion began: Retrievers! Hounds! Retrievers! Hounds! In the end, the dogs arrived and ate all the rabbits. The WTO is still uncertain whether it wants to retain the Doha Round architecture or move into something else. The WTO is still unsure what it wants to talk about, like new issues that were not included in the Doha Round, or even old issues such as e-commerce, in which a moratorium has existed and has been renewed every two years since 1998 on the issue of electronic transactions.

Second, the private sector is highly engaged in the green growth agenda. A group of more than 280 global investors worth some US$17 trillion, has requested the G7 targeted climate and energy plans for 2050, a phasing out of fossil fuel subsidies and carbon pricing, and adoption of policies for low carbon investment. This remarkable leadership should be backed with the corresponding public policymaking required to implement such an agenda.

Third, the SDG agenda that the WTO should be addressing and discussing with all its resources and human capital should contain concrete results on: a) fisheries subsidies; b) fossil fuel subsidies; c) clean energy and environmental goods; d) e-commerce (trade policy for the digital economy); e) sustainable agriculture and food stockpiles (and not the agriculture from the 1970s); and f) responsible production and consumption (trade policy for the circular economy), among others.

Fourth, the issue of sea level rise should be top of mind of all policymakers worldwide, not least at the WTO. The Arctic is very close to my heart as I lived in the Norwegian Arctic for two years and the estimates of sea level rise for 2100 factor in possible melting scenarios of the Arctic including Greenland, which are vast amounts of frozen fresh water. But that figure is dwarfed by the amount of water that is frozen in Antarctica and that scientists are starting to scratch the surface to determine not whether it is melting, but how fast and how much water would it release into the world’s oceans. In other words, catastrophic sea level rise, the one that will displace hundreds of millions of peoples that live within a kilometer of the coast will likely come from the south pole which we barely know anything about.

Fifth, regarding fossil fuels, Costa Rica has been taxing them heavily instead of subsidizing its consumption. Unlike many other countries that use fossil taxes to finance government spending, Costa Rica created, since 1988, the first known mechanism of payment for environmental services (PES) through which reforestation has been incentivized. After nearly 30 years of this policy, forest coverage has more than doubled, influx of tourists seeking ecological tourism has grown ten fold, and the economy has grown seven times. This proven story of success is adaptable to all tropical developing countries that possess half of the fertile land and water of the planet and that hold such abundance of natural capital and renewable resources.

Finally, many of you watched in excitement the amazing close-up pictures of Jupiter taken by Juno, a remarkable piece of technology that brought the giant planet closest to human civilization than ever before. This was in part due to the amazing coverage that NASA does on social media of space exploration. They figured out how to make space exploration cool so the younger generations are learning and excited and engaged about it. Is there any better way of promoting the study of science in this day and age? So we must keep this in mind and figure out a way to make trade and climate action cool, most particularly from a development angle, which is what millennials care about: will I have a job and will it matter to solve the problems that my generation did not create but needs to address to live in peace and prosperity.

Make climate action cool

“Making climate action cool”

Intervention at UNEP workshop on the

Trade and technology nexus to achieve

Agenda 2030 goals for developing countries

1.     As you may know, the Earth spins on its axis at 1600 kilometers per hour. Its orbital speed around the sun is of 108,000 kilometers per hour. Now, as some of you may know, last July NASA achieved the remarkable goal of putting a spacecraft in Jupiter’s orbit. By the name Juno, it launched from Earth on August 2011. In October 2013, it encountered Earth’s orbit again and used it as a slingshot to gain significant speed on its travel voyage towards Jupiter. Five years and 2.8 billion kilometers later, Juno slowed down to avoid crashing against Jupiter’s gravity forces and enter into orbit, which was achieved successfully. A remarkable fact is that the top speed it reached on this trajectory was 265,000 kilometers per hour, or more than twice the orbital speed of Earth around the sun. Another remarkable fact is that it traveled all this distance and reached this astounding speed using solar energy as predominant source. What NASA has done is commendable indeed: they have made aerospace science and exploration cool. If someone like me can share this story with you is because I was drawn into NASA’s social media outlets and explanations for the non-technical public. Bravo, NASA!

2.     I am from Costa Rica, and it is a country that has a very cool brand. We are a sought-after destination for ecological tourism, we generate 100% of our electricity from renewable sources, our economy has tripled in the last 30 years and in that same period of time our forest coverage has doubled, representing a unique case worldwide in the last 50 years. This can be considered a good example of regenerative development, where growth is both in financial and natural capital simultaneously. We have learned throughout the decades that there is a virtuous spiral between renewable energies, environmental conservation, forest coverage, biodiversity, ecological tourism, services, jobs, and wellbeing. This is a recipe we believe can be considered by countries with similar geographical location and climate, many of which face considerable developmental challenges. May I remind you about the billion people worldwide without access to electricity; the two billion people without access to drinkable water; the three billion people without access to three meals per day; and the four billion people without access to the Internet.

3.     Regarding Sustainable Development Goal 13a., related to the creation of a Green Climate Fund that hopes to raise US$100 billion/year to finance mitigation efforts in developing countries, it is a fact that globally we are spending US$1.5 trillion/year in military equipment. Only a 6% reduction in this expenditure would provide all the cash required by the Fund. Let’s choose our battles wisely!

4.     One of the most important lessons learned from the Paris Agreement is a successful mindset that positively affected the attitudes and behaviors of key participants in the process. This included optimism to always expect a brighter future; imagination to create an innovative agreement; vision to have a broader, more long-term approach; strategic thinking to prioritize actions with key stakeholders; and the ability to design a critical path to take the necessary steps to make it work.

5.     Regarding the Environmental Goods Agreement (EGA) currently under negotiation at the World Trade Organization (WTO), it is an agreement whose aim is partially assisting climate change mitigation and adaptation, partially improving insertion into Global Value Chains (GVC), and also fostering innovation. Costa Rica can share the success story of the Information Technology Agreement (ITA) signed in 1996, which allowed the country to attract an important investment like the manufacturing plant of INTEL, which at its peak of production was exporting from Costa Rica 99% of all server microprocessors used worldwide. This created a high-tech cluster that triggered the development of multiple small and medium enterprises (SMEs) that engaged in GVCs through innovation and high competitiveness. INTEL decided in 2014 to transfer its manufacturing plant from Costa Rica to Asia and decided to leave in Costa Rica an innovation lab. This means that Costa Rica has moved, in 20 years, from agricultural production to high-tech manufacturing to high-tech innovation, creating enormous value for the company, its suppliers and the world in general. The most important aspect of this success story is that education has been at the core of it, from school preparedness to the ability to develop public-private partnerships with higher education institutions to adapt to the needs of foreign multinationals, to being able to develop world-class talent to operate at the highest level of performance.

6.     Another important topic related to trade and climate action taking place at the WTO is the leadership of the group of Friends of Fossil Fuels Subsidy Reform which seeks the elimination of these subsidies that, according to the World Bank and the International Monetary Fund, amount to US$500 billion/year. Furthermore, they have calculated the social cost of these subsidies at US$4 trillion/year. Reducing them would immediately create incentives for renewable energies by proving fossil energy not cost competitive without such subsidies.

7.     Clean technology offers the possibility to address different needs through different solutions. For example, geothermal energy should be prioritized wherever there is an accessible volcano. Solutions should grow organically from there. Is it towards clean tech manufacturing clusters or towards agriculture or towards ecological tourism? It will depend on each case. It is important to consider a different paradigm when thinking about clean tech. For example, an electric car is a great solution to a particular problem of carbon emissions, but better than an electric car is an electric bus that can provide massive, public and clean transportation.

8.     Innovation requires that we identify the constraints within which we must innovate. For example, why do researchers work on the vaccine of a disease they are not suffering? They have the constraints and they look for potential developments that will advance the knowledge and science and technology frontiers organically in a variety of directions depending on the findings and additional constraints incorporated along the way.

9.     Humanity has put a satellite on Jupiter’s orbit powered with renewable energy. We have the challenge to make climate action cool. Millennials know what is cool, not only because they are young and in every generation it is the youth who determine what is cool and what is not, but because millennials are not motivated by money or power or glory, but by purpose. We are not rocket scientists but is this the best we can do to make climate action cool? If we don’t do it, then who? And if we don’t do it now, then when? Thank you. 

Only real win-win scenario

Image capture from www.worldometers.info on December 31st, 2015, at 18:00 GMT.

Another year has passed with a gigantic human footprint on the planet, unfortunately a very negative one. Yet, there are reasons to revitalize optimism in the wake of 2016. By some accounts, 2015 saw a worldwide reduction in carbon emissions in relation to economic growth, which would confirm a tendency already suggested in 2014, when emissions remained constant even though the global economy grew. But that’s not the point. The point is that we are still pouring 35 billion metric tons of a highly toxic gas that will remain in the atmosphere for centuries, as a result of aggregate human activity in all corners of the planet. [To put this figure in perspective, a metric ton of carbon fills up a sphere that is 10 meters in diameter and if we would enter in it, we would die in less than 10 minutes.]

At this stage of the XXI Century, no one can deny, question or pretend to ignore the effect civilization has on the atmosphere, precisely the bubble that holds the conditions to support life on Earth, the only planet in the known universe of which we have scientific proof that life exists.

It is urgent for our generation, as it starts to take the lead worldwide in high-impact, public and private decision-making, to place, atop our list of strategic priorities, innovation and design to reinvent all human endeavors and channel them towards a new paradigm of regenerative development. It suggests to create and distribute wealth while recovering natural capital, which is the source of all inputs and raw materials used in agricultural, industrial and digital production and provision of services, and, at the same time, enables the flourishing and coexistence of all life forms that precisely enrich and feed back into that very capital. This is the only real win-win scenario there is.

I am not suggesting abandoning capitalism, consumerism or hedonism. Each person must be individually responsible for his or her ideologies, ideals and values. It is, nevertheless, absolutely mandatory, to unconditionally comply with the ethical maxim of sustainability, so that all life forms fit in the planet forever. There is no business on a dead planet and we have no plan(et) B.

The climate action required by the Earth is not a responsibility or interest of a few of us. Everyone, without exception, is a crew member on this spacecraft that travels at a very high velocity around the sun, within the solar system, inside a galaxy among billions in a universe that keeps expanding into the vast unknown. We must learn fast and implement public and private policies that result in regenerative development, since there is nothing more important for any rational, sensible and sane human organization –be it a corporation, school, cult or family— to guarantee its existence beyond the lifespan of their current members.

More of this is what we need urgently, and I mean, a matter of life or death. I know 2016 will bring greater climatic challenges and a more shocking reality, but also a more authentic and effective leadership in search for solutions. It is not difficult to achieve the required transformation, but it is certainly impossible if we do not try.