Hello, welcome to visit Shanghai Forum
We are talking about problemsthat will not show their effects in the next 5 or 10 years, nor 30, 40, or 50 years.This requires a real long-term vision and perspective.
Reporter: David Young, Wang Yizhu
Reporter: The title of this conferenceis “Economic Globalization and the Choice of Asia”. What has been yourimpression thus far?
CarloCarraro: I think my impression is a very positive one becauseof the range of issues we are talking about at this conference, from financialstability to environmental problems. These are no longer domestic issues; theseconcerns are not only Korean ones or Chinese ones; these are not even justregional problems - these are global problems. Globalization lies at the heartof many of these issues. National governments are no longer able to tacklethese problems sufficiently. I believe that the reflections happening at thisforum are very important in advancing a more international cooperation focusedon addressing climate change, tackling energy concerns, understanding howfinancial markets work, etc.
Reporter: One of the keynote speakers, Long Yongchu, mentioned one differencebetween the Shanghai Forum and other governmental forums is that it isorganized by a university. As the President of the University, what are yourthoughts on that?
CarloCarraro: In otherforums, (e.g. the DAVOS forum, theWorld Economic Forum, or other ones organized by independent conferences) theyfocus specifically on the policy dimension. Here, policy is also critically examined—with deep academic analyses byscholars from a variety of different disciplines. Universities are the best equippedinstitutions in the world for handling this type of endeavor.
Reporter: Your keynote speech was very impressive. You mentioned working withIPCC to develop different options for mitigating climate change and developingsome adaption options. Given your role as an energy company, what do you thinkthe focus should be or what do you think can be done?
CarloCarraro: There are manythings that can be done. The IPCC is trying to gather existing knowledge. Theyare not going to produce any new knowledge. I think the global frame of thisIPCC report would be transition. The key word here is “transition” because itis slow, it’s progressive, and cannot be done within a few years. It will takedecades to make. But it’s important to start now. We should focus on researchand development first. We need key innovations in order to achieve a globalcontrol of emissions and key innovations come from improvement of energyefficiency. We’ve done a lot, but we can do much more. We have renewables, butthe cost is still higher than the cost of fossil fuels. However, the market forthese advancements has been well received lately. This proves that theseimprovements are possible.
But for all these technologies to become areal alternative you need the right infrastructures. The currentinfrastructures in place are not adequate enough to accommodate a largerproportion of people using electric cars, alternative fossil fuels, or otherrenewable energy types In order to make innovation worthwhile, it also requiresa suitable infrastructure to sustain its transition.
Reporter: You stated a very importantfact. I’m feeling that you would agree that governments should support thedevelopment of this infrastructure. The industry itself has to make money. Thisrequires some subsidizing on behalf of the government to get things started.
CarloCarraro: Also throughregulation. For example: thin-film solar panels. On new houses, this couldbecome compulsory. Of course, this will help the industry because the size ofthe market will increase and according to return to scale, production willbecome more effective. On electric vehicles, the infrastructure could becovered by public investment rather than private investment and would help todevelop these technologies. There is also the move towards private-publicpartnerships regarding these investments, which is probably the main approachto these kinds of problems.
Reporter: Now since we’re talking about money. You mentioned that by 2050, itcould be more than 20 billion dollars or 25 billion dollars. So who is going topay for it? Considering the cost of these environmental changes, is it reallyrealistic to assume that governments and private entities would be willing topay for it?
CarloCarraro: The additionalcost is not too large. In the energy sector, there are already a lot ofinvestments. And a lot of investment will take place anyway, because the energydemand is going to increase due to growth of the world’s population and anincreasingly more energy-reliant world population too. The key is to re-directthese investments, to shift this investment from traditional fossil fuelssources to new climate friendly energy sources. And the additional cost is notthat high. Of course, the total cost is high. But a large fraction of the costshould be paid for anyway if you want to produce energy with fossil fuel sources.Of course, renewables are, for the moment more costly and the thing we need topay is the difference and I think the government should cover the difference. Thedifference will become smaller and smaller as the size of the market increases.
Reporter: So you think the public sector or government should pay thatdifference?
CarloCarraro: Right. Andalso the structure of the market for renewables is much different than fossilfuels. For example, oil, gas, and even coal are controlled by a few companiesand a few states. But the market for renewables is much more democratic.
Reporter: You said that right now we are at 440ppm and that the target was450ppm. Do you feel that this is a realistic goal?
CarloCarraro: As I showedearlier, the reasonable target is about 450ppm. Today, we are at 440 ppm, so weare there. There is no way to stop at 450ppm. We’ll move beyond 450 andprobably even beyond 500. There is a possibility to come back however. But tocome back we need to remove carbon dioxide from the atmosphere. Technologicalinnovation and improvement can play a big big role here. But we’re not thereyet. A lot of research is being done and there are plenty of ideas. Severaltechnologies have even been developed, but nothing that can be industrializedyet.
Reporter: We know the previous Copenhagen summit did not go as you expected.Now the Rio+20 is coming up. What are your expectations for it?
CarloCarraro: Theexpectation will be a political event, which will send a signal and identify areasfor future policy making, but there will be no decision taking place. It willbe more of a celebration, a celebration of 20 years of efforts. The Rio+20 isan important step, but just a first step. However, it will still deliver asignal for future policy makers to carry out more initiatives. The goal of themeeting is more concerned with redesigning economic roles. The whole discussionwill be on a green world and green development, because I think for mostcountries, or for at least a major portion of the global population, the environmentis not just a component of economic development. It’s the essence of it. Andthe conservation of resources and developing renewable energies are crucialcomponents of economic development.
Reporter: In what way cantransfers of resources from develop countries to developing countries beincentivized? Do you feel that there are other methods outside incentives inorder to foster this transfer or resources?
CarloCarraro: The incentive is there if youare far sighted, if you have long-term vision. We are talking about problemsthat will not show their effects in the next 5 or 10 years, nor 30, 40, or 50years. This requires a real long-term vision and perspective. Sometimes policymakers don’t usually have this because they worry about getting elected andreelected.
Anotherincentive is related to the issue that these problems are not just developingcountries’, but also developed countries’ as well. The world is becoming more interconnected andproduction factors (in particular, labor) are becoming quite mobile. So if someregions of the world become too difficult to live in, and it’s problematic tosurvive in those regions, people will simply move. A growing number of peoplemoving around is going to have global adverse effects
Besidespopulation concerns, we should also take into consideration health and safetyconcerns (e.g. viruses), crime rate, and even the potentiality of wars. Theseare not local problems anymore, but now globalizing issues. Just consider how financialmarkets operate and the consequences felt by the stock exchange when there is aproblem in one side of the world far away. When we talk about these issues, weare not just talking about regional or domestic issues. The developed nations mustbe just as concerned as the developing ones. But you need a long-term vision.
Reporter: So are you sayingit’s a matter of education and making these leaders more aware of thesituation?
CarloCarraro: Not only education andawareness. It’s really a matter of taking care of your own interests in thelong-term by adjusting in the short-term. Economists would say it’s another“discount rate”. If you don’t discount the future too much of course, all theseissues become a real concern.
Reporter: At its current stage in economic development; China cannot avoid itsgrowing energy needs. Of note is China’s rising domestic gasoline prices andprice of electricity, which have incited popular discontent. While we cannotview environmental concerns and the Chinese people’s livelihoods as a zero-sumgame, can you offer any suggestions to help balance these two pressingconcerns?
CarloCarraro: When you raisethe price of a good that is fundamental to a population, there is always goingto be some discontent. With this in mind, I believe that pricing resourcescorrectly is very important. The price signal must show that, even for basicgoods like energy, this is something precious, something that must be preservedand which the quantity of resources is finite. We need to be careful in how weuse them. Don’t forget that world population has grown at an unprecedented ratein the past century with an increasing exertion of pressure on the resources ofthe planet. It’s feasible, but we need to do it very carefully. And this is whythe right pricing is important.
Reporter r: Do you feel that the domestic political and academic climate inChina is conducive to seizing this opportunity for domestic policy changesregarding climate change?
CarloCarraro: I think so, particularly in Asia. In Asia alot of investments, particularly infrastructure investments have yet to becompleted. They need to build new power plants, pipelines, new roads, and newinfrastructures. They can think about their own development using a different“green” approach to economic development, which can be implemented at a costthat is not much higher than a traditional approach. I feel that this is anopportunity that both the U.S. and Europe were not able to take advantage offor various reasons, but one that China, S. Korea, and even India can.
Reporter: So precisely because the East Asian region is in a period ofeconomic transition is has the chance to decide what kind of transition thatwill be?
CarloCarraro: Exactly.
Reporter: I want to ask yousome questions about Copenhagen. What do you think of China’s attitude atCopenhagen? And what do you think the role of China or Shanghai will be orshould be in the next ten years?
CarloCarraro: I think the role of China inCopenhagen was too defensive. They tried to defend their own interests ofcourse and their own development path and their own view of economicdevelopment. I think that China now has a different and more prevalentleadership type of role that it should play in global politics. China needs topropose something new to the other countries as well. There are many effortsand measures to increase energy efficiency and emissions efficiency and toreduce the amount of emissions per unit of production. Of course the totalemissions will not decrease. It will continue to increase with the rising GDP. Eitherway, the relation between emissions to unit of production is decreasing. Theobjective of China declared at Copenhagen was not satisfactory. I think additionalefforts are necessary to show what kind of leadership role China can play.
Reporter: In your personalexperience with other high level officials and academics, what has been yourmost frustrating experience?
CarloCarraro: Probably internationalnegotiations. International diplomacy is still quite old fashioned, with longdiscussions—sometimes useless discussions with an equal role given to allcountries big and small. Each country has the same role and same importance. Ithink that we need new kinds of governance in which leading countries andimportant countries are more effective in at least pertaining to the waydecisions are taken by all countries. Even more, if somedecisions can be left to some sort of global authority—of course not all ofthem—but if some of them can be delegated to a global authority that decides onbehalf of all other countries - this can be the way out.
Reporter: Is this idea apopular one?
CarloCarraro: There are discussionsabout it. Some countries are not ready to accept these kinds of ideas, butsooner or later it will come. The European Union had very little consensus inthe beginning, but it gradually gained more and more over the past 30-40 years.Now, the 27 countries accept the idea that some decisions are taken by acentral government and not by domestic governments. I think on a world level weshould follow a similar process. Though, again, not on all matters. Not oneconomic issues, etc, but on social, military, or environmental issues it wouldbe useful.
Introduction：
Carlo Carraro, President, University of Venice;Vice-Chair, Working Group III, Intergovernmental Panel for Climate Change(IPCC)
