MAC: Mines and Communities

Climate change: Is Paulson on the road to Damascus?

Published by MAC on 2014-06-24
Source: Business Spectator (2014-06-24)

When the former secretary of the US treasury and CEO of Goldman Sachs compares the danger of what he calls the "climate bubble" with the pre-crash "financial bubble", you may wonder "what's going on?"

When he also calls for a carbon tax to be introduced in the USA and a withdrawal of subsidies for fossil fuels, you may think he's gone green overnight.

But then, you learn that he specifically targets Russia and Iran as "fossil-fuel rich nations" that would be hurt by such a tax.

Phew! We thought for a moment that the Grand Old Republican had lost his marbles.

Comment  by Nostromo Research]

Climate change like GFC: Paulson

Daniel Palmer

Business Spectator

24 June 2014

Henry (Hank) Paulson, best known for his actions during the global financial crisis as secretary of the Treasury in the US, has made an urgent call for action on climate change as the Australian parliament mulls a scrapping of its centrepiece climate policy.

Formerly one of the titans of the financial sector as chief executive of Goldman Sachs, Mr Paulson has equated the risks posed by climate change to those seen just prior to the financial crisis.

"For too many years, we failed to rein in the excesses building up in the nation's financial markets. When the credit bubble burst in 2008, the damage was devastating. Millions suffered. Many still do," he said in an op-ed in the New York Times.

"We're making the same mistake today with climate change.

"We're staring down a climate bubble that poses enormous risks to both our environment and economy."

The comments come as US President Barack Obama renews a push to strengthen climate policy, with new standards imposed on power plants.

Mr Paulson, a longtime Republican, bemoaned the lack of urgency, noting that the economic risks of doing nothing outweighed the cost of action.

"I feel as if I'm watching as we fly in slow motion on a collision course toward a giant mountain," he wrote in the NYT.

"We can see the crash coming, and yet we're sitting on our hands rather than altering course."

Mr Paulson concluded the way forward was an economic response to the problem, calling for a carbon tax to be put in place in the US.

He said such an approach was supported by many respected economists and would allow for the phasing out of subsidies for both fossil fuels and renewable energy.

The view of Mr Paulson is at direct odds with Prime Minister Tony Abbott, who continues to press for the scrapping of the carbon pricing scheme. The government has reintroduced its carbon tax repeal bills this week, but they may not clear the Senate.

The former Treasury secretary also called for a joint climate agreement from China and the US, which would prove a gamechanger.

"When it comes to developing new technologies, no country can innovate like America. And no country can test new technologies and roll them out at scale quicker than China," he said.

"The two nations must come together on climate."

As an added bonus, the promotion of renewable technologies through a carbon tax would reduce the world's dependence on fossil fuel-rich nations like Russia and Iran, Mr Paulson said.

Mr Paulson has joined with rich lister, and former New York mayor, Michael Bloomberg as well as hedge fund manager Tom Steyer on a project that will provide a broad economic analysis of the costs of inaction, with its goal to influence decision-makers around the world.

 

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