President of the European Commission on Hopes for COP28 | Mike Bloomberg

Thank you so much for joining us. You've really put climate change, climate transition, financing at the heart of your presidency. What's your hope and biggest expectations for COP28? COP28 is a decisive moment and my expectations and my hope is that we're going to be successful in three fields. First, ambition. Second, targets. And the third is finance. What ambition is concerned, we need more ambition. We know that at the moment being we are off track but we can still make it to keep the 1.5 degrees Celsius warming limited to that point and therefore we need to increase our ambition. The ambition of the nationally determined contributions of the different countries at the COP28 but also, for example, to peak greenhouse gas emissions in 2025. Or, for example, to be very clear on getting rid of unabated fossil fuels. These are topics that are very important. The second is targets. It was Mike Bloomberg said it, only what gets measured gets done. And we do not have at the moment being a global target how we want to deploy renewable energy till 2030. And we need such a global target because really we have to be on the right trajectory. Therefore, I hope we're going to have a global target defined that we triple the deployment of renewable energy till 2030 and that we double energy efficiency. Doubling energy efficiency means energy we do not use. And the third topic is climate finance. So, ambition, targets, finance. And President, do you see that resolve from world leaders to actually come together and get more done in those three fields? Yes, of course. I mean, it's still a time in the run-up to the COP28 where we have to negotiate intensively. But a typical topic is, for example, climate finance. As you know, there is the promise out there since years now that the highly industrialized countries deliver 100 billion dollars every year to developing countries and emerging economies. I'm deeply convinced that this year we're going to make it and we're going to deliver it. The European Union is contributing its fair share with 27 billion dollars. So, I hope that the others step up too. And this is a matter of trust. If we deliver, the developing countries trust the whole process and then we can move forward with the ambition, for example. And the scale of this is immense, right? How much of this money is actually needed for emerging economies? What's the one thing that could hold them back? Well, on one hand, you need for the emerging economies public investment from us, but you also need to attract private capital. It won't work without private capital. And there we have a new initiative because we've seen one of the most effective tools to nudge private capital into green projects, sustainable projects, are green bonds. The European Union has the largest green bond market. The green bond market otherwise is dominated by the United States and China, but there are no developing countries or low and middle income countries that have sufficient green bond markets. So, we've decided we're going to share our expertise with the low and middle income countries so that they can build up their green bond markets. And we're going to be an anchor investor. That's very important. Providing around about a billion to leverage up to 15 to 20 billion because we have to de-risk for the private capital, the investment that are doing. So, the green bond markets, one of the major projects we're launching right now, and I put a lot of hope in it that it will attract the necessary private capital to the low and middle income countries. Is there anything else that actually Europe can offer in terms of attracting this private capital to emerging economies? Yes, there's a second big topic that we have. We call it Global Gateway. Global Gateway is our investment program for critical infrastructure abroad and, of course, a big chunk goes into green projects, sustainable projects. And here, together with the private capital that we are leveraging, it's around 300 billion euros that are ready to be invested. And here, it's very fascinating because, I mean, if we want to master the clean transition to renewable energies, we need the Global South. The Global South has all the resources in abundance, the wind and the sun, but it doesn't have the infrastructure. So, it's a perfect match. If Global Gateway is there, our task is, with Global Gateway, to de-risk private capital here to create, for example, a conducive judicial environment or regulatory environment for projects that are going forward. I give you examples. We have now green hydrogen projects with Kenya and with Namibia started, but also with India, with Chile, for example. Or we have projects on forest management with Brazil, with Zambia, with Indonesia. We have a lot of projects for solar and wind. So, all critical infrastructure. It's a win-win situation. We need this additional renewable energy. For example, I was just talking about the targets till 2030, a tripling of deployment of renewable energy. And here, for the private capital that really wants to go into these projects, we are de-risking and we are the ones also who are showing this is true and trusted as a project. President, the Global South is worried that actually the cost of capital is so much higher for them. Do you share the same concerns? The cost of capital is higher. For example, if we look at wind onshore, it's 3.3% in the European Union. It's around 7.2% in Africa. If you look at sun, solar, it's around 4% in the European Union, 8% in Africa. So, this is where Global Gateway is absolutely the right instrument to go in there, de-risk, be the anchor investor, make sure that the project functions and attract private capital to these projects. President, going back to some of the green bond markets that some of these economies can develop themselves, what's the hardest thing about that, apart from attracting capital? Is there any advice that you would give? Well, yes, it is. I mean, you start from scratch. It's lots of technicalities. It's very technical. So, to share this expertise, we built up our green bond market, so to share everything which is necessary for it. Of course, to invest also at the beginning that this green bond market can be built up, and then get supply and demand at the same time started. This is why we are so important as anchor investor. Where do you see it first? So, how much and how quickly can that scale up, you think? Depends on the speed that we are developing, but we've seen in our own green bond market, it was a steep rise immediately of the demand is out there. There's a lot of capital out there that is looking for the good projects. So, we've seen it with the own green bond market. It really went like this, oversubscribed enormously. Therefore, the idea was born to do the same for the low and middle-income countries, and as I said, the resources they have, they have them in abundance. They need the infrastructure, and therefore, there's a lot of good capital out there that is looking for the reliable projects. Therefore, it's a perfect match. You've been, President, very vocal on carbon pricing. Yeah. Why? That's a third point, where carbon pricing. In the European Union, we have made a very good experience with the topic of carbon pricing. What is the principle? It is a price on carbon. So, we say, you want to pollute, you pay a price on the carbon you're emitting. You want to avoid it, the best thing is innovate into a clean technology, and that's what happened in the European Union. I'll give you a few figures. We introduced carbon pricing in the industry in 2005. Since then, the economy has grown by 65 percent, while the greenhouse gas emissions have decreased in the sectors that were covered by carbon pricing by 35 percent. So, an increase, a growth in the economy, a decrease in greenhouse gas emissions, and we got 152 billion in revenues from the carbon price, which we could immediately reinvest in the green transition. So, it's an extremely effective and efficient tool. It's market-driven. It nudges the entrepreneurs into innovation. It couldn't be better. Now, if you look at the global overall scenery, only 23 percent of greenhouse gas emissions are covered by carbon pricing. So, just imagine, if we were able to increase that to 60 percent, the amount of revenues that would come back, besides the fact that it cuts greenhouse gases and grows innovation. The amount of revenues we could get back, if we agree to give a big chunk of that to the low- and middle-income countries, this is fresh money that has this triple effect, innovation, cutting greenhouse gas emissions, and investment capital. President, on that, were you surprised at the speed at which this was adopted, or actually the scale of revenue, like how big it became? Well, well, it is now, I said at the beginning, we covered industry. Now, by now, we just started to cover road traffic and buildings. So, almost the whole economy is covered by carbon pricing. We've made our initial learning experience, so we know how to move forward, and interestingly, there's a lot of demand out there. For example, China is building a carbon pricing system, we call it emission trading system, and they ask us for advice, how can we do that? This is good news, because, of course, big emitters like China, for example, if they start with that, this is absolutely the right way to go. And we have different regions in the world where we have carbon pricing already, but as I said, only 23% of the overall CO2 emissions are covered, so we need much more. Is there a role for carbon credits? Yes, absolutely, yes. Carbon credits have the advantage that if companies want to invest in green or sustainable products, it is possible through carbon credits. What is important is, and we could do this at COP28, that we develop a framework that defines what is a trusted carbon credit. And this is necessary, but it's doable, and I think it's also a perfect instrument for voluntary investment, for example, in sustainable projects. President, what's the question you get the most by investors that want to put capital to work, but are either worried about greenwashing or getting it quite right? Very important is that in politics, we are very clear with the direction of travel. It made a huge difference when I introduced in 2019 the European Green Deal with the climate law, where all 27 member states of the European Union accepted and agreed that we have the climate law by 2030 and by 2050 goals, because this gave predictability and certainty to the private sector and the business community. Last week, I baptized the first container ship with green methanol, and the ship owner told me that when he started to think about planning such a container ship with green methanol, it was a bad business case. But he wanted to contribute to something good, so he wanted to do this innovative stuff. And then we came with the European Green Deal and with the climate law. And from then on, he said, immediately it flipped into a frontline project, a first mover advantage for him. And this taught me again, it's so important that politics is very clear with the laws that we give or the frameworks that we give. This is the direction of travel, so that there's trust in the business community. They can rely on the direction of travel that we are choosing together, and the investment then is there. President, do you ever doubt when there's a country that either is less ambitious on net zero or wobbles a little with their commitment, do you ever doubt that the transition will take longer than you thought six months ago? Well, at the moment being, if we look at the world, or are we speaking about Europe? Europe and the world. Okay, now if you look at the world, we are off track without any question. But I'm deeply convinced and I'm confident that we can accelerate and we can be better. So it's just a question of, you know, that we join forces and that we move on rapidly. And I heard the introductory remarks of Mike. He was describing rightly so, the effects of climate change that we are already feeling. So it's very clear that we have to work against it. And we can do it. We can do it through innovation. There are a lot of good examples what we have done and where we have to go to. We have to convince the countries, of course, those who are hesitant, let's put it that way. What is important? I think we have been able to prove in the European Union that the transition to a circular clean economy is our new growth strategy. And the United States did the same with Inflation Reduction Act, for example. So a very clear message. The next generation of advanced products are the clean technologies, is clean energy, for example. And the race is on. Now the whole world is engaging. And the question is, who is going to be the first? Who is going to be the frontline countries or developer? Who is going to be the first mover? And of course we want to be it, but competition is always good. So it shows that you can grow, you can be successful, you can be prosperous while cutting emissions, while transforming into a green economy and circular economy. President von der Leyen, thank you so much for your time today. Thank you.