Mark Carney, UN Special Envoy for Climate Action and Finance

Political Will and Drivers:

• Political momentum is described as "quite strong," driven by public pressure and the cumulative, visible frequency of climate-related physical events.
• The insurance and reinsurance industry, historically aware of climate risk data, helped catalyze the private sector's initial engagement following the 2015 "Tragedy of the Horizon" speech.
• Governments possess the general orientation but require private sector assistance to determine the specific levers, sequencing, and design that maximize impact.

Government Policy Frameworks (The "Three F's"):

• Fiscal Spending: Includes home retrofits and renewable power support; significant initiatives are emerging regarding hydrogen to lower costs (e.g., UK, EU, German, and French programs).
• Framing (Regulation): Regulatory mandates are deemed as critical as spending, such as the 2035 ban on internal combustion engine production (potentially accelerated) and hydrogen fuel mandates.
• Finance: Requires robust market infrastructure and data to enable private capital to capitalize on policy orientations.
• Deficit Management: The UK deficit is estimated at ~20% of GDP this year, with roughly half attributable to emergency pandemic transfers; a rebound to high single digits is expected in 2021 as restrictions ease.
• Investment Strategy: Chancellor-level decisions will focus on rebalancing from current spending to capital investment and amplifying spending through regulatory certainty rather than additional expenditure.

Investment Signals and Carbon Pricing:

• Credibility and Prediction: Markets require clear, predictable pathways for carbon pricing to pull forward investment decisions, analogous to independent central banking ensuring consistent monetary policy.
• Current Status: Global carbon pricing covers only ~20% of the globe with an average price of $3/ton; regional averages rise to $15/ton where priced.
• EU Trajectory: The EU aims to reach €75–€100 per ton by 2030, driving investor preparation in member states like Ireland.
• Border Carbon Adjustment: Strong support exists in Europe for a carbon border tax to prevent "carbon leakage," with a WTO process underway; the incoming US administration has shown logical support for the concept.
• Implementation Design: Recommendations focus on heavy-emitting sectors (steel, cement, industrial), setting specific thresholds to exclude minor discrepancies, and accounting for equivalent regulatory measures in other jurisdictions.

Geopolitical and Market Structure Shifts:

• Future globalization may shift toward "like-minded clubs" (e.g., climate, technology, AI, data) characterized by high intra-group integration but less global universality.
• Private capital is currently available to deploy, contingent upon governments establishing frameworks that attract rather than obstruct investment.