The right institutions for the climate transition by Mariana Mazzucato

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While global climate commitments are important, they won’t have much without the institutional foundation that the transition to a zero carbon economy needs. This will require innovation and experimentation at all levels of governance, where the focus should be on broadening participation.

LONDON – At the United Nations Climate Change Conference in Glasgow (COP26) last week, I joined a panel with national politicians, including Scottish Prime Minister Nicola Sturgeon and Spain’s Minister for Ecological Transition Teresa Ribera, to discuss how we can take the green economy seriously. As male-dominated world leaders wrestled with each other over commitments, postures and promises – what Swedish climate activist Greta Thunberg memorably dismissed as more ‘blah, blah, blah’ – our panel of women came together. focused on the fundamental question of what new tools and institutions the world will need to decarbonise itself.

After COP26, it is clearer than ever that top-down commitments and policies are not enough. Rather, we need a structural and institutional transformation from the bottom up. Our only hope of keeping global warming within “safe” limits (in fact, the agreed target is much safer for some than for others) is to accelerate a green transition with massive and coordinated public investments aimed at leaps of innovation and a change of economic paradigm.

Just as climate change is a dynamic, non-linear phenomenon passing through a series of tipping points – each with its own spillover effects, making it extremely difficult to predict the rate and magnitude of change – the process of change. reduction or even reversal relies on cascading tipping points in the other direction. Synergistic leaps in technological innovation and institutional transformation can precipitate positive feedback loops and cumulative multiplier effects.

This is precisely the goal of what I have called a mission-oriented innovation policy. We need to mobilize resources and align economic policies around measurable goals, such as the emergence of new technological innovations and the formation of new markets. Each mission must be inspiring and catalytic, and compel many actors and sectors to innovate and collaborate in new ways, whether it is for a carbon neutral city or a plastic free ocean. Each mission must attract the investments of many actors, with strong conditionalities attached to any form of public support, in order to stimulate “upward tipping cascades” which will broaden the current technological horizon and inaugurate a zero carbon future. But to reorient the economy around mission-driven leaps of innovation, we will need new institutions at all levels, from local to global.

At the international level, for example, a ‘CERN for climate technology’ (modeled on the supranational European scientific research organization) can coordinate the investments of participating governments, using a collective pot to finance the development of innovative technologies that the private sector will not sue. on their own, either because they are too risky or because the financial returns are too low. This idea was included in the final report of the G7 Expert Group on Economic Resilience, in which I represented Italy.

At the national level, public green investment banks can provide the patient capital needed to develop zero carbon markets. One promising model is the Scottish National Investment Bank (which I had the honor to help establish), a public financial institution whose primary mission is to help decarbonise the Scottish economy. The new bank will catalyze investments in sectors and companies specializing in zero carbon technologies.

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Last but not least is the municipal level, where climate action materializes in tangible projects such as zero-carbon housing, car-free neighborhoods and circular supply chains. Here, the new Council of Urban Initiatives, co-organized by University College London, the London School of Economics and UN Habitat, has a critical role to play in sharing information on successful projects and aligning them with agreements. international, especially those to come. outside COP26.

These institutions will need the buy-in and commitment of citizens – and in particular vulnerable workers – to get started. The yellow vests (yellow vests) and other protest movements have demonstrated why the momentum behind the green transition must come from below. The idea behind the Green New Deal proposals is to harness popular energies by placing people at the heart of economic transition.

Popular participation means involving citizens in processes at the community level, such as the Camden Renewal Commission, who used key debates among residents’ associations to place housing estates at the center of the Borough of London’s clean growth strategy. It also means inviting community associations, cooperatives and unions to form “public-common partnerships” with governments. Another option is to create citizens’ assemblies on climate change, as Spain has done. Such institutional innovations will serve as the foundation for a new social contract, which is the only way to build public confidence and achieve a socially just transition.

The biggest mistake of climate activism has been for failing to present compelling and realistic arguments for a green transition that promotes workers’ interests. A Green New Deal that creates good new jobs, raises living standards and reduces precariousness and inequality should be the top priority. The success of the green transition will depend on measures to ensure that workers whose jobs are threatened by decarbonization can acquire skills and employment in the new economy. Otherwise, they should benefit from a guaranteed minimum income as a fundamental right.

This will only happen if workers have a place at the negotiating table. Whatever new commitments COP26 makes on the global stage, we will need to redouble the work behind the scenes of institution-building, with particular emphasis on broadening participation to include ordinary citizens. Avoiding a climate catastrophe will require large-scale experimentation with new technologies and, importantly, new institutions at all levels.

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