The economic benefits of climate action

Whitney Pennington Rodgers:
Marcelo Mena is an environmentalist

and a scholar,

and he is the former
Minister of Environment for Chile.

Welcome, Marcelo.

Marcelo Mena: How are you doing, Whitney?
Thanks for the invitation.

WPR: Perfect. Great.

Of course, thank you so much
for being with us here today.

And you know, before we dive
into the future of climate action

in Chile and beyond,

I think it would be great for us
to talk about the present

and why Chile really represents
a country that is worth thinking about

when we talk about climate.

You know, recently there have been
lots of commendable actions

taken by your country
when we think about climate.

Chile recently committed
to net-zero emissions by 2050,

the first in the Americas to do this,

and that's especially notable
when you think about

how much of Chile's economy
really depends on carbon emissions:

mining and agriculture
and spaces like that.

So could you start a little bit
by just talking about

how would this even be possible
to get to net-zero emissions in 30 years,

and what would that mean for Chile?

MM: Mm-hmm. It was a very surreal image

when we saw Minister Schmidt,
the COP25 president,

Patricia Espinosa,
the UN head on climate change,

with masks, delivering this new NDC.

The important thing here is, things
that are hard to build require consensus,

but therefore to get rid
of that commitment,

you need to have another consensus.

This hasn't happened,

so the thing is, the reason why Chile
has a sort of vision towards mitigation

that's ambitious

is that we see that there's
a big economic benefit.

We have seen, we've witnessed,

what the renewable energy sector
has been able to do for investment,

for lowering energy costs.

And so therefore to reach this goal,

we will inevitably expand
to 100 percent renewable,

but we'll also transform our industry,
which is heavy on fossil fuels,

towards low emissions,

with the hydrogen economy kicking in,

with a recently launched
committee that I formed,

that Minister Jobet,
the Minister of Energy, set up.

And also energy efficiency
and a lot of capture, carbon capture.

We are endowed with
a lot of natural capital.

Taking care of that natural capital
and expanding plantations

will allow us to reach net-zero by 2050.

WPR: That's great.

And now it seems like Chile
has such a huge focus, then,

in thinking about renewable energy
and thinking about climate.

But this wasn't always the case.

Could you talk a little bit, I guess,

about the history of how Chile
arrived at this moment?

MM: Yeah, so in 2011, 2010,

we had an energy discussion

with incumbents saying the only way
we could solve our energy problems

will be through large coal
and large hydro in the Patagonia.

And that really polarized the discussion.

We got together as a community
after large protests

that triggered a lot of social movements,

and we started discussing

how we should be able
to do our energy going forward.

The population, public unrest,
set up almost 6,000 megawatts

of coal-fired power plants
to never be built.

And when the government,
Michelle Bachelet's government came in,

we pulled the plug
on the HidroAysén project,

which is a big hydro project
in the Patagonia.

And both of these conditions
enabled an opportunity

for renewable energy to set in.

We put in carbon taxes,

we put in environmental regulations,

and we set up an energy strategy
that we did, building on discussing

and looking at the data,

in which we thought that
the 70 percent renewable energy by 2050

was going to be a target
that we could agree on.

This target has been long surpassed.

Now we're thinking of reaching
that same goal by 2030.

WPR: And what you were saying
about social protests,

that's something that a lot of people
maybe have been following

news of what's going in Chile
are familiar with recent social protests,

and I think I'm curious about
how you see that factoring in

to climate action moving forward.

How might these social protests

play a role in what
climate action you see?

And, really, how is it possible for Chile
to be a leader in climate action

while also struggling
with some of these social issues?

MM: Well, the social issues,

which are very profound
and important to address,

caused, for example, COP25
to not be able to be held in Santiago

and to go to Madrid.

And this also shifted a whole bunch
of the discussions and announcements

that weren't done

and we were expecting to have.

But regardless of this,

the fact that we have this commitment
from the government today

shows that there's a resolution
to continue forward.

But really, the economic model of Chile
was brought into question,

because the environmental issues,
for example, are quite widespread,

and many times you have
large coal-fired power plants

being situated where people live

and with higher mortality rates.

Somebody who lives
where a power plant is installed

has twice the rate of death

in comparison to other people in Chile.

So the model of having many people
be impacted for the benefit of few

is something that caused
and triggered the social unrest.

And it goes into the economic model itself

of extracting, polluting,
impacting communities

that may not see the benefits
of these economic activities.

So while we've done a lot --

we've come a long way, for example,
in securing a very emblematic agreement

to phase out coal-fired power plants --

many people feel that this
wasn't done fast enough

and want this action to be brought faster.

WPR: And it sounds like having people
be the voice and the engine

behind making that happen

has really been part
of this historical thread

with climate action in Chile

and seems like it would really
lead things moving into the future.

MM: No, definitely, and we will continue.
Yes, go ahead. Sorry.

WPR: Go ahead. Please go ahead.
We have a little bit of a delay.

MM: Going forward, we're going to be ...
Starting out, we are doing well,

but I think we need
to double down on our commitments.

So even though
we have ministries involved,

we have civil society involved,

we need to bring in
the mainstream industry.

I think, for example, the mining sector
has a great opportunity

to be the solution
for the environmental issues,

because we provide the copper,
the cobalt, the lithium

that are required for solar PV panels,
for battery storage.

But we need to do this in a clean manner.

I think that's the biggest challenge
we're going to have

in the next 20 years ahead.

WPR: And sort of pivoting to the pandemic

and to thinking about
what's going on right now,

the entire world has obviously
been devastated by this crisis.

What have been some of the unique
challenges that Chile has faced

during this pandemic?

MM: Well, definitely, as anybody,

we are always struggling within

taking actions today to prevent
a deeper impact in the future.

And we started off pretty well.

We shut off schools.

We shut off different cities
and had a quarantine.

But we gave the wrong signals to people

and we didn't have a consistent effort,

and this has brought us to have
the highest infection rates per capita

in the world these days.

So this goes to show that --
the same parallels with climate change.

We need to take action now
to prevent deeper impact later.

And I think we need
to take the lesson of this

to continue with an effort,

because one thing is to announce
an ambitious NDC.

Another thing is to invest and do
the regulations that you require

to turn this into reality.

But there are some things
that are interesting.

The pollution in Santiago,

which is one of the most polluted capitals
historically in Latin America,

has dropped substantially.

The car-related emissions
are down almost 80 to 90 percent,

which is pretty substantive.

And we look at the example
of what's going on.

Harvard University showed a study

in which they showed higher
mortality rates for more polluted cities.

And this is also the case in Chile.

For every microgram of pollution, PM2.5,
there is an increase of the fatality rate

of nine percent.

But the thing is, we could also look back
at what we've achieved up to now.

Had we not taken
measures to clean the air,

as we've done in Chile
these last 20 years,

we would be talking about five times
more people would have died from COVID.

We have around 800 people
that have died due to COVID directly,

but this would have been much higher
had we not taken action.

And in fact, due to the lower pollution,

if we estimate and predict this
to the rest of the year,

we will have saved as many lives
reducing the pollution

as we have lost in COVID,

showing that there's a pandemic
that we also need to address,

which is the crisis on air pollution
that suffocates many cities in the world.

WPR: And it seems like that's probably
something that we're seeing

in other areas around the world.

As you're suggesting,
air pollution is a problem everywhere.

And I'm curious also

how these challenges
that you've mentioned, and maybe others,

might hinder or help

some of this progress
that you're hoping to make

towards climate action.

How do you see this factoring in
to some of the decisions

that might be made going forward
in Chile and beyond?

MM: OK, so we have a higher fatality rate
and more polluted cities,

and we have a climate action to carry out.

This is going to be a decisive decade,

in which we need to lay the groundwork
for our lower-emissions strategies.

So whatever we do today cannot lock us in
to an incompatible climate future.

We need to lay the groundwork
for this low-emissions transition.

So therefore, our green
recovery efforts need to be done,

as Kristalina [Georgieva] spoke last week,

has to be related to a green recovery
that creates jobs immediately,

that addresses the poverty issues
that we have on energy

today in southern Chile,

and we need to use this
for expanding renewable energy

and expanding the successful efforts
that we've done on electromobility.

Today, we have the largest fleet
of electric buses outside of China,

but we could actually
make this go even bigger,

because we've seen that the reductions
in cost have been almost 70 percent

in comparison to diesel buses.

So we should use
this opportunity to expand.

And multiple stakeholders are working.

We're working together
to call on the government

to do a green recovery,

to use the green bonds
that we've already issued

and under which we've gotten
really low rates for interest rates,

to do and fund cleaning the air,

cleaning the transportation

and laying the groundwork for
a cleaner tomorrow in the mining sector,

which is our biggest
challenge going forward.

WPR: And then as far as the way
that you think about

and conceptualize climate action,

have you personally
had any changes to your thinking,

just as a result of what
you're seeing through this pandemic?

MM: Yeah, I think we start looking around,

everybody had to struggle and find
that we could do much more with less,

and keeping a full economy

that requires you to buy
an extra t-shirt that you don't need,

the fact that we're using
three times more clothes

than we were maybe 20 years ago

shows that we are blowing up
an economy that requires us

to destroy the environment, in a way,

to continue forward.

And the food system is going to be
probably our biggest challenge,

and even though I've been working
with electric buses and electromobility

and just the more conventional mitigation,

I think our biggest cultural challenge

will be to talk about
how our food decisions

impact the way that we will have a future.

"Nature" just put out a report

that showed something that when we were
in the government, we had talked about.

When Chile was good in soccer,

we started going deeper
into the wintertime contests,

and we started winning games.

But to win those games,
we started doing a lot of barbecues,

and the paper that came out
showed something that,

when we explained this to people,

that you guys are messing up
the air with barbecues,

people thought we were crazy.

Well, the "Nature" report now shows
that we actually fouled the air

and destroyed the air,
annihilated the air,

because we wanted
to celebrate the soccer.

And we set this up to people,
and people thought we were crazy.

Now people acknowledge the fact
that the basic things that you could do,

such as the way that
you choose how to cook,

could actually impact your air.

So I think going forward these
cultural challenges that we need to do,

we need to tackle them head-on.

We should need to show the evidence.

Otherwise, we're just going
to be ignoring problems

and letting them
perpetuate for the future.

WPR: And, you know, for nations
who have not really prioritized climate

in the same way that Chile has,

are there lessons that
you think can be learned

from some of the choices
that Chile has made in recent years

that other nations can apply,

and how could folks in other countries
implement some of these strategies

that you implemented in Chile?

MM: So, many people in the US
and across the world

know about the Chilean sea bass.

The Chilean sea bass was overfished
and almost collapsed.

One of the things that we did under
the support from "National Geographic"

and with the leadership
of President Bachelet

was to expand marine protection,

from four percent of our oceans
to 43 percent within one government,

which is the largest leap.

There's only comparison to the US
during Obama in terms of protection.

And this is because we want
this population also to recover.

You know, when you
let the park stop fishing,

the overflow from the fishing

will actually increase
the biomass sixfold.

So I think one of the efforts
that we need to do

as we talk about
the biodiversity convention

that's going to happen this next year

is that we need to change
our relationship to the environment.

We need to protect
and conserve our ecosystems,

so they provide the services
that they do today.

Today, 96 percent of all mammals,
land mammals,

are humans or stuff humans eat.

Only four percent
of land mammals are wild.

When I heard that data,
from "National Geographic,"

for the first time,

I couldn't believe it.

We've changed our relationship
with the planet,

and we're suffering these decisions

because we see zoonotic diseases --
not just coronavirus --

spread time after time.

WPR: And we have Bruno here -- hi, Bruno
-- with a question from the community.

Bruno Giussani: Hi.
Absolutely. Hello, Marcelo.

This is a question from Melissa Mahoney.

She asks if you can expand on
what economic benefits

of net-zero emissions are.

And especially, could those benefits
be the same for Chile

and for other countries?

MM: Good.

For example, when I worked
in the World Bank,

we supported Chile to look into
the macroeconomic impacts

of the net-zero target.

And it was shown that Chile
will grow 4.4 percent more.

So we turned the risk of climate change,

and we turned it into an opportunity
of expanded growth.

This manifests in lower
transportation costs,

lower energy costs,

and this makes the economy
more competitive.

The costs of reaching the net-zero target

are much lower than the benefits
that we will have to reap.

And we're not even talking
about cleaner air benefits,

we're talking about
direct economic benefits

of having increased investments,

which is something that every country
will require in these years

to recover from the COVID crisis,

and lower energy costs.

So that's how it manifests,

and this is a consensus today

that we need to have more renewable energy

because this is the way that we've had
cleaner air and lower energy costs.

BG: There is another question
from someone in the audience, asking,

"Countries across Latin America
have very different attitudes on climate.

Can you comment on that?"

MM: So Pew Research Center
has been putting out reports

regarding what is the main
external threat that you have.

And in Europe, in the US,

the biggest threat
was either China or ISIS

or some external bellicose threat.

In Latin America and Africa,
it's climate change, number one,

and Chile is one of the highest,
with 86 percent of Chileans

saying that climate change
is the greatest external threat.

And this is also very high
across the region.

We could have populist governments
coming in, changing their priorities,

but the reality is, people are concerned,

because they see the threat
of climate change every day,

and regardless of whether
the national government believes in it,

climate change is real

and is causing impacts
and causing poverty in the region.

BG: Thank you, Marcelo.
Back to you, Whitney.

WPR: Thank you. Thank you, Bruno.

And Marcelo, just one last question
before we actually say goodbye,

which is just, knowing that you
were involved in the negotiations

for the Paris Agreement,

are there things that you take
from that experience

that you can apply to this moment

as we think about emerging
from this crisis

and coming out of the COVID-19 pandemic?

MM: Yes,

that there will always be a populist
that will be opposing climate action,

and the way to get at this
is to make the economic case,

so regardless of what happens,

there will be an economic case
for spending on renewable energy.

The US grew its renewable energy
investments around 40 percent last year.

In Brazil, it grew almost 10 percent.

And so therefore, if we are able
to align the economic goals

with climate goals,

you will be able to make this go forward.

There's the Network for Greening
the Financial System

that puts together central bankers.

The World Bank launched a coalition
of finance ministers for climate action.

These are great efforts

that will allow us to have the financial
system support climate action

because there's an economic benefit,

because it's important for you,
for your fiduciary responsibilities,

to disclose the risks you have,

both transitionally and physically.

And if we are able to do this,

regardless of what negotiations happen,

because there will always be
problems with the consensus,

you will continue to have
a resilient approach

because climate action will continue

because you can have
the economic system support this.

WPR: That's really great.

Thank you so much, Marcelo,
for being with us

to share your perspective
and your insight.

It's really great to sort of zoom in
on some of the things happening in Chile

and how that might apply
to all of us all over the world.

Thank you for joining us today.

MM: Thanks.