"Green finance" - Speech by President Charles Michel at the Leaders’ Climate Summit

Dear President Biden,

Thank you for convening this important summit. America is back with us at the forefront of multilateralism. And your decision to return to the Paris Agreement sends a strong global signal. This is good news for the world.

We face a civilisational challenge. Human beings have always shown a unique ability to adapt. Adapting from agrarian communities to industrial nations, dependent on fossil fuels.

Today we understand this is not sustainable. And we must once again adapt, to fossil-free economies. This is now the third industrial revolution.

In December 2019, EU Leaders committed to climate neutrality by 2050. We were the first major economy to take such a bold decision. And just yesterday, we enshrined our ambitious climate goals into European Climate Law. In three minutes I’d like to focus on two critical areas: green bonds and carbon pricing.

Green Finance

First, we need to be more determined in the field of climate finance. We decided collectively to mobilise at least 100 billion dollars a year, for climate financing.

The EU and our Member States remain the largest contributor of public climate finance to developing countries. We urge all developed countries to scale up their contributions. This would send a strong signal in the run up to COP 26.

This is why our EU budget and recovery package will dedicate around 600 billion euros to powering our green transition. Transition to a low carbon economy requires massive investment, which far exceeds public investment capacity alone.

We need to use our public funding intelligently — to create buy-in from the private sector. The green transition is our prosperity strategy.

Green bonds

30% of our recovery package will be funded through green bonds. Since finance is global, green finance must also be global. We want to cooperate and orientate the private sector.

Green finance was born in Europe. And today, our currency — the euro — is by far the leading currency when it comes to green bonds. We have the most advanced regulatory framework in the world. We will soon establish a European Green Bond Standard. But we need to create the right global regulatory framework. Let’s provide greater certainty for private investors, everywhere in the world.

In 2019, we set up the International Platform on Sustainable Finance. Today, the Platform represents 55% of global greenhouse gas emissions. And we encourage more countries to join. Our European ambition is also reflected in our EU financial institutions.

As of this year, the European Investment Bank has aligned all its financing activities with the goals of the Paris agreement. It will dedicate at least 50% of annual financing to green investment by 2025. It will support 1 trillion euro in investment for green projects, this decade. And the European Central Bank is also working on the implication of climate change for monetary policy and financial stability.

Carbon Pricing

My second point, a global approach to carbon pricing is paramount to promoting green investment. If we want to be at peace with nature, we need to chase carbon from our business model. This is the only way to change direction.

Preserving a global level playing field is essential. We must set the right incentives at the global level. Because carbon leakage across our economies is detrimental.

That’s why we intend to introduce a carbon border adjustment mechanism. This is needed to ensure a level playing field. And it must be compatible with WTO rules. We are ready to work with all our partners on carbon pricing.

We want to be a strong and loyal partner. And we are ready. Ready to join forces with all global partners. Ready to take our collective responsibility for the well-being of our people and of our planet. Thank you.