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G-20 MEMBERS091Right: Korean PresidentLee Myung-bakIn pursuing these alternative energy sources we will beaddressing environmental concerns even as we put inplace mechanisms that will also yield tangibleeconomic benefits. Shifting our sources of energyallows us to redirect substantial sources of wealth intoother productive sectors of the economy. Theinvestment and technological innovation required indeveloping new technologies for electric vehicles andrenewable energy will provide additional impetus foreconomic growth, and will lead to more jobs related tothe research, development and production of eco-friendly goods and services. Green growth clearly does not translate into a trade-offbetween economic development and protection of theenvironment. Rather, it allows us to attain both goalssimultaneously. It is a "win-win" strategy that willprovide countries with the ability, not only in the longterm but also in the short term, to preserve theenvironment and achieve economic competitiveness. We do understand, however, that the transition togreen growth may not be achieved uniformly at thenational and international levels. There are people whowill be particularly vulnerable during the transition andthus will need more time to adjust than others. Withoutthe appropriate consideration they could be leftbehind, and our "growth" strategy would not workeffectively. In addition, the transition could take longerfor those countries with a more rigid market structure.Many developing countries, with their low level oftechnological capacity and human capital, may findthat the "green growth" strategy simply widens the gapbetween them and the advanced economies.Nevertheless, given effective guidance appropriate tothe conditions of each country, green growth can opennew avenues through which developing countries cancrosscut the development gap between them and thedeveloped countries. A PUSH FOR INTERNATIONAL CO-OPERATIONNo country acting alone in the push for green growthcan bring about change on a global scale. What weneed is a concerted effort on the part of theinternational community to confront this challenge. Inthe hope of providing a unified platform to facilitatethe collaboration of the global stakeholders, Korealaunched the Global Green Growth Institute (GGGI) inJune 2010, a body that will serve as a think tank forgreen growth and provide practical solutions fordeveloping countries seeking to implement greengrowth policies. We encourage all nations andinterested parties to take part in GGGI's initiatives andmake use of its resources. The G20 Summit to be held in Seoul in November willprovide a forum for heads of state and internationalleaders to discuss how to build upon pastachievements and ponder a new strategy for commonprosperity. The recent global financial crisis hashighlighted the weaknesses of the internationalfinancial system, and it has underlined the closelyintertwined nature of the global economy. There is no doubt that changes are required to fix theshortcomings of the current international financialsystem. But as the old saying goes, every cloud has asilver lining. This crisis offers a great opportunity for atransition towards a new paradigm for growth: a "GreenNew Deal" that uses the strategy of green growth as afoundation for achieving a global economic recoveryand lasting development. Korea would be proud to host the Summit which can transform adversity into possibility.In addition, Korea has further signaled its intention toplay a pioneering role in the global green growth effort.These initiatives, combined with our future ambitions,are testament to Korea's firm resolve to bring climatechange to the forefront of global issues and ensure thatthe world does not stand idle in the face of such animminent threat. With the cooperation of theinternational community, we hope to reach aconsensus that will set us on the path toward ourcommon goal to fight climate change and achievefuture prosperity. n

" "WITHOUT CERTAINTY ON A FUTURE CARBON PRICE,BUSINESSES WILLNOT INVEST INLONG-LIVED ASSETS, BECAUSETHEY WILL NOTKNOW WHAT THEIR RETURNSWILL BE ompared to the rest of the world, we havestrong growth, employment is expanding,investment flows into Australia are high,and we have record terms of trade. At thesame time as the dollar is so strong, I am also consciousthat electricity prices are rising and that this is also hardfor Australian industry.The current price rises in a number of states have beenprincipally caused by a sustained period of under-investment. Over the past three years residentialelectricity bills have risen by more than 40 per centacross Australia. We continue to see electricity pricesincrease. These increases have been overwhelminglydriven by a lack of investment. Significant investmentis required to replace ageing network infrastructureand deliver energy security.State and Territory Governments have no longer beenable to ignore the need for electricity providers torecoup the costs of these investments through higher prices. The Premier of Western Australia haseffectively apologised for the situation, saying: "Iregret it, but it is something that simply has tohappen." A leading industry commentator -KeithOrchison, previously the CEO of the Energy SupplyAssociation of Australia -put it this way in theAustralian newspaper last week: "After almost twodecades in which Australia has coasted, meeting itspower needs with cheap coal and putting off untiltomorrow a higher level of augmentation of networks,while state Governments have reaped a handy dividendfrom the revenue earned by the electricity businessesthey own, the reckoning is at hand." It is not a prettypicture. We will all live with the legacy of thosedecisions. But my commitment is this. I am not goingto allow a repetition of this problem in another 10 years by allowing another sustained period of under-investment now. That is one reason why I am sodetermined to deliver a carbon price. Obviously, thefundamental motivation for our carbon price policy ispollution reduction. If carbon did not create anexternality by warming the planet, we would not bepricing that externality in. However, the industryconsequences are then immediate. Delaying a carbonprice makes the eventual adjustment shaper and morecostly. And the absence of a carbon price is already aproblem. Producers and consumers accept the scienceof climate change. Because they believe it, they arealready responding, and their responses are alreadychanging our energy economics.Without certainty on a future carbon price, businesseswill not invest in long-lived assets, because they willnot know what their returns will be or what theenvironment will be for their competitors. Investorsalready face perverse incentives for solutions which aredriving them to adopt stopgap solutions rather thanlong term investment. This is particularly the case inthe electricity generation sector where uncertainty willdirect what capacity growth there is towards meetingincremental rises in energy demand, rather than long-term baseload growth.Where his predecessor is critical of some stategovernments for lack of investment and policyprudence, the current CEO of the Energy SupplyAssociation of Australia, Brad Page, is imploring policymakers to underwrite investment by injecting a carbonprice into the economy. He has said that without aclear carbon constraint over the next few years,generators will be forced to make stop gap investmentsin technologies like open-cycle gas turbines to meetimmediate increases in demand rather than take longterm large scale investment decision. In Brad Page'swords: "That is not a zero-cost outcome -our lightsTHE ADVANTAGES OF ACTING ON A CARBON PRICE: AN AUSTRALIAN PERSPECTIVE092 G-20 MEMBERSJULIA GILLARD, PRIME MINISTER, AUSTRALIACPhoto: UN Photo/Mark Garten