Christine Lagarde, the president of the European Central Bank, and U.S. Treasury Secretary Steven Mnuchin laid bare their stark differences over how the global community should transition to cleaner energy sources.
The role of the corporate world in preventing the environment has been a central theme of 2020’s World Economic Forum in Davos, Switzerland.
Speaking on a panel Friday as the annual meeting drew to close, Lagarde said that central banks needed to guide the economic modeling of how changes to the environment should be costed and mitigated.
The president of ECB (European Central Bank) further said that banks, companies, accountants and rating agencies would need to move ahead of quarterly and medium-term forecasts and begin to think in terms of 30 years out.
Mnuchin responded to Lagarde’s suggestion saying that he didn’t think forecasting the cost of protecting the environment was possible.
“Christine, I think you can have many people and model it, but I just don’t want to kid ourselves. I perceive there’s no way can likely model what these risks are over the next 30 years with a level of certainty, given what I think is the changes in technology along the way,” Mnuchin said to Lagarde.
The recently appointed president of ECB, Christine Lagarde, responded instantly, saying that long-term modeling would aid press firms to know the cost and process of shifting to new, and less carbon-rich, energy resources.
She suggested that “If we push firms into the direction of actually forecasting the transition, pricing it, and making sure that they move to cleaner and cleaner energy uses, then it helps.”
Mnuchin replied directly, interpreting Lagarde’s suggestion as a direct cost to a business.
“I don’t think we understand how to valuate these things,” Mnuchin said, and added that “Current pricing of future greener energy resources was being inflated.”
“Therefore, I think we’re somewhat overestimating the cost. So, if you want to put a tax on people, go ahead and put a carbon tax. That is a tax on many hard-working people. I have a personal opinion that costs are going to be significantly lower ten years from now – because of technology – than we think they’re today, Mnuchin added.
Earlier, Steven T. Mnuchin condemned that the U.S. had become much more efficient through carbon technology and the use of energy, but termed India and China as countries which needed to bring “significant improvement in terms of environmental issues.”