The Ministerial Directors and the Encouragement of the Banking Communities in particular, was to look at sustainability as at least one pillar of that changing source, of competitive advantage. Yesterday, about this time in London, perhaps a little bit later, there was a large meeting, kind of equivalent to this, but perhaps with a slightly different audience instead of speakers. The Corporation of London which, as you know, is the sort of square mile being governed bythat of millennium gyda'r coferatio Lundau, neu yna'n defnyddio bod ar bobl gwyloedd deunydd gwahanol gwahanol i ddweud y dyfnod roedd y gwaith am ddod o bobl gwyloedd gwahanol gwahanol gwahanol gwahanol. Felly, cyfnodolwyd o'i weld geitigol yma yn ein ffynwys gwirionedd d東西b cerddindig, yna, i groes o'r regine yw'r cymhau cyfnodol yn i'ch gael gynllunio ar gyfer y cyfnodol iawn i'ch gael gweithio amgylcheddol sy'n gwybod i'ch ddweud y gweithio ar gyfer cyffredinol ac yn ymgylcheddol i'ch gael gweithio'r cyfnodol iawn. final slide, perhaps thinking forward ever so slightly, and I've left this quite open because obviously that's particularly for the panel discussion to come. As a UN agency report, we find ourselves strangely constrained as to how or indeed even if one can make recommendations that distinguish the practices of different countries who are, of course, the constituency members of the UN. If you choose to read the report, particularly the global report, you'll find not a sort of clear cut set of recommendations at the end, but perhaps a sort of set of options, a menu of possible measures that can be thought about by different countries at different points in their development. These are some, if you like, at a high level of the areas that we feel are worth really focusing on going forward, but by no means the only. Clearly, a whole lot of innovation happening particularly within the bond market, the whole development of green bonds, but also the increasing engagement of some of the global credit rating agencies based here on the East Coast, thinking about where climate and broader environmental issues fit into their credit rating methodology and practice. Coming down one level, clearly, the whole area of market efficiency, the first of those five clusters that are identified at an early stage, the Financial Stability Board task force on climate risk disclosure being a case in point, but a number of other measures also being taken that are worth looking at, particularly in the area of stock exchanges. Growing interest in understanding where resilience, particularly in relation to environmental change, meets resilience in relation to financial markets. How do we understand the interaction between changing climatic conditions, but also the policy and technology, if you like, long tail that precedes many of those climatic changes and may disrupt financial markets going forward? Very much the sort of prudential regulatory area that is beginning to be looked at in more detail. The policy architecture side, we've all said now this new G20 green finance group will move forward. In fact, the launch is next week on the 25th and 26th of January in Beijing. And it's interesting to note that although it is formally a study group, which for those who are unfortunate enough to have worked in detail under G20 rules means that it is a voluntary process that G20 members do not all have to join. So study groups are typically made up of four, five, six, maybe a little bit more of G20 members. At the launch of the Green Finance Study Group next week in Beijing, all 20 G20 members will be in attendance. All observer countries have chosen to participate and all international organisations, IMF, Bank, IFC, OECD, Bank of International Settlements Financial Stability Board have all chosen to be present and active in the process. This is a moment in time, if you like, where this subject has moved from an interesting side discussion to one of considerable policy interest and concern. And then finally, I've put tracking performance at the bottom, but that's a code word for something else. And I think it's a code word for saying 2011 and was at the IMF during a truly pivotal time, seeing the way in which that institution responded to and initiated a process of self evolution in response to the financial crisis, of course, that hit in the late 2000s. Griff Thompson is director of the Office of Electricity and Energy Efficiency at the US Department of State, and he also serves as an adjunct professor for Georgetown University. To my immediate right, Michelle Patren served as special assistant to US President Barack Obama and senior director for energy and climate on the US National Security Council from 2013 to 2015. And to my far right, Leo Martinez Diaz is deputy assistant secretary for energy and environment at the Department of the Treasury and is intimately involved with a number of the issues that Simon raised from the US perspective. And I very much look forward to hearing how this fits in to, as Simon alluded to, a broader discussion of financial reform in the United States and where there might be puzzle pieces that fit together at some part in that discussion. With that said, if I can ask John to lead us off talking a bit about how you see this fitting into the US context, and in particular actually also given the fact that you had a global view at the IMF, walk us through in particular central banks as an example where for a long term risk like climate change, the traditional mandate of the central bank and questions of risk and financial stability as they relate to climate change down the road are increasingly being blurred. You see many central banks grappling with that question and I wonder if you've come down to some sort of cohesive theory for how to approach that. Very simple. Thank you for that. First of all, I want to say it was a great pleasure and an honor to be able to participate in the advisory council to the inquiry and want to acknowledge the leadership work of Simon and his co-chair, Nick Robbins, in producing which I hope is a very useful report that will have long term shelf life and have a useful impact. Let me just say the following things. First, that the big issues are quite straightforward but the details are extremely challenging and anything but simple and we have to start with the recognition that our specific knowledge of the details of how climate change and environment are going to involve and how we are going to understand that evolution. It remains very uncertain and so we have to, I think we need to, it counsels persistence and patience. It's going to take a long time to get this right and we're going to change our ideas on the road as to what is actually necessary and how to get it done so we can't start out with the idea that we know the answers today and we know how it's going to work out. But number one, it strikes me when thinking through how is this working, why is this working and where should it and will it be going. Forgive me if this is going to sound so simple minded but I think point number one is I believe the argument over whether climate change is real is over. It has now settled. Now for those of you who enjoyed the political show last night, you noticed how important environmental and climate change issues assumed in the debate of the Republican candidates. But I think it would be a mistake to think that that shows that there's a whole important part of the body politic in the United States that are in denial over this issue. I think we're going to find when we get the government there's a broad consensus that something needs to be done and I would carry that generally globally. There's a consensus that this is a problem, it's a critical problem and it has to be addressed. What I found and why I was so happy to participate in the inquiry is a tendency, as I'm sure you've all found, folks who are extremely knowledgeable about finance may not be so knowledgeable about the details of climate change and environment and vice versa. But we are now starting to evolve a group of folks who understand both and are trying to put them together. OK, second point is I think the logic of what I always call the Nicholas Stern insight from Sir Nicholas Stern's seminal report on climate change, namely the earlier you start to act the easier it is to be effective. The longer you leave it to go, leave it go without effective action, the bigger the problem is going to get. I think that's been taken on board as well. But I would, third point, Sinaquanon and it strikes me that this often gets lost in these discussions. Maybe I'm wrong, but for me a Sinaquanon is carbon pricing. If we're not pricing carbon, then we're not serious. And there are many ways to do it. You can think of a tax, you can think of cap and trade, etc. But if we're not effectively pricing carbon, then we're just engaging in a lot of motion without much effect. So it seems to me that when you put this all together, for example, COP 21 actually made a start. But also we can see some very big issues that are going to be very difficult to solve, even if there was an agreement on technical means. And that is number one, that we're starting from a starting point of very unequal levels of per capita income in countries. And we think, I think most of us think that over time that can, should and ought to be leveled out, not by holding down the incomes in the wealthy countries, but by helping to accommodate growth. That's an obvious challenge in this context. And second is the inequality of financial resources available to various countries. So that's going to be hard to solve. It is not going to be easy. But, and I think Simon alluded to it and we all recognize, there is now extreme motivation on the part of many of the key emerging market economies to make progress in this way because of the, as Simon talked about, the obvious critical, not to say extreme, environmental challenges in some of these countries. And if I could add a footnote to that, that when we talk about the more deregist systems have been successful in producing economic growth and rapid growth, these are exactly the places that have also produced quite difficult and extreme environmental challenges. So I think that's a cautionary tale about how wonderfully deregist systems take into account the public good in the most broad sense. It's, I think, a cautionary lesson. So, but what have we, what have we seen? There are, this problem is going to require huge amounts of investment, huge amounts of financing. So it goes without saying that it is going to involve essentially private sector finance and not state finance. There's going to have to be a community that is, should be obvious. And there's going to have to be a very long term focus. Now why I say that is because today in many of the countries where this is going to be a challenge, both on the supply and the demand side, there is the need for substantial institutional development. On the one hand, in countries like China or India, to develop the development of social safety nets and sources of long term funding, insurance, availability of insurance, both social insurance and private insurance is going to create large pools of institutional savings that are going to need to be invested over the long term. So there's going to need to be the counterpart, long term financial markets or long production of long term assets. And that's when, it strikes me is when folks start talking about, oh then we need specialized banks. I think well banks are about the last kind of format that you would think of that are holding assets that have lives of 30, 40, 50 years. Fund short term hold very long term assets. That's a recipe for either on the one hand instability or on the other hand a requirement for extensive public sector involvement, not to say control. So you're going to have to do a lot of institutional development to start to be able to get to the point of where you can on the one hand incorporate externality and public interest and I think most powerfully through carbon pricing into a financial system that will produce efficient and effective results in that context. And if there will be a tendency to say well we've got this externality, that externality and what you find quickly is that you end up with essentially what I'll call publicly rigged markets in which essentially you're producing directed credit. And that, for that to work would in fact imply a degree of specific knowledge that I think we do not possess. So this is why this is going to be, is going to require persistence, patience and open minded approach. How are we going to get this done? Well it's going to require folks like you keeping pressure on the folks in this town who make decisions, some of whom are sitting happily sitting here and are right thinking types. But just a little vignette and I've talked more than I'm supposed to but just as a little vignette to give you an idea of how you can get optimistic about this. When I was participating in the discussions organizing the London G20 summit in early 2009 that was exactly at the time of the run up to the Copenhagen conference on climate change. And the discussion in the G20 ministerial was should the G20 ministerial address climate change? And the answer was, I guess led on the part of the emerging market countries, absolutely not. The G20 should stay out of it, it was not a financial issue, it was an environmental issue and it was a UN issue and the G20 should stay away. As we heard from Simon, next week the Chinese authorities are going to welcome the first meeting of the Green Finance Working Group within the G20. There has been in this short period of time a complete change in idea about the importance, the seriousness and the need to get going on this topic. I'll stop there. Super, super. John, you put it crystal clear and I'm glad you raised the G20 process at the end yet again. Michelle, you used to work on that G20 process. Thankfully you've been liberated from such duties but I wonder, you're intimately familiar with the challenges of addressing this in a very politicized context like the G20. But you're also tuned in to what's happening in the private sector. How do those two link up? Are there avenues through which, are there means through which what's happening in the G20 can be communicated to the private sector for the benefit of both? Likewise, the small scale innovations that are taking place in these little laboratories of experimentation in the private sector can feed themselves into the G20 process so that they end up discussing truly meaningful concrete material issues instead of just coming out with a series of talking points. That's great. Well, thank you David for putting together this panel and thank you Simon for an excellent presentation and body work. What I want to do this morning is to talk a little bit about the US approach to green finance in general and some outlook for how the China G20 can approach this issue. So the US government approach to green finance has been heavily concentrated in the public finance space but increasingly looking at both sides of the ledger. So trying to create the incentives for the green finance piece but also increasing the disincentives from what you might call brown finance or continued investment in these carbon intent projects. So those various examples of this over the past few years of which Leo and his team have spearheaded a tremendous job. Robust efforts over the past few years to end US public financing through export credit agencies, development credit or overseas development assistance to some of the most polluting projects in the world and mobilizing international efforts to get OECD agreement on those same standards just last year. Obviously a tremendous push on the public climate finance piece so closing out the US contribution to the climate investment funds and also a very large and catalytic pledge $3 billion to the green climate funds of which despite a lot of skepticism of the US ability to make good on that promise will begin this year. And another process which has not gotten as much as attention is there is an effort that is underway to make sure that all US overseas development assistance is consistent with our mitigation and our resilient goals. So really stress testing, creating standards and stress testing, what USAID does, what State Department does, what Defense Department does, what the whole body of development assistance and overseas assistance does. And then obviously there's a robust set domestically of fiscal incentives to try and encourage investment in clean energy projects and agriculture projects, resilience projects, smart transportation. And in different ways trying to mobilize all of those levers to catalyze private investment and scale it up. I would argue however that the US government has been a lot less active in the efforts and the systematic efforts to green private finance and really has been lagging behind other countries. The discussion in the United States has largely been driven by the holders of private capital and by academics. And you do see an increased momentum in the space as a wide range of investors from institutional investors, pension funds, endowments, high net worth individuals and increasingly retail investors are increasing their appetite to have sustainable investment products, impact investment products, a stubble bottom line which is really kind of driving a lot of the debate and getting what will get folks' attention. You have asset managers scrambling to try and develop a range of products to address that. But in some of the other points that Simon talked about, if it's the governance piece, if it's the disclosure piece, the standardization, the institutional development and capacity building that John alluded to, that's a lot less mature in the United States. And there's a lot of work to be done there. So in terms of what we can expect from China and the G20, this meeting is happening at an important inflection point for lots of different reasons. This will be the first G20 meeting that will be post the Land-Work-Paris agreement of which all G20 countries were a part of and signed on to and endorsed. This is also the first G20 in China. China is transitioning from being a net recipient to a net donor in a lot of these spaces, particularly in the climate finance side, but more broadly development assistance and looking to get international credibility for all of its institutions in the space. And this will be President Obama's last G20 meeting and there's a legacy piece there as well having the process being created during his presidency. It will also happen against the backdrop of what will likely be the last bilateral engagement between President Obama and President Xi Jinping of which climate has been among the brightest spots and made the strongest progress in that relationship. As all of the experts before me alluded to, there are a lot of benefits and challenges in the G20. The great thing about the G20 is you have all the key actors. The worst thing about the G20 is you have all the key actors because you have a huge set of competing interests and priorities. You have, and as much progress has been made in going in the right direction and having consensus on climate, there's still a lot of differences that have been papered over. So you have developed and developing country in this context, more nuanced donor and recipient countries which finance and capital flows have very different meanings. You still have countries that see finance justice overseas direct development assistance and others that have a more nuanced broad view of that. There are very different ranges of capital market structures within these countries than being open and very strong regulators and others having very heavy state involvement. You still have this debate among some of the largest fossil fuel producers in the world and countries whose energy sectors are much more dependent on low carbon. So that obviously colors the debate of what is possible, at least in concrete terms. It tends to be dependent and vulnerable to political events. That's great if you're the issue that is front and center a little bit less helpful if something happens last minute that kind of puts your issue down the priority list. Another issue is that it's been a challenge of where to put the house, the issue of green finance, because you have three different tracks that can be working on this. The Sherpa track, which is the high level political track, you have the finance track, which is scaling up its expertise in this area. You have the energy track, which tends to be run and handled by a totally different agency and has maybe further down in the bureaucracy than the other two areas. It's great news that this working group and the study group is moving forward. The G20 has had a mixed track record to date on issues that are associated with this. I think the most progress that's been done has been elevating the issue of fossil fuel subsidy reform and helped by the macro energy climate of a tremendous amount of momentum in lifting those. There's probably going to be some focus on that by China and then obviously support political support behind some of the climate finance vehicles like the Green Climate Fund. I think that two things to keep in mind as stakeholders are trying to encourage different sets of deliverables and outcomes is that China is going to want to avoid re-litigating Paris because obviously it was an incredibly delicate balance that was struck. So they're really going to want to keep this in the finance space and not enter into the negotiations space at all. I think that will be echoed by a lot of other countries. What we learned from the APEC context when China hosted APEC in 2014 is that the outcomes that have the most traction for China are ones that they feel ownership of. There's things that are happening or applicable to their own economy, their own experience, and that they give them a chance to project global leadership. I think the issue that's front and center for China right now is these new development assistance, aside from the Green Finance pieces domestically, are these new development assistance vehicles, particularly the Asian Infrastructure Investment Bank, and getting some credibility and helping them on the reputational risk issue that they have there. And so things that can tie the Green Climate debate and the Green Finance debate to those could be right for exploration. Excellent. Thanks very much, Michelle. Leo, to just tease out a thread that Michelle left at the end of her presentation, there's a question of how should the U.S. engage with this, both from a normative standpoint as well as from kind of a strategic standpoint. This fits into a broader foreign policy context, this fits into a broader economic, macroeconomic governance context, and of course it's always constrained by politics. Michelle noted the Asian Infrastructure Bank. Of course, the U.S. reaction to that was, of course, as we all know, it sailed through some choppy waters during that point. And I think it's unfortunate because it's in the U.S.'s reach to be able to project a far more positive and proactive vision of what it wants to do on Green Finance, drawing upon the experience of its regulatory approach, drawing on the experience of its financial sector and the innovations going on there. From your seat in Treasury, what is that positive vision? How will the U.S. seek to engage in this and show leadership even through China's G20 presidency? First of all, David, thank you for the invitation. It's a very timely moment to have this conversation. And it's also great to be up here with old friends and colleagues and new friends and colleagues. The issue of Green Finance is complex. As you can tell from the presentation we just heard, there is masses of policies, interventions, efforts in many different sectors of the financial system and beyond. And so I think it's important throughout the process that we have a very kind of narrow and disciplined approach to understand what is a problem that we're trying to solve. And so at Treasury the way we look at Green Finance is we start with a definition, right? It's important to know what it is. And there's many different kinds of definitions about Green Finance. Oes centres on two things. The first, it has to be a series of activities that enables actors to internalize externalities. And I'm sorry for the wonkiness but I think you understand what that means. And second, that helps adjust risk perceptions. And the effect of those two things is that they will over time shift financial activity from environmentally damaging activities to environmentally friendly ones. And so the goal then of all of these efforts including in the study group ought to be to look at the different sectors, whether it's equities or banking or fixed income markets, and to ask what is the obstacle that is preventing financial flows from going into the environmentally friendly activities. And I think that will help all of us in the G20 better try to solve those problems and address them given all of the idiosyncratic frameworks as you mentioned that we face. Because we all have a different set of politics, a different set of institutions and a different set of actors. And so I think if the study group is able to do that we will have advanced the debate in a very important way. And then hopefully the domestic will to do something in this area will be strong in all the G20 countries. And then we can pursue that track as it best suits each one of our contexts. Let me add sort of four points about what that vision should entail. I think the first thing is the private sector has to be in the lead, at least for the United States. I think when we see the most effective types of efforts, for example the equator principles or the green bond principles, or if you want to go beyond the environmental aspect, the sovereign bond restructuring principles, what you see is the private sector taking the lead saying this is a real issue, a real concern for us, doing some of the thinking, the organizing, and then driving the train. I think we absolutely need to see that. And I think it's already happening because we have a lot of private sector companies here already putting this on their agenda. The second thing is that we should realize that ultimately what green finance is about is a deeper understanding of risk. And these are risks that, as we mentioned earlier, are at the cutting edge. We're only now beginning to understand what these risks are. The risks depend on modeling and data and an understanding of the relationship between emissions and climate on one hand, and then climate and economic activity on the other. And there's uncertainties in all of those, in those two legs of the triangle. And we're trying to, the science is trying to catch up and then the modeling and the data is trying to help inform the rest of us what that means for us. And so green finance has to be deeply rooted in that debate, in that understanding. And so we need, with the private sector, to figure out how do we understand that risk better. Risk in terms of the green investments we want to make, which is one of the reasons that the investment is not materializing because people perceive it to be too risky. And on the other hand, what does climate change mean for the rest of the financial system and its own liabilities, its own assets? The third point I want to make is about insurance. Insurance markets are really important because they help price risk. And once you price the risk, then actors react and are able to take the actions that are needed in order to help address a problem. When insurance premiums reflect risk, you are able to signal to the market and to different actors what they need to do in order to reduce that risk. And that is ultimately what we are aiming for. In Paris, President Obama in December announced a commitment from the United States to a number of parametric insurance platforms around the world, including the Pacific Islands, Central America and Africa. And these are first and foremost efforts to try to get insurance to more countries that are vulnerable to climate change. And that of course will help get liquidity to those countries in the aftermath of a major climate event. Even more important than that is that in the process of countries entering into insurance contracts buying coverage, they will have to sit down and to think about the risk that they are facing to quantify that risk. And that will have great, very positive impact because not only does it help you get insurance, it helps you understand the entire framework that you have at your disposal to try to manage that risk. That is essentially where we all want to go in this green finance business. Finally, the Treasury will be engaged with the green finance study group throughout. We are strong champions of the process and we very much welcome it. We are also very welcoming of the climate disclosure task force that Michael Bloomberg will be leading and which was done at the behest of the FSB, the Financial Stability Board. And with those two pieces and the rest of the dialogues that are occurring in places like the Carnegie Endowment, I think we will see increased attention, increased focus and increased insight into how we can make further progress in green finance. Thanks very much, Leo. This point on insurance makes me think about, there was an interesting line that I heard actually from a number of different sources in the run-up to the Paris Climate Conference last year, which was that there's actually a bit of uncertainty over the degree to which a world with more than two degrees of warming from pre-industrial levels is, in fact, an insurable world at all for significant swaths of assets across the globe. And I think it underscores, of course, the notion of the challenge of two degrees or perhaps even 1.5 degrees, the fact that for some it implies difficulty for others and it implies survival. And the analyses coming out of Paris were that in order to achieve that two degrees, in order to actually hit that target, it implies about $75 trillion of additional capital invested in the energy sector, of energy sector-related investments to decarbonise the energy sector out to 2040. If you think about that, that's $75 trillion approximately the size of global GDP, but now break that down over 25 years out to 2040 and you're talking about then about 4% of global GDP per year. It's an incredibly significant, it's a massive number, but consider at the same time that global gross capital formation is on the order of 22% of global GDP. So this echoes what we've heard from a number of different speakers and that the capital formation process is there. It's about changing the incentives, the culture and the networks which distribute it, which make those decisions. And so that goes directly to what you're doing, Griff, because you're involved in a number of incredibly important and interesting projects that are derisking capital formation in a lower carbon economy and are doing this from a point of U.S. leadership working in other parts of the world. So I'm just curious, tell us a bit about how state approaches this and what part you play in this challenge. Well first of all David, thank you and Carnegie for inviting the State Department to come and talk about what we do around the world and I want to congratulate UNEP and Simon on what I think is a very, very important document. I mean you mentioned it in your opening, David, when you talked about the teleology of this report, which really gets to the essence of the report, I think, which is the subtext which challenges us to question what is our telos, what is our end, what is the goal? Aristotle referred to it as the final cause. What are we after? Why are we doing this? You look at the financial system. But I think as several speakers have mentioned and it gets to your point is that we can no longer isolate the financial sector from the energy sector, from the agriculture sector, from the environmental sector. So what I see as the climate change issue is at heart an epistemological challenge. It challenges us to rethink our cognitive maps and our cognitive models. How we think about knowledge, how we think about our belief system, how we think about truths. Essentially in common nomenclature simply means we have to change our habits, both individually and institutionally. As the boxer Mike Tyson said, everybody's got a plan until they get punched in the face. Well we've been punched in the face. In fact one could argue we are repeatedly being punched in the face and we need a new plan. So what does that mean? And again it means challenging our fundamental assumptions on how we move markets, how we create markets. Again markets don't rise Phoenix like out of the desert. They are social constructions. They are constructed by myriad formal and informal behaviors and actions around the world. So how do we shift and change that behavior that constitutes markets? And it's very difficult for those of you who aren't so convinced of the shackling effect of habits. In a few months ask family and friends how well they're doing on their New Year's resolution. We all find ourselves in our own cognitive cul-de-sacs thinking what we have thought for years and years and years. Most of us work in institutions that are captured by institutional inertia. The climate change issue, the green finance issue, the energy transformation. Again we are in the middle of an energy revolution. All requires us to rethink what we do, how we do it and why we do it. That's why I think the subtext of what Simon and his colleagues in the UNEP report have done is trying to lift the veil of really what the back story is. It's not simply tinkering with financial instruments. It goes far beyond that. So how do we at the State Department translate these profound thoughts into prosaic actions around the world? And we do it in a number of ways. And I'll bifurcate our actions sectorally and spatially. Sectorally, again, it is no longer possible to segregate and isolate energy sector from everything else. In fact, many other sectors, many other ministries have as profound effects on the movement and the transition from high carbon to low carbon energy technologies in the energy sector. We work very heavily in India and right there land use and land rights is a huge barrier to the increased effusion of renewable energy technologies. We've seen that here domestically. How do you possess and get acquire land rights for transmission lines, power plants, et cetera, et cetera? So it is now an all hands on deck sort of thing. You need to work with the ag ministry. You need to work with the finance ministry. You need to work everybody in an integrated holistic way. Again, this is the beauty from my perspective working with energy because of the centrality of energy to everything on the development and the diplomatic agenda. You have to connect the dots to everybody else, policy and programs. Spatially the State Department works at various levels. We of course work at the multilateral level before coming over to the energy bureau last year. I spent a number of years in the climate change office and one of my roles there was to leave the negotiations on technology in the UN Framework Convention on Climate Change. What we did within the technology executive committee and the climate technology center network was tried to again redefine the terms of discourse and reconstruct the rules of engagement by how we think about technology, development, diffusion and adoption. Working with the developing countries saying it's not about intellectual property rights, it's not about patents, it's about national systems of innovation which include everything from education systems to business climate to the financial structures and as John was saying about the institutions. How do you change the institutions? You won't be distracted by patent laws or intellectual property rights. Those are red herrings. You need to change the basic institutions. As a good friend of mine who works at one of the largest international banks in the world says, Griff, if you change the institutions, the finance will find you. Money will find you if you change the institutions. In a matter of hours my deputy assistant secretary Melanie Nakagawa will land in Abu Dhabi and will take part in ministerial discussions at the International Renewable Energy Agency, IRENA. First and foremost amongst those topics is green finance. How do you mobilize and catalyze and accelerate the flow of private capital into the green investment? We also work bilaterally. One example is the energy bureau co-chairs, the US India Clean Energy Finance Task Force. A task force that was launched through an agreement between Prime Minister Modi and President Obama. Realizing that India with its goal of 175 gigawatts of renewable energy by 2022 will never get there, as John has alluded globally, with only using private capital. We need to increase the markets, decrease the risk for private investors of private capital. So what we did is form a task force and we brought in the experts from our side on the government side, including Treasury and OPIC and XM and DOE, to look at how have we accelerated the flow of private capital domestically to catalyze our renewable energy markets domestically. And how could we perhaps talk about those lessons within the context of Indian policies and resource environment? And so we spent last year on a number of task force meetings both here in Washington and India. We've come up with a conclusion and this year we are intended to roll out a couple of pilot projects looking at first loss facility, standardization of power purchase agreements and other transaction documents which will reduce the risk on investors and reduce the cost of project development. We're looking at securitisation and warehousing, things that we have found, that we have tried and found true here in the United States and trying to match those to the exigencies of the Indian context. So again, we also work regionally. We've got the Caribbean Energy Security Initiative which we worked again. How do you mobilize financing in a region? Working with OPIC, we have a facility, the clean energy finance facility for the Caribbean in Central America. Looking at how do you address these soft costs? Because again, renewable energy and the dramatically decline of costs of PV solar, most of the costs are now on the soft costs, not of the hard costs, but that is where it's difficult to find the necessary funding. So again, we are looking at ways in which we can work with other countries, look at ways in which we can redefine again how we approach this issue and to try to apply Tocqueville's exhortation of understanding your self-interest rightly. And that's not easy. Try it on yourself sometime. But trying to apply that in a national context, we're getting people to understand your self-interest rightly. What is your self-interest? And how do you design the institutions, policies, projects and programs that will get you to that telos that is your self-interest and what are we here for both politically and economically? And so again, I think, and it's an honor to be here with the rest of the panel and to comment on Simon and Unab's great, great, great study. So thank you, David. Thanks, Griff. Thanks very much. I'd like to ask just one or two follow-up questions and then actually get to the audience as quickly as possible because I think we've got a lot of bright minds in the audience that will probably have great questions for the panel. One thing that comes to me is it's been rewarding and validating to have such a mature, such a thoughtful discussion up here on stage and to see that leadership is present in the US government, both in terms of present practitioners, past practitioners, et cetera. The human capital is there. How do we get it to rise up in the institutions that matter? In other words, even just within the US government, I kind of ask a few of you who have had experience there, what's the number one change you would make in just the institutional culture or framework or what's the number one rule change you would make in order to allow clear thinking minds and as you said, a kind of topillian understanding of our own self-interest clearly. Allow that to trickle up. In this administration as well as in future administrations, because we're talking about a challenge that's going to be inherited by whoever succeeds President Obama. Is this on or off the record? I have a mortgage to pay and I like my job. Understand. But you would feel confident that in this administration at least there's a network of individuals who see this across sectors in a systemic perspective, like you said. We're getting there. But we've seen a sea change. Michelle and Leo have seen this firsthand as well. There's a sea change over the last eight years and there's a confluence of factors that address that, external and internal. John had said earlier, it is no longer open for debate. The science is there. Now it's how do we respond institutionally and ideologically to this major challenge. But I've seen over the last year, institutionally within the State Department, here you have the Secretary of State holding an investment conference on clean energy and finance, bringing in the world leaders to talk about how do we do exactly what Simon is trying to talk about. How do we transform the system? That's a profound change. We're just looking at it subnationally. No longer do we realize that it's a nation-state issue. There's been two global trends that we are following. One is urbanization, more people living in cities than rural areas for the first time in human history. The second is the devolution and decentralization of economic and political power. Cities, states and provinces are increasingly at the centers and have their hands on the levers of power. And we need, as a foreign policy institution, address that when we are doing that. So that's one of the things that I would hope to see in the next administration is to continue momentum to look at the variegated policy landscape and address each of the access points. If I could just add a few things. I think that first and foremost when it comes to, if we're talking about addressing climate change, the most important thing that the United States could do was act to address climate change and to reduce its own emissions. And has put over the last several years, but particularly over the last year and a half, a solid plan in place of what the United States is going to do domestically. And then its next focus was how to catalyze that into global action and get global consensus. Now that we're in a post-Paris world, and a lot of the things you used to have to negotiate every single year and re-litigate, hopefully has moved on, you can focus on other things. And so there's a lot of agenda setting and priority setting that's happening in general post-Paris. And then you have obviously an election cycle here that will lend itself to a whole set of other priorities. So I think that, so the space is now open. And so this, as you alluded to, is happening at a really important inflection point. And to that I would add, it's really important that we continue to support development, climate finance developments in internationally. And so for example in Paris, just before Paris, there was a really useful report trying to account for the total volume of climate finance that has flowed from developed countries to developing countries over the last couple of years. And it reckoned that in 2014, about 62 billion flowed from developing countries. What's interesting about that number is that 30% of the 62 billion was private sector capital that had been mobilized by a public sector intervention. And that shows how de-risking, how the deployment of different kinds of financial instruments like equities of guarantees or concessional loans can help bridge some of those risks and obstacles that are keeping the private capital out of the green sectors. And so that's I think really important. And the second is to continue this dialogue here at home, not just in Washington, but also to look at what's going on both in the states and in the private sector. So for example, green banks, both New York and Connecticut have created their own green banks and are experimenting with the use of those institutions to support green projects there. With green bonds, some of the most interesting action is happening at the municipal level with the green munis. A billion dollars of green municipal bonds were issued. A number of jurisdictions have done this, you know, Hawaii, Iowa including DC. And that's another set of experiments going on again at a subnational level. And I think these are the types of experiments that we have to give some time to see how they flourish and then to continue the dialogue to see what's working and what's not working. Because we're going to make some mistakes, we're exploring what is truly uncharted waters. And that we're going to be learning a lot, I think, over the next few years. I'd like to ask a whole litany of other questions, but I've got to restrain myself in the interest of giving the audience a chance to jump in here and pose any questions that have been burning on their mind. So we've got folks roaming around with microphones. If you'd like to ask a question, just ask your name. The two golden rules, which I'm sure you've heard plenty of now, is number one, please be brief and ensure that it ends with a question mark instead of an exclamation point or an ellipsis or a parentheses. And also please identify your name and affiliation first. So with that, yes, at the back of the room. Lady at the back. Jeanine Finnell, leaders in energy. I feel like giving you all a standing ovation just while you blew me away, wonderful, wonderful panel. My question is you've been doing great work on the financial tools of 70 countries and I was wondering have you thought about intersecting the INDC reports? He intended nationally determined contribution reports after Paris to see if these financial tool reports can help to accelerate the goals envisioned in a Paris agreement. Thank you. Very good. Maybe we can have Simon up front going to answer that question. We've got a lattice work of different tracks going on in the UN process on climate with green finance. Have you thought about those intersection points with the further evolution of the report? No. But you should. So I think the INDCs will be increasingly used as framing devices for investment planning and increasingly used as a basis for negotiations for both public and private and blended financing instruments. So I think if kind of that's the direction you're pointing to I think the good news is that I think there's work in play in that school already. I don't know whether Leo, you wanted to, that would be an area you would also know about is my guess. So I think that's sort of a yes. I don't think it's a particular area that the inquiry team is focused on but I think there are many other players that are. Very good. Yes, next question right in the middle back there. Thank you. My name is Irving Minser. I'm with the Johns Hopkins University School of Advanced International Studies. I have a question for each of you. Could you each identify one specific step in the domains that you're most familiar with, that a policy or instrument or mechanism that you think could accelerate capital flows through green finance into long-term sustainable infrastructure in the US? Does anyone want to lead off on that? Otherwise, just a general point. The administration has been putting in place a number of important policies in this area, especially in the area of renewables, tax breaks for different types of renewable energy generation both at the household level and in businesses. That has been, I think, a successful, a demonstrable effect on the deployment of solar and wind in the country. Now, the key to a lot of these measures is predictability. Are they going to be around tomorrow? Are they going to be around the year after? If you don't have that stability of the framework, it's going to be quite difficult for the private sector to make large bets that are, by definition, multi-year bets, and the private sector will not materialize. You can make up for that in the short run with more subsidies, more tax breaks, but in the long run that becomes unsustainable unless you can give confidence to the private sector that the regulatory framework will be stable over time. One of the key successes of the last budget is that it extends those tax breaks for another five years, increasing the time horizon over which people can be confident that those will remain in place. But in a larger setting, we have to make sure that we are putting in place the rules of the game that are going to be conducive to investment and that they stay stable. That's the real challenge, not just at the federal level, but also at the subnational level. If I could actually just offer one that I think is important and a bit provocative, it would be to solve the principal agent problem between asset owners, particularly long-term asset owners, pensions, family offices, endowments, insurance, et cetera, solve that principal agent problem between the asset owner and the asset manager. Because oftentimes the interest, and this goes actually to Griff's point, that the identification of self-interest is not aligned between those two. If we increase the capacity of institutional investors, for example, to direct invest directly in low-carbon, in green finance sort of productive assets, we'll unlock an incredible pool of money, the very foundation of our capitalist system, which is sitting on the sidelines right now. And that might start with actually treating the leadership of these institutional investors, not as public employees, but as actually sophisticated asset managers. So, if you compensate them on par with those in private sector asset management, you might actually get better outcomes. You also align their incentive structures with the teleology that we've discussed here. That's just one that I would throw out. I'm tempted to say something simple-minded, and I will. It strikes me that a lot of these programs, they're well-meaning, they're great, we should be for them, but essentially they are compensation for a straightforward carbon pricing system. And I continue to say, until we get there, we're pussy-footing around. But patience and persistence, it ain't going to happen tomorrow, but we can't give up, and once we get there, then we'll be someplace that will produce the kind of results Irving's talking about. Excellent. Yes, right up here in the front, aligned with the road. Hazel Henderson Ethical Markets Media. We produce the green transition scoreboard, and we have been tracking private investments in green sectors worldwide since 2007. Our current figure is 6.22 trillion with a T already in the pipeline. And as a green private equity investor myself, to what extent are you going to help us all in the green finance sector by focusing on the fossil fuel subsidies? Because green sector investments can do just fine without any further subsidies if you can just help us to get rid of the fossil fuel subsidies. And one more point in terms of the US public. If we could talk about pollution taxes rather than just carbon taxes, the American public loves pollution taxes. They don't understand carbon taxes. So if you could change that language, it would help a lot. Very silly point. Does anyone want to address that respond? Can I start? Your fossil fuel subsidies point is hugely important. It doesn't make sense to even start thinking about carbon pricing. On the other hand, you're subsidizing the very thing you're trying to manage. The G20 has taken fossil fuel subsidies and performing them as a key policy area. There's been now numerous communications in which all the G20 countries commit to reducing and rationalizing inefficient fossil fuel subsidies. We'll continue to do that in the coming G20. That is a very high level leader's effort. At a more detailed level, that has given way to a peer review process in which one country will assess one of its peers and that country will assess another country. That generates reports of what are the fossil fuel subsidies on the books and how do you intend to reform them? We are happy to say that the first peer reviews that will be coming out of that G20 process will be China and the US. This is, I think, a very interesting process because it's one which China has agreed to have the US and other institutions and other countries assess its fossil fuel subsidies and subject them to scrutiny. We're going to do the same for subsidies here. We hope that process will be done this year in 2016 and that those documents will lead to, we hope, a richer, more robust dialogue inside both China and the US about what we do about these subsidies. Finally, I'd say that the administration has every year in its budget asked for the elimination of inefficient fossil fuel subsidies, particularly on the production side. You heard President Obama talk about subsidies for oil companies a lot and so that's been in the budget but it requires commercial action. To say, it is worth noting that because of the drop in oil prices over the last year and a half, you have seen significant progress around the world on removing subsidies if it's in India, particularly in the natural gas, but also in the diesel sector. The question is how do you make sure that those are structural and that they don't rebound when and if there is a rebound in prices? To the second question, I would just note that there are two words in carbon and tax. You might be able to figure out ways to do carbon and pollution. I think perhaps one of the more loaded words is the tax work. John, no institution has done more that I know of to give us a sophisticated understanding of fossil fuel subsidies than the IMF. Where do you see that fitting together with your call for intelligent and urgent carbon pricing? Indeed, thank you for that and I'm proud of the role the IMF has had in calling attention specifically to the role of fossil fuel subsidies and earlier I was saying we need patience and persistence. We need to strike while the iron is hot and it's hot right now and the energy price is still falling. This is an area that ought to receive real political leadership. Excellent. We've got a sense of priorities out there. Yes, back there, Nancy. Nancy Alexander, Hynrych Bowe Foundation. We all have a really big steak in seeing that the Green Finance Study Group of the G20 is successful and one of the measures of success could be the extent to which the study group influences the other working groups of the G20. As many of you may know, the biggest emphasis, arguably, one of the biggest emphasis of the G20 for a couple of years has been to mobilize long-term institutional investment in infrastructure, energy, transport and water. And yet all the G20 codes that it's working on with the OECD are pretty much either devoid of sustainability concerns or those concerns are very secondary and optional. These are the codes that have to do with public-private partnerships, procurement, long-term institutional investment, infrastructure. So one of the measures of success could be how the Green Finance Study Group influences the thinking not only of the OECD, but of the other working groups and I'd appreciate, especially for Michelle who's been so close to this process and John or Simon any guidance as to how to conquer this challenge because the global economy is having trouble and this injection of investment is seen by the G20 as they answer. So I think that the group sounds like it's off to a very good start, having the type of unanimous participation and high-level endorsement that it has received, particularly not just being from the traditional developed countries, but developing countries. So that's key, but it's going to have to make sure that it has a stake that the other working groups feel like they have a stake and will play in the process. So it's kind of the same thing you would expect of other type of issues. It's about buy-in ownership and some strategic patients as well. Simon. Yeah, no. Michelle has retired from doing G20 work which is why she's smiling and looking pitifully at me because I'm just starting. So actually it's great that you've asked the question Nancy because the answer is Germany. Which is if this is a one-year play it won't achieve anything. It has to be a multi-year play and that depends particularly on Germany next year. And Germany needs to pick this up and take it forward and pick it up and take it forward without cutting it down to something irrelevant. They need to pick it up in the same level of ambition that China and the UK are pushing it forward now. So of course that's only a piece of the answer, but actually within the G20 architecture unless this is a three to five-year play it won't achieve anything at all. We've got a question right up here. Hello, I'm Kurt Vogt from HSBC. I have a question for Leonardo. You mentioned that the green bonds are an experiment and I agree with that. It's still a very small market but it has a lot of potential. Is there a way to catalyze it? I mean with some physical movement into the cocktail like making it tax-free for instance, like a municipal bond. I think the so green bonds I agree with you have a lot of potential and one of the key constraints at the moment is both growing the market and ensuring that there's liquidity and one of the obstacles in that space is that people don't know what green means or they can't be sure. There's too many definitions there's too many different interpretations of greenness and that of course matters to those that have to make allocations for certain types of green. The private sector and the industry has been trying to deal with that through exercises to develop the green bond standards to further subject them to third party validation to basically improve the definition of greenness if you like and I think that's ultimately far more important than any specific fiscal help that can be provided. Although that's something worth considering on the line it's certainly been very successful in the muni market. The other thing I would point to a project that we did at the green climate fund a couple of months ago which involves bringing green bonds to countries that have never had them before. In this case with the use of GCF concessional finance they were able to inject some capital that will help stimulate and catalyze the green bond market in this case in Mexico but that can then be extended forward to our markets. In the interest of time we're going to do one final round I'm going to collect three to four questions we'll collect them all in one swoop and then we'll divvy them out and then wrap things up. Right here there's a gentleman over here a gentleman with glasses behind her. So thank you very much for a very interesting presentation and a very interesting panel discussion Stacey Swann climate finance advisers. My question is really about the resilience and risk aspect of greening finance. I agree that if we have a meaningful price on carbon that will drive behavioral change and investment in a certain way but we may already be locked into a world where we're going to need to have to address resilience and the risks that come with that. So for you Mr. Lipsky what would be your kind of desired outcome from the actors in the financial system, the various actors on the issue of climate risk, how to assess, how to manage and how to price perhaps and then kind of Leo made an interesting connection with insurance insurance is nothing but a risk management tool how can we kind of better help or better catalyze insurance like solutions to help manage what will be kind of the resilience we need to build in. Very good, so that's one question, yes right behind you. Terry Hill with the passive house institute the White House has just focused attention on space weather space weather has a potential impact on the grid as it is today. Why isn't the reliability of the grid and all the implications of that being factored into this discussion so I think it's more inclusive than just say resiliency we need to bring in reliability as well so why isn't this aspect of things being brought into this discussion. Interesting, so interesting notions of resiliency, two different ways of asking and one further question back here. Hank Patton with World Steward at the beginning of the process of this inquiry I had the privilege of asking Simon the question about how we make a market for serving the future, what's the transactional framework avoiding the co-plan saves hundreds of millions of dollars and that's a measurable outcome. How do we couple the early retirement of dirty assets to the creation of the clean new assets at a scale by which we can secure ties and make markets of these out of these intergenerational services. Interesting. Who wants to lead off in taking a question? One came to you, John. Do you want to lead off on that? I was asking about resilience the simple answer enhancing the resilience of the financial system is one of the key goals of the post crisis reforms. It has involved in broad terms two things an increase in the required level of capital improvement in the risk management processes. Those can accommodate concerns about climate risk and environmental risk. In other words, you don't need to invent some new special process. What you have to do is figure out a meaningful way to create a measure that can be included into those risk management and capital adequacy processes. Everyone in principle can agree that's a great idea it's going to take a while to get consensus on exactly what does that mean in an operation sense. That's great. We were just discussing grid reliability. Do you want to comment on that? We'll go to Griff who has a few thoughts on that as well. The point of reliability goes back to what David said in the beginning is the difference between energy sector and energy systems.  The space weather issues obviously there are security risks. It goes back to making sure the interests are aligned. The challenge with the grid is good. Even before the green finance debate this has been a huge issue of how you update modernize the grid. I think coming up with some of these more creative instruments and systemic approaches in which you're blending some of these public approaches with private capital has to be part of the answer but keeping reliability in mind. No, that's a very good question. In fact, the cornerstone of my office's strategy is looking at utilities 2.0. As we increasingly integrate renewable energy and energy efficiency practices and technologies into the energy mix it is posing greater and greater challenges on the old business models of the utility. We talk about grid defection and the death spiral of existing utility models. Part of that includes cyber security and includes how do you reconcile the variability of renewable energy with baseload requirements. We have working with co-hosted a workshop in Germany last year on the utility of the future and grid reliability. We are very much vested in looking at the multiple dimensions of the provision of electricity services whether it's central power plants or increasingly the distributed generation model. All of which encompass the need for acute attention on grid reliability. Finally, the question of long-termism which is a wonderful way to circle back to where we began. How do we invest our financial system with an operationalized a series of mechanisms that reward long-termism and that carry inter-temporal value from tomorrow into today? Is that the point of the inquiry? Exactly. Maybe we've ended where we began with an inquiry. You've done a good job striking upon the question at the center of all of this. If you allow me to just take that and add to it just a few things that I personally will walk away from today having learned. I wrote down a few notes, a few takeaways. Number one, clearly Simon, you're absolutely right. Something has changed. What you call the quiet revolution which surely goes by many other different names in many different geographies and particular policy circles. But what it is, it's a recognition that the financial sector can and must be shaped to the needs of the real economy in many different forms. Second, that green, sustainable and financial market reform these aren't distinct areas of action or distinct tribes but they're different windows upon the same set of challenges. Third, that the U.S. has a critical role to play and is in fact arguably indispensable in this entire process. G20 action or notwithstanding whether you include the G20 or not. The U.S. is critical to this over the long run and that it's imperative for the U.S. to play to its strength and to come at this from a positive proactive message of showing how U.S. style financial markets, U.S. style regulatory approaches can evolve to serve better the needs of the real economy. But finally of course also that as part of that leadership it's very important for the U.S. to learn from different context in which this is taking place. To learn from other successes, failures, experiments that are taking place within the auspices within the halls of different central banks, long thought of hardly as bastions of innovation, I think Simon if there's nothing else we've taken away from today it's that central bankers are in many ways actually some of the most important actors in this green finance transition, in this green finance quiet revolution if you will. And I would add just one final point which is that these conversations have been taking place in many different ways for quite a long time but they've rarely been put together, organized in an operational framework like the UNEP inquiry has succeeded in doing. That'll carry forward into the G20 green finance process and you were quite modest Simon in a lot of our discussions in the lead up to this as to what the report is about as to what it has achieved. I think you under promised and over delivered and on that note I want to thank you for that and I hope that we too at Carnegie in our own small way have under promised and over delivered we made no mention of the fact that lunch would be served outside this room once this event concludes but it will so thank you very much for coming thank you for staying with us and enjoy your day grab a copy of the report on the way out thanks to all you panelists as well John Griff