Second, a green economy will need to be much more energy efficient. Energy intensity — the energy needed to produce a dollar of GDP — will have to improve substantially. The IEA has estimated that, to reach net zero, the rate of improvement in energy intensity would have to go up to more than 4% a year, which is more than double the average rate of the previous decade. Current plans and commitments made by countries will yield an improvement of only 2.8% a year. Third, a green economy will need to find ways to decarbonise so-called ‘hard-to-abate’ sectors and activities. There are currently not very good transition pathways for aviation and maritime. There are also some critical materials whose production is hard to decarbonise. Some 17% of the world’s primary energy supply is used just to make four materials – steel, cement, plastic, and ammonia (which is used in fertilisers). These four materials have been described as “pillars of modern civilization”. Not only are there no readily available substitutes for these materials, but also no practical low-carbon ways to produce enough to meet current demand. And the world must actually expand their production as Africa and Asia modernise. Fourth, the sectoral composition of economies will change. The sectors with the highest greenhouse gas emissions – such as coal, oil and gas power and petroleum products – will be most impacted. They account for about 20% of global GDP.
Indeed, the increase in global imbalances is not confined to current account positions. In addition to the growth in net international capital flows, the very sharp rise in gross positions in international portfolios, not exclusively but largely linked to the accumulation of foreign exchange reserves by the major emerging economies, is one of the most significant developments of the past few years. The striking synchronisation of the recent economic crisis across the major economies is certainly in large part a result of this. BIS central bankers’ speeches  1  In any case, the issue of the appropriate level for the supply of safe and liquid international assets and the international monetary and financial system best able to provide this has yet to be resolved. As you know, this issue is at the heart of France’s presidency of the G-20. The second major topic is international economic and financial coordination and I will briefly touch on its two main components. The first component concerns the Framework for Strong, Sustainable and Balanced Growth. This initiative has been given wide media coverage since its adoption at the G-20 summit in Pittsburgh in September 2009. However, I am inclined to think that it has sometimes been distorted and that its scope has been underestimated. This initiative is indeed a promising and ambitious one: promising as it could be the impetus for genuinely enhancing international economic cooperation through the combination of economic policies taking greater account of externalities and structural reforms, in order to achieve the jointly defined global objectives.