# The Main Obstacle to the Ecological Transition Is Political **Date de l'événement :** 01/11/2025 * Publié le 01/11/2025 ### Date 01/11/2025 ## Chapô **Climate change is becoming a multiplier of structural problems, making an integrated social, territorial and environmental response even more urgent. The long-term cost of inaction is much higher than that of investing in the transition, even at the cost of temporarily higher debt. Financing the climate transition in the most vulnerable countries is a moral, economic and geopolitical imperative.** ## Corps du texte ‘Each generation doubtless feels called upon to reform the world. Mine knows that it will not reform it, but its task is perhaps even greater. It consists in preventing the world from destroying itself,’ said Albert Camus when he received the Nobel Prize for Literature in 1957. To paraphrase the writer, if we fail today to prevent the climate from destroying the world, it will not be for technological or financial reasons, but political ones. It will be because of the vicious cycle that climate change creates in terms of social inequalities, because of the rise of conservative populism and the fragmentation of the world. The response must address all these dimensions simultaneously. Climate, inequality, resentment, populism ----------------------------------------- Global warming acts as a powerful amplifier of economic, social and territorial inequalities. Extreme events – heatwaves, floods, droughts – primarily affect the most vulnerable populations, who are often poorly housed, unprotected and dependent on precarious infrastructure. These impacts are far from uniform: already fragile territories, exposed professions (such as agriculture, construction, outdoor work, precarious employment in the service sector) and low-income households suffer more from the consequences of global warming. This differentiated shock comes on top of the increase in inequalities that has been underway since the 1980s as a result of policies to reduce the Keynesian welfare state, the financialisation of the economy and industrial relocation linked to globalisation. Far from being a homogeneous external risk factor, climate change is becoming a multiplier of structural problems, making an integrated social, territorial and environmental response even more urgent. The same observation applies at the international level: poor countries are often the most exposed to physical risks, the least able to cope with the repeated destruction caused by extreme weather events, and those with the most pressing needs for growth and development. Growing inequalities fuel deep political resentment, which is directed both against elites and against ecological transition policies. Many territories and social groups experience a feeling of injustice and abandonment, fuelled by the conviction that decisions are being made without them, or even against them. This translates into a crisis of confidence in institutions, experts and even science, the latter being perceived as exploited by political agendas far removed from everyday concerns. The ecological transition itself is often experienced as an additional burden on the most disadvantaged, as illustrated in 2018 by the Yellow Vests protest against carbon taxation in France. If the transition is not paired with redistributive measures and social justice _ex ante_ (and not only _ex post_), it will be rejected for the inequalities it seems to reinforce rather than for its objective. Social dissatisfaction largely explains the rise of reactionary populism around the world. This populism is a major obstacle to the implementation of adequate climate policies. Driven by anti-scientific, identitarian, nihilistic and sovereigntist rhetoric, it exploits social unrest to make any form of regulation based on cooperation, expertise or international solidarity appear illegitimate. Climate policies are caricatured as projects imposed by out-of-touch elites or international institutions that are insensitive to local realities. Reactionary populist rhetoric also uses immigration and fear of the other as ideological and political levers, brandishing the threat that millions of climate migrants would pose to populations. This hostility is reflected on the international stage by nationalist withdrawal, the weakening of international law and the abandonment of the legal order established after World War II – a context that seriously undermines the cooperation that is essential to a global response to climate change. Between debt and austerity, it is unwise to sacrifice the transition -------------------------------------------------------------------- The 2008 financial crisis and the COVID-19 pandemic burdened many countries’ public finances. To avoid an economic depression on the scale of the 1929 crisis, governments and central banks implemented unconventional and highly expansionary fiscal and monetary policies, including fiscal stimulus packages, social assistance, near-zero interest rates, and massive asset purchases on the bond markets. These exceptional and necessary policies have led to a significant increase in public debt, which has risen on average from around 60 per cent to over 100 per cent of GDP. After fulfilling this essential role, several countries turned to considering how to stabilise the debt, especially as rising interest rates increased the cost of servicing it. While fiscal consolidation is now necessary, its pace and scale involve difficult trade-offs between fiscal sustainability and investment in the green transition. Funding for the transition risks being sacrificed on the altar of immediate fiscal austerity, often presented as the only alternative, even though public investment is a lever for long-term economic, social and environmental resilience. The COVID-19 pandemic triggered highly expansionary, coordinated, global macroeconomic responses and unprecedented scientific mobilisation, leading to the discovery of vaccines in record time. Why is the danger of climate change not being treated with the same urgency and boldness? Boldness is indeed required. Traditional macroeconomic responses are based on poorly calibrated fiscal austerity, functional silos between public policies and a lack of planned vision. These risk exacerbating the vicious cycle fuelled by the climate crisis, inequalities and political rejection of the transition. In times of uncertainty and high public debt, discussion of fiscal discipline and deficit reduction must be conducted without preconceptions. Immediate and significant adjustment remains the invariable opinion of the markets, experts and rating agencies, contrary to investment imperatives, particularly in the ecological transition. For their part, sticking to their mandates, economic institutions – central banks, fiscal regulations and governance frameworks – are reluctant to incorporate social and environmental factors. Such a lack of boldness and flexibility fuels a spiral of inaction, where the climate emergency is relegated to the background in the name of financial sustainability. This wait-and-see attitude only perpetuates the systemic risks, or ‘green swans’ (see below), that need to be reduced. Just as we are able to mobilise funding for security and defence in the context of the war in Ukraine, we can, and must, consider innovative solutions for the climate: regional or, ideally, global mutualisation of transitional green debt; development, in a manner that is transparent to financial markets, of transitional budgetary trajectories with a combination of new taxes; and more progressive taxation of the wealthiest, who are also the biggest carbon emitters. There is no denying the constraints imposed by high public debt, the cost of which is increasing, but this should not deter analysis of the relative risks of alternative macroeconomic trajectories. Perhaps the greatest risk is not the financial risk associated with public debt, but rather the risk of not using debt as one of the possible instruments for the climate transition, thereby causing it to fail. > **Green swans** > The term ‘green swan’ was introduced by a group of economists and central bankers meeting at the Bank for International Settlements  in their report _The Green Swan. Central Banking and Financial Stability in the Age of Climate Change_ (2020). It is inspired by the concept of the ‘black swan’ popularised by Nassim Nicholas Taleb (2007), which refers to rare, unpredictable events with systemic consequences. Conversely, green swans are certain: major climate shocks – melting ice caps, massive deforestation, heat waves and extreme flooding – will occur if nothing is done in the coming decades, and their potentially destabilising effects on economies and financial systems are already established. For central banks and regulators, this means developing forward-looking scenarios, strengthening climate stress tests and integrating physical and transition risks into financial stability oversight. In other words, it means acknowledging that climate is now a key determinant of macroeconomic and financial stability and that it affects central banks' ability to fulfil their mandates. Faced with these systemic, existential and potentially irreversible risks, it is essential to change our approach. As in a war economy, the priority must be to look beyond the short term and propose a rapid and coordinated mobilisation of resources, institutions and capacities for collective action. This requires rethinking the macroeconomic framework by analysing relative risks. In other words, the idea is that the long-term cost of inaction is much higher than that of investing in the transition, even at the cost of temporarily higher debt. As in times of war, the question is no longer ‘can we afford it?’ but ‘can we afford not to do anything?’ The answer calls not only for technological innovation, but also and above all for institutional transformation – in the interpretation of central bank mandates, fiscal rules and coordination mechanisms – in order to grant the climate transition the status of a national and global priority. Adapting the macroeconomic paradigm to the climate challenge ------------------------------------------------------------ A new national macroeconomic framework, adapted to the climate transition, must fulfil three key, inseparable and complementary functions. First, it must reconcile economic stabilisation with structural transformation of the economy. Cushioning short-term shocks is no longer enough. Investment, production and employment must now be actively steered towards a low-carbon trajectory. Second, it must enable the mobilisation of national savings and public and private financing for the transition, through targeted incentives, guarantees and strategic coordination between financial actors. Finally, it must strengthen market regulation to fully integrate climate risk, which is currently underestimated or invisible, and to guide economic behaviour towards choices that are compatible with planetary boundaries. This three-pronged approach – stabilising, financing and regulating – must form the basis of the macroeconomics of the transition. To give substance to this new macroeconomy, adaptive fiscal, monetary and financial regulatory policies must respond to climate change and its harmful feedback loops. Climate change must be understood as a persistent and systemic ‘super supply shock’that, through its major implications for aggregate demand, will reconfigure traditional economic policy trade-offs. > A **supply shock** refers to a sudden and significant disruption that affects an economy's production capacity, i.e. its supply of goods and services. It can be negative (sharp rise in energy prices, disruption of value chains, war) or positive (technological innovation). In the case of climate change, a ‘super shock’ would combine sudden events (natural disasters) with slow-moving, gradual phenomena (sea level rise, desertification) and would have significant macroeconomic effects.  On the monetary front, an adaptive framework should update inflation targeting to manage the recurrence of persistent climate-related supply shocks. Central banks would thus preserve their credibility in terms of price stability while gaining explicit flexibility through wider tolerance margins and/or a target temporarily higher than the current 2 per cent, longer time horizons and the use of forward-looking climate scenario analyses. In the face of greenflation, specifically the already noticeable increase in costs linked to droughts and crop failures, this will also make it possible to avoid quasi-mandatory pro-cyclical monetary tightening that could undermine growth, financial stability and the green transition. In this context, it is important to prevent persistent climate-related supply shocks from automatically spreading to the economy as a whole. On the fiscal front, an adaptive framework should replace overly rigid rules. Debt sustainability assessments tend to favour a short-term view. They focus on immediate financial market reactions and overly narrow projection horizons, thus underestimating the potentially positive long-term effects of productive public investment, particularly in the climate transition. There is a need for temporary flexibility, conditional on the state of the economy, to allow governments to finance mitigation, adaptation and disaster response while maintaining market confidence. This requires targeted climate investments, local and international financing tools, redistribution mechanisms to protect vulnerable groups, and institutional reforms such as climate-adjusted debt sustainability analyses and accounting adapted to green bonds. At the same time, adaptive regulatory and financial policies are needed to integrate climate risks into prudential frameworks (which define banks' capital ratios relative to their loan amounts), mobilise institutional investors, and reform global financial governance to channel public and private capital towards resilience and transition. The aim is to establish a consistent green taxonomy, impose mandatory transparency on climate risk exposure and standardise risk assessment in order to effectively guide capital flows. Carbon market reform is also crucial to ensuring a credible price signal that can incentivise action. It must be complemented by climate taxation mechanisms, including global solidarity taxes and the issuance of green bonds to finance public and private investments aligned with climate objectives. Furthermore, the transition cannot happen without an essential and ambitious social component. Climate shields for the most vulnerable, targeted transfers and active support for worker retraining must compensate for the inequalities caused or exacerbated by climate policies. Consistency between economic, financial and social instruments is a prerequisite for an effective, fair and sustainable transition. The great debate on financing the transition through debt and progressive taxation must first focus on how we analyse a climate shock: is it necessarily negative, with a contraction in economic activity in the short term, or can it, on the contrary, become a driver of activity? If it immediately and permanently reduces growth and weakens tax revenues, then the problems of public debt sustainability are exacerbated. The proposal for an adaptive macroeconomic response involves consideration of another perspective: providing every opportunity in the short term to transform the transition into a medium- and long-term expansionary, Schumpeterian process, thanks to massive and planned investments in mitigation and adaptation, accompanied by social safeguards to protect the most vulnerable. These planned and targeted supply measures reduce uncertainty, boost confidence and strengthen demand, thus making the transition path more sustainable in economic, fiscal and social terms. The dynamics of public debt depend not only on the stock of debt relative to payment capacity as measured by GDP and interest rates, but also on growth. Admittedly, during the decade of near-zero interest rates that followed the global financial crisis of 2008, a golden opportunity to finance the transition was missed. However, although rates are higher today, it is still possible, and necessary, to chart a green growth trajectory capable of absorbing a temporary ‘bump’ in debt. The challenge is to transform this additional debt into an engine for sustainable growth in the medium and long term that is more socially just and resilient to climate and geopolitical shocks. A successful ecological transition also requires overcoming the institutional silos between ministries that too often characterise public action. At the national level, greater coordination between the ministries of the economy, the environment and social affairs is essential to ensure what is known as ecological planning, which combines climate, social and macroeconomic stability objectives. To give climate policy a coherent, transparent and evident macroeconomic framework, it would be desirable to create a neutral and technical body to place public accounts within a transition scenario, similar to the Congressional Budget Office in the United States or, mutatis mutandis, the Pension Advisory Council in France. Finally, the transition will not be politically viable without in-depth dialogue with social and territorial actors: trade unions, local authorities and civil society. France took a first step with the Citizens' Climate Convention, established in 2019, but it has yet to follow up and implement proposals. Such dialogue is essential not only to ensure acceptance of reforms, but also to design differentiated trajectories rooted in local realities and to strengthen the democratic legitimacy of the choices made. A Bretton Woods 2.0 for the climate ----------------------------------- In an international context marked by geopolitical tensions and rising sovereignty movements, it is unrealistic to rely solely on ambitious universal agreements to advance the climate agenda. Rampant climate scepticism and the rise to power of leaders hostile to multilateral cooperation make any strategy based on global consensus particularly fragile. Faced with this reality, a more pragmatic approach is needed: building partial coalitions, a new temporary multilateralism, or ‘plura-teralism’, without the participation of some major players (notably without the United States as long as the Trump administration is in power). We must improve and develop international financing mechanisms (private investment and official development assistance transfers), increase global taxation initiatives to finance the transition, and promote exchanges within global bodies. To counter the ‘savagery of the world’ and the law of the strongest that is taking hold in international relations, it is important to reaffirm the importance of international law, the danger of new forms of protectionism, the adverse effects of fragmentation on the fight against global phenomena, and the need for cooperation between countries. Financing the climate transition in the most vulnerable countries is a moral, economic and geopolitical imperative. This requires a thorough reform of the international financing system, strengthening official development assistance (rather than reducing it, as has been the case in recent years), expanding guarantee mechanisms to reduce the perceived risk in middle- and low-income countries, and reorienting multilateral development banks towards the low-carbon transition. A Bretton Woods 2.0 for the climate would be welcome. Just as ecological and social planning is needed at the national level to coordinate investment, redistribution and transition pathways, it is becoming essential to consider global planning through the creation of a Global Climate Agency. The Intergovernmental Panel on Climate Change (IPCC) already has some elements of such an agency but lacks financing and regulatory powers. The agency’s remit would be to coordinate climate action with existing international institutions such as the International Monetary Fund, World Bank, development banks, Bank for International Settlements and the Organisation for Economic Co-operation and Development.  These would coordinate to propose both a common analytical framework and a set of appropriate financial instruments: green bond issues and market mechanisms, concessional financing, public guarantees and climate funds for the poorest countries. This architecture would strengthen the coherence and effectiveness of international action, while creating the conditions for a more equitable sharing of the risks and resources needed for the transition. At the same time, a Bretton Woods 2.0 would promote private investment, which must be mobilised on a large scale, for example through initiatives such as the Glasgow Financial Alliance for Net Zero. New sources of financing must be activated through global fiscal measures: carbon border taxes, universal minimum taxation of multinationals, and solidarity contributions on financial transactions and fossil fuel assets. These new resources can form the basis of a climate justice pact between North and South, which is essential for the stability of the international system. > **The Glasgow Financial Alliance for Net Zero**, a global coalition launched at COP26 in 2021, has brought together more than 160 major financial institutions representing some USD 130 trillion in assets committed to carbon neutrality, with the ambition of mobilising private finance for the climate. In a world marked by the return of power politics and nationalist retrenching, it is more necessary than ever to reaffirm international law and cooperation as global public goods. Protectionist policies, such as those currently pursued by the United States, run the risk of further fragmenting the trade and climate space to the detriment of a just and orderly transition. The absence of common rules weakens the ability to anticipate, promotes imbalances and paves the way for climate chaos with major geopolitical consequences: conflicts over water or energy, forced migration and regional instability. Given these risks, only active, inclusive and structured climate diplomacy will enable the necessary convergence. To restore a minimum level of confidence in the ability of international institutions to act for the common good, it is imperative to strengthen dialogue within existing bodies and forums (G20, COP, IPCC, United Nations, regional alliances, among others), to better coordinate levels of governance and to involve Southern countries in the development of standards. It's the Politics, Stupid! -------------------------- ‘It's the Economy, Stupid’: in 1992, James Carville, Clinton's campaign adviser, responded with these now famous words to a journalist's question, implying that the economy determines politics. Today, we could reverse the proposition – ‘It's the Politics, Stupid!’ – since breaking the vicious cycle between climate crisis, inequality and political paralysis is, above all, a question of political will. Inaction is not inevitable due to technical or budgetary constraints, but rather the result of political choices, often influenced by short-term interests or paralysis in the face of unfavourable power relations. Reversing this trend requires a new macroeconomic architecture capable of articulating stabilisation, ecological transformation and social justice, and new international cooperation based on more pragmatic, differentiated and inclusive approaches. Nothing is set in stone: the window of opportunity is closing rapidly, but for now it remains open. Solutions will not come solely from the options discussed above. Many innovations are emerging at the local level, driven by communities, local authorities and self-organised groups experimenting with sustainable and equitable resource management practices. Recognising and supporting this diversity of initiatives is essential to building a transition that is rooted, legitimate and resilient. Our fragmented world, full of noise and fury, can sometimes be discouraging. But it can also inspire bold decisions, collective mobilisation and a shared vision of the future. Our capacity to face systemic challenges with clarity and solidarity will shape our common destiny. As Elinor Ostrom pointed out in her Nobel Prize acceptance speech in 2009, ‘Rather than assuming that only external authorities can develop effective rules, we must recognise the capacity of individuals and communities to create their own institutions to manage resources sustainably.’ **References:** * Barmes, D., Claeys, I., Dikau, S. and Pereira da Silva, L. A. 2024. _The Case for Adaptive Inflation Targeting. Monetary Policy in a Hot and Volatile World_, London: Grantham Institute Publication, * Bolton, P., Després, M., Pereira da Silva, L. A., Samama, F. and Svartzman, R. 2020. _The Green Swan. Central Banking and Financial Stability in the Age of Climate Change_, Basel: Bank for International Settlements, * Pereira da Silva, L. A. and Tubiana L. 2025. ‘Donald Trump and J. D. Vance offer us a chance to create a new multilateralism’, Le Monde, 4 April 2025, * Pereira da Silva, L. A., Proctor, J. C., Salin, M., Svartzman, R., Després, M., Saint-Amans, P. and Tubiana L. 2025 (forthcoming). _Global Solidarity Levies. A Practical Negotiation Framework for the Just Transition_, The Hague: European Climate Foundation. **_This article was originally published in Conférence issue No. 4, titled "[Facing the Environmental Challenge](https://www.calameo.com/sciencespo/read/0041604547f5e00dcf173)", a publication that sheds light on major contemporary issues and informs public and private decision makers._** ### Thématique `#Environnement` `#Europe` **Langue :** `#Anglais` --- ### Navigation pour IA - [Index de tous les contenus](https://conference.sciencespo.fr/llms.txt) - [Plan du site (Sitemap)](https://conference.sciencespo.fr/sitemap.xml) - [Retour à l'accueil](https://conference.sciencespo.fr/)