19 June 2020

ECA Journal – Climate Change and Audit

During the last decade, climate change - and action to stop it - has steadily climbed up the political agenda, with many policy makers expressing an opinion one way or the other. But sometimes facts do matter. Nowadays global warming is considered a fact. An overwhelming amount of scientific evidence shows a correlation between human behaviour and the global rise in temperatures. Likewise, reports by the well-known UN Intergovernmental Panel on Climate Change (IPCC) present the effects of this, in all its extremities (see page 13). All of life on Earth depends on the climate; and human life is no exception to that.

While there is growing acceptance of these scientific data, their uptake in the form of policy action against global warming has been a lot slower. Despite the fact that many studies, considered to be scientifically sound and representative, often present rather logical and convincing solutions to prevent or at least limit further global warming. A clear example is the discussion on the pricing of CO2 emissions, also known as carbon pricing. As far as I understand, there is hardly any economist who disputes the need for carbon pricing. And with the ‘polluter pays’ principle that is common sense. Nevertheless, only the EU has set up a carbon pricing system and even that one is still a work in progress (see page 178). How come issues you can even explain to a primary school child find such little uptake by politicians?

At the same time many government leaders commit themselves to climate goals, with targets, ceilings and sometimes even milestones to be reached in the future, most often the ‘distant’ future. The 2015 Paris Agreement is probably the most prominent example, and the more you dive into the details, the more specific these ambitions, if not commitments, become. Most often, these agreements focus on the targets while leaving open the pathways to reach them.
These agreements, however, offer a stepping-stone to accountability and transparency, to remind policy makers about the promises they have made, and where they have got in keeping them, or not. This is where public auditors come into play. Supreme audit institutions (SAIs), at EU and national level, provide evidence-based insights into the achievement of climate change policies, most often using scientific data presented by the IPCC and from other research sources. Besides pointing out what happens in practice, these public auditors often also identify risks for current programmes, and future perspectives for reaching the goals identified. The latter aspect, which may also include possible scenarios for future implementation, is particularly pertinent for climate change action, with many long-term goals and several variables for achievement (see page 32). Failure to prepare is preparing for failure, and the human variable, causing climate change, also presents an opportunity to reverse or at least limit it.

Climate change action has not only become ‘hot’ as an audit topic, but also an existential one. Climate goes beyond barriers, beyond borders, beyond species. Everything is connected to it. Not performing on climate change will affect all other policy areas, either today or tomorrow. Climate change action has become a task too big to fail. While familiarising themselves with the topic, many public auditors realise this, as is reflected in the SAIs’ audit output and their interaction on the topic through the regional and global cooperation platforms SAIs have created, such as EUROSAI and INTOSAI (see pages 92 and 101). In addition, taking climate change action now instead of tomorrow is, in the long run, more efficient and effective than postponing measures. Hardly anybody disputes that the costs of climate mitigation, even only in financial terms, are much lower than climate adaptation. In this Journal you can read about the many reports produced, by the ECA and by many other public auditors, but also by many other key players and contributors on climate issues. Some of the contributions were written before, some during the Covid-19 pandemic. Finding dissenting opinions on whether this issue has to be tackled urgently is a needle in the haystack story. Finding different opinions about “how” is far easier.

The bad news is: we are far behind in reaching the goals set in the Paris Agreement. Hardly any country is on track. And apparently, even if we were to maintain the emission levels the EU has reached during the Covid-19 confinement, we would still not achieve the ambitions set for 2030. Quite a grim picture, which explains the sense of urgency that the young generation has. After all, it is particularly their future (see page 122). Why is it that politicians do not act more on these goals, building on the scientific material abundantly available? Here trust that others will make the same effort, short horizons, imminent elections, and public interests versus private interests come into play. Technically a lot is possible, politically a lot less. And changing one’s habits, including an addiction to a fossil-fuelled society, is not easy and requires a change of mind-set, a change of heart towards the yet unimaginable. This requires a leap of faith, too.

The good news is: change can happen, even fast if we want. The Covid-19 pandemic, a clear and present danger, shows many aspects that can help us forward in addressing the looming climate crisis, a slow and distant danger. Public interests (common health) prevailed over private interests (such as freedom of movement) and people accepted that. Politicians took this leap of faith in science, taking measures that showed the added value and courage of government that acts early and decisively. This takes courage, not only on the part of the politicians but also citizens, with a sustainable society, where well-being has more to it than economic growth, as their common objective. Here, too, Covid-19 has led to self-reflection on what really matters, ranging from a reappraisal of nature, social networking and equality issues. Such signals were already there before Covid-19 (see page 8), with numerous climate protests in 2019, a growing awareness of increasing risks of natural disasters (and related preparedness) and more climate litigation against the lack of climate action (see page 167), and also more SAI reports on the achievement of climate action and the risks of not taking it. Or a magazine like The Economist pleading for climate transition and the World Economic Forum talking about ‘The Big Reset.’

Policy makers have reacted to these signals - at EU level with the Green Deal, a climate law, a Next Generation EU programme - with the aim of weaving Covid-19 recovery measures into a transition to a carbon neutral society (see pages 190). Also at Member State level, several government leaders seem to be unfolding their climate plans, with pathways to reach the goals set. More and more are realising that climate is truly a too-big-to-fail issue, and that even the Covid-19 crisis is small beer compared to the climate challenges. Besides giving a new self-confidence to government regarding its ability to influence society (see page 18), the Covid-19 measures – estimated by the IMF to amount to almost USD9 trillion – have got us used to huge sums being spent on support measures. So increasing climate funds to actually lay a pathway to the objectives should be much less of a problem…?

But with time, will it be enough? Will new technologies (see page 140), new habits (see page 22) and renewed cooperation be enough to catch up with the delays we have already incurred to reaching the Paris Agreement objectives? No doubt SAIs in the EU will continue on the path they have already taken by increased reporting on climate change progress and the transition towards a carbon neutral society in the long run. For the short term, we should not be surprised if we experience higher temperatures, even in Europe, as we saw last summer.

full Journal

ECA

© ECA PRESS