Interview: Felipe Calderón, former president, Mexico | Green Growth: How to manage a false dilemma

Green Growth: How to Manage a False Dilemma

June 2013

It would be only a slight exaggeration to say that Felipe Calderón developed his passionate concern about the environment at his father’s knee. As a teenager in the 1970s, he watched as Luis Calderón Vega, a founder of Mexico’s Partido Acción Nacional, warned his party about the grave impact of climate change, one of the few senior politicians at the time to raise the issue—in Mexico or anywhere else.

Perhaps the most important lesson he learned from his father, the younger Calderón recalls today, is never to underestimate the ability of one person to effect change.

As Mexico’s energy secretary and later as president, Felipe Calderón emerged as a global leader in fighting the threat of climate change and promoting sustainable human development. In an exclusive interview, his first on Green Growth since leaving office in December 2012, Calderón sat down with Peter Lacy, managing director of Accenture’s Strategy and Sustainability businesses in the Asia Pacific region, to discuss Green Growth, the efforts to date to address climate change and the outlook for the future.


Listen as Felipe Calderón, former president, Mexico, discusses Green Growth, the efforts to date to address climate change and the outlook for the future, with Accenture’s Peter Lacy.

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PETER LACY: One of the defining themes of your public life, both domestically and globally, has been Green Growth. What does Green Growth really mean?

FELIPE CALDERÓN: I always depart from a false dilemma. During the last decade, nations and governments believed that it was not possible to achieve two goals at the same time, that growth and protecting the environment were incompatible. That is a false dilemma. It is possible to make economic growth and the protection of the environment compatible; it is possible to tackle poverty and, at the same time, to tackle climate change. The mix of policies—all those policies to tackle climate change and, at the same time, to produce economic growth—is Green Growth, in my opinion.

Finding the way to make economic policies compatible with environmental policies is probably the most important challenge for human beings in this century. I know that given the current international economic situation, it is really difficult to also think about climate issues. But the fact is, sooner or later, we will need to face the problem—not only the environmental problem itself but the economic problem of adaptation to climate change in the future.

Can you give us some examples of how you managed that false dilemma when you were president of Mexico?

We tried to apply policies that could be understood by people, companies and the government. A lot of people inside the government actually don’t believe in the challenge we have ahead.

One example: a massive program to substitute all appliances for new appliances, mainly refrigerators and air-conditioning equipment, to reduce carbon emissions from domestic sources. We were able to exchange more than 2 million refrigerators in three years. We pioneered a mix of public policy, small subsidies to the very-low-income families and an affordable credit program for everyone.

Secondly, the so-called green mortgages. In Mexico, the low-income families, especially low-income workers, have access to mortgages. But it was impossible to reach the workers below a certain income level. We started a new program—again, not only with the affordable mortgages but also with upfront subsidies, a down payment for all those workers earning minimum salaries or less. All those mortgages—and we are talking about half a million a year—are provided on the condition that the house they are buying has some kind of innovative energy-saving mechanism. It could be solar panels for heating water, whatever.

Another example: the public sector itself, PEMEX [the state petroleum company]. We established clear and concrete goals for payments to reduce carbon emissions, for instance. Another is regulation. We are establishing better parameters for the vehicle industry. Another is promoting mass transit in some cities. We are preparing—through the public works bank or infrastructure banks and other development banks in Mexico—affordable credits for municipalities. They can promote public/private projects related with mass transit in order to reduce carbon emissions.

One of the barriers often cited to doing more in this area is vested interests— groups that stand to be disadvantaged by regulation—slowing down the process. Often, the argument is about whether or not it makes you non-competitive compared to other countries. How did you tackle that issue?

It is very important to understand the companies’ point of view, and they have a point. The question is, how can we apply neutral policies in order to avoid these kinds of biases, or these kinds of situations of one company or one country fulfilling the new regulation about the environment and suffering a loss of competitiveness as a result? At the national level, we need to involve the industries in the general discussions.

It’s not enough to try to wake up some kind of national commitment to the environment. Something else is needed, and that could be the right economic incentives for all those interested. And that could be related to taxes, for instance, or some kind of policy which gives incentive for saving energy.

How did this work in Mexico during your administration?

One example: At the beginning of my administration, there were no wind farms. In Mexico today, we have 3,000 megawatts from wind and a growing number of projects. Some of them are made by private companies. We provided them with the right incentives. We are not paying any subsidy, but we facilitated their access to the grid in a more competitive way and more affordable way, because it’s a public utility.

But there is no one-size-fits-all-industries approach, right?

We need to establish some kind of order for the measures we will apply at the aggregate level. My point is this: It is very expensive, for instance, for a company which is on the frontier of technology to make marginal reductions of carbon emissions, and that could be very expensive for some industries. However, there are other projects where we can get a lot of advantage in terms of carbon reduction. One of the most important tasks for the international community is to detect what projects are more viable than others for reducing more carbon.

What sort of progress is being made in this area?

There is some interesting research that is estimating the net present value of the grid measures. It’s clear, for instance, that energy-saving programs for energy-intensive industries are not only good for the environment but are also absolutely viable in financial terms. In other words, that kind of measure applies not only to carbon reduction but also to profits for the industry. We need to establish the right public policies and economic incentives in order to move the companies to take those measures to reduce emissions.

If we are able to make the right estimation of the net present value of different projects related to saving energy or reduction of carbon emissions, we could make the first step. Someone did research in Mexico; they found that there are 140 projects in which the net present value is positive.

It sounds like companies and governments can work together in some sort of win-win dynamic.

Industry could do a lot or governments could do a lot. But all those efforts imply not only a reduction in carbon emissions but also profits or cost savings for the companies—or for the governments. If we start with that, we can reach a better . . .

. . . price/efficiency equivalent?

Yes. We are not going into very expensive measures for the companies, but we are gaining in terms of the environment, and the companies could get money from those measures.

From your experience, what would you advise other policy makers to be doing—or not doing—to drive Green Growth successfully?

A lot of people don’t realize that this is a serious issue. Unfortunately, for a lot of leaders in the world, climate change seems like a very naïve way to lose money. It is a very pragmatic arena—political pressure, public opinion, jobs, the performance of the government—for thinking about climate change. But we’re losing time. We need to switch that mentality, and that is the most urgent task we have ahead.

In order to do so, we need to emphasize and repeat the issue at every single meeting. I tried to do that, and in every single meeting, I was talking about climate change, I was talking about the government responsibilities.

Let me be honest. I remember when I went to Canada, the prime minister said in a press conference, when he was asked about climate change, that it was clear that the United States was not taking any position or any commitment by now, so his government had to wait for the American decisions in order to take our next step. I was there, and I said to the prime minister we could see that the American congress and government were not making any decisions, but we couldn’t wait for the American decision. It was a little bit painful for him, in Canadian public opinion, but it is the only way to wake up that issue.

By calling it straight.

Yes. We need to put some political incentives on track.

You have played a critical role in the last few years in trying to build bridges, broker deals on climate change. What did you learn that you think should be factored into future UN negotiations, as we try to build a global architecture for dealing with climate change?

First, we need to understand that consensus doesn’t mean unanimity. We need to break that kind of tricky bet coming from some countries. We need to move ahead—over them, if you allow me to say that. We cannot be blocked every single day, every single year, by the same guys.

Secondly, we need to change the mechanisms inside the United Nations. I do believe in diplomacy, but the bureaucracy and the organization itself are not working. We need to think seriously about that. I remember when we had a discussion with the secretary general, or his staff, [and] I asked them what the budget of the United Nations was. It’s an incredible figure—I can’t even remember, but it was billions.

Well, we can cut that, and we can allocate half of that to the environment, and we can fix the problem, at least for the next 10 years.

What was their response?

Wow. Well, of course, they got angry with me, and they hated me a little bit. But it’s true. If you go to the United Nations assembly, you can see a massive bureaucracy doing nothing. We need to think in a very different way; we need to change the United Nations itself.

What are the lessons of the Kyoto Protocol?

That we also need to think about new mechanisms even inside the diplomacy itself. Kyoto was a marvelous, amazing agreement in its time, but ultimately, it was a tremendous failure.

In the Kyoto Protocol, there are commitments from developed countries for some amount of tons of carbon. However, from a different angle, we on the negotiating team at the COP-16 climate change negotiations established unilateral, non- binding commitments from developing countries. These public commitments are, by far, larger than the commitments made in the protocols. I’m talking about twice the millions of tons of carbon emissions reduction commitment than the Kyoto Protocol. And we need developing countries to join the fight because they account for a larger proportion of carbon emissions every day.

We also need to be more creative and think of other mechanisms to tackle climate change. That could be carbon sequestration, for example, not only to figure out this technical mechanism to sequester carbon, but all these green projects, literally green projects, related to plantation, forestry, the REDD mechanism [the United Nations Collaborative Programme Reducing Emissions from Deforestation and Forest Degradation in Developing Countries].

It’s a key issue—why? Because, in my understanding, reduction of emissions in industry is more related to developed countries, but carbon sequestration is more related to developing countries. And the economic capabilities and the potential growth are in developing countries right now. So we can shift and focus on developing countries, and towards carbon emissions or sequestration of carbon, instead of or as well as carbon reduction.

When you think about what’s required to deal with climate change—what we know about the science, what we know about the need for speed, for scale—are you hopeful?

I know it is difficult, but I realize that today, the economic circumstances are the most important obstacle to a commitment for a lot of countries. However, that will change. Sooner or later, Europe is going to start to grow again. The United States, in one way or another, in a good way or a bad way, will fix its deficit. And in the future, we will be able to catch again the attention and the commitment of everybody.

Is Green Growth the way to do that?

I don’t want to create, even for myself, huge expectations about that. But the only way to preserve our hope is to insist on that, is to work on that on a daily basis.

You have been recognized as a UNEP Champion of the Earth and have earned all sorts of other accolades since your term as energy minister and then as president. What would you want your legacy on Green Growth, on sustainability, to be?

I have fought to create the mechanisms that make this tremendous effort we need to do viable. One mechanism is Green Growth itself. The other is to rescue diplomacy, to allow it to establish a serious commitment on a global level. I am trying to wake up the global conscience about the problem.

Of course, we need to work a lot, and today, we are far away from concrete action on a global level—at least [from] what is required. However, it is possible to act, at least in a very modest way, in your own space, your own country, your own government, your own policies.

Even on a personal level. One of my hobbies, for instance, is to plant trees. I really enjoy that. For a number of years, I have had a barbecue with my friends, [where] I invite them to plant trees—hundreds of trees, thousands of trees.

They work hard for their barbecue.

Yes! Actually, today, I am enjoying the shade of some of the trees.

This is a very personal, even emotional, issue for you. Where does the passion come from?

Let me tell you this story. When I was born, my father was 51 years old. He was almost my grandfather. In the ’70s, for the first time in my life, I listened to him talk about the environment, some kind of climate change. My father started to talk in the assembly of the party about the future. He was saying that the poles will melt one day, the levels of the seas will increase, there is some kind of acid rain that is causing a lot of damage, and so on. And even some of his best friends at that time started to say, well, what happened to Luis? He’s losing his mind, he is very old.

That was very early for a senior politician to be raising this issue.

Yes, it was the ’70s. I had never heard about it. Most of the people said my father was crazy. But I learned from him, in the sense that I learned you are able to start a change. Something will happen. Maybe you fail, but if you don’t start things, those things will never happen, ever. So, I started that.

He clearly had a big influence on you.

Sometimes, we never realize the size of our own influence. But we need to try. The surprising thing is there are more people waiting for the right thing, or the right measures, so you need to try.

We need to fix these problems. There is a lot of money in the world right now, in pension funds, sovereign wealth funds and so on; and, on the other hand, there are a lot of needs in terms of green projects. The same with infrastructure projects. The key issue is how to match that. We need to find the right instruments and the viable projects to do so.


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Interview: Felipe Calderón, former president, Mexico | Green Growth: How to manage a false dilemma | Accenture Outlook 
Economic growth and protecting the environment are not incompatible, insists Felipe Calderón, former president, Mexico. But the need to act is urgent and will require a concerted global effort if the world's economy is to adapt successfully to future climate change.
sustainability, Mexico, Felipe Calderón
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