 I'm very pleased to welcome you to this IIA ESB webinar. It is the second in the series, the 1920 ESB IIA lecture series entitled Rethink Energy. I'd like to thank the ESB for their sponsorship of this event. We're delighted to be joined today by Professor Ottmar Adenhofer, director and chief economist of the Potsdam Institute for Climate Impact Research, who's been generous enough to take time out of his schedule to talk to us today. He will speak to us for about 25, 30 minutes and then we'll go to a question and answer session with you, our audience. We'll be able to join this discussion using the Q&A function on Zoom. You can see that towards the bottom of your screens. Please feel free to send questions throughout the session as they occur to you, and we will come to them once Professor Adenhofer has finished his presentation. And I should remind you that today's presentation and the question and answer session are both on the record. We're also on Twitter. The handle there is at IIA and feel free to join the discussion. And by way of introduction, Professor Ottmar Adenhofer is director and chief economist of the Potsdam Institute for Climate Impact Research. He's also professor of the economics of climate change at the Tech University of Berlin and founding director of the Mercator Research Institute on Global Commons and Climate Change. He's also a member of the Irish Climate Change Advisory Council, so he knows us well. He's a leading expert on the economics of climate change. He recognizes regularly sought by the German government and the World Bank from 2008 to 2015. He served as co-chair of working group three of the Intergovernmental Panel on Climate Change and contributed importantly to the shaping of the fifth assessment report on climate change mitigation, which after all provided scientific basis for the Paris Agreement. In 2019, Professor Adenhofer was awarded the Umfeldt Reich, the most prestigious environmental prize in Germany. Before handing over to Professor Adenhofer, I'd like to invite Geraldine Heavey, who's executive director of enterprise services at the ESP to offer some brief remarks. Geraldine. Thank you and good morning everyone and indeed good afternoon for some of today's attendees. It's my great pleasure to welcome you on behalf of ESB to the second rethink lecture hosted by IIEA in association with ESB. We've both been collaborating for over decades now on various different lecture series, with the aim of bringing leading international policy, industrial, academic and political figures to Dublin to advance debate on critical energy policy issues. One of the unexpected benefits of COVID-19 has been the widespread move to digital channels, including these lectures, and our ability not only to invite international experts to address these lectures from the comfort of their own base, but to bring the discussion to a much wider audience both in Ireland and around the world. Of course we do miss the pre-lecture discussions over lunch, so hopefully in the not too distant future we will be able to combine the best of both. The subject of today's lecture is of particular relevance to the work we are doing in ESB, and our commitment to taking action and leadership in the transition to affordable, reliable and low carbon future. When ESB was established over 90 years ago, it was a vision to unlock Ireland's social and economic potential, and free people from the poverty and hardship that many faced at that time. ESB succeeded in that ambition and opened up new possibilities, helping Ireland to transform into a modern progressive society. With the challenges we face today as a society, and indeed globally, while they have changed dramatically, ESB's commitment to creating a brighter future for the customers and communities we serve remain as strong as ever. And with the technologies we have today, and those that will come and stream over the years ahead, we believe that electricity will be a transformative force in tackling climate change, just as it was during the last entry in helping Irish people to escape from poverty and hardship. The combination of clean electricity and widespread electrification of heating and transport has the potential to reduce carbon emissions from energy by over 60%. However, in making that transition to a low carbon energy system, it is critical that clean energy and emerging electric technologies do not become the preserve of the rich. If only the most well-off can afford to invest in technologies like microgeneration, electric cars or heat pumps, fast ways of the population will be left behind, and the potential of clean electricity to transform society will be undermined. COVID-19 and the associated challenges it brings has acted as a stark reminder to us of the vital role that electricity plays in people's lives, whether that's in hospitals, schools, farms, factories and people's homes, and the need to keep investing and innovating both as a way of kickstarting the economy and delivering secure affordable low carbon energy for the future. Across ESB, we have been trialling and implementing new technologies to reduce our own carbon emissions and enabling others to reduce theirs. Over the past year, we have significantly expanded our renewable portfolio through new investments in onshore and offshore wind, solar and biomass. Our networks, businesses, ESB networks and NIE networks to continue to invest in smarter, more resilient networks to enable more renewable generation to come on stream and to support the rapid growth predicted in EVs, heat pumps and microgeneration. Meanwhile, our retail business Electric Ireland continues to develop new products and services, including special tariffs for electric homes, microgeneration technologies and EV charging systems that will incentivize and help our customers to reduce their own carbon footprint. As we make a conscious transition to a low carbon energy system, society will increasingly rely on electricity generation as a source of clean, reliable and secure energy. The new risk landscape of which COVID-19 is the latest manifestation has highlighted the need for more resilient energy systems and for finances aimed at boosting economic sustainability and resilience. Our ESB strategy recognizes the tradeoffs and dilemmas that exist in serving the needs of multiple stakeholders and seeks to find solutions that will balance affordability, reliability and carbon reduction, particularly as we face into a period of economic uncertainty. Clearly, public finances, government policies and technological advances will all influence the choices we make. And I'm very much looking forward to hearing what Professor Edenhofer has to say to all of us today on the distribution of effects of climate change and energy inequality in the post-COVID world. So thank you and over to you, Professor Edenhofer. So thank you very much. Can you see my screen? No, unfortunately not. I tried again. Can you see it now? Yes. Wonderful. First of all, thank you very much. It is an enormous pleasure to be here and to discuss with you. The most recent developments in climate and energy policy. And here I would argue that we are in a quite historic, unique moment. Tomorrow with the La Fonda Line will announce the Green Deal. Last Friday, the Economic Minister in Germany has also announced a quite ambitious plan. And I thought it might be worthwhile to take a step back and to think a little bit more from a more general point of view, what should be and what will be the future direction of climate policy. I don't want to bore you with national issues, German issues, but Minister Altmaier on last Friday has announced that the German climate policy and energy policy should be transformed, seeing a paradigm shift. And this paradigm shift that he describes as the carbon prices. The market-based mechanism should play a much more prominent role in the transformation of our societies and of our economies and therefore I asked the question, is he the new Ludwig Erhard? Ludwig Erhard was, after the Second World War, a very famous German economic minister who promised that the economic policy will lead to prosperity for all. So this was at a national scale. Tomorrow, in the State of the Union speech with La Fonda Line will announce a Green Deal. And the document of the Green Deal has been leaked today and it has many important and very interesting aspects. But the most important thing is that the Commission will review, as they said, and propose to revise when necessary all relevant climate-related policy instruments. And this will comprise the emissions trading scheme and also the possible extension of the European emissions trading to new sectors. So here I would argue indeed that we will see at the European scale a paradigm shift. And this paradigm shift at the European level will also have a strong impact on our member states. But it's not the only level, the national level, the EU level, it's the third level, the international level, the international climate policy. The Conference of Part 26 has been postponed. And climate policy, after all, and in the end, is a global problem. We only can succeed globally, humankind together, otherwise we will fail to limit the increase of global mean temperature. So these are the three levels. Now, when I think about this policy changes, this paradigm shifts, it seems to me it is worthwhile to go back a little bit in history. And it is exactly 100 years ago that the very famous economist, and this is a household name for economists, and for non-economists. Here I would like to highlight that Arthur Cecil Pigou has published in this 100 years ago in his publication, The Economics of Welfare, the first time what we call today carbon pricing. We could say environmental taxes. And recent developments at the national, EU and international point now, and this is my argument in this lecture, to a historic opportunity for carbon pricing to become not just a minor component, but a leading principle for future climate policy. In the past 400 years, the following consensus has emerged. Whilst Pigouvian taxation is highly desirable from a theoretical point of view, it is politically, its political feasibility is essentially to zero. Even economists who argue that the carbon price might be the most efficient tool, have serious and raised serious doubts about the political feasibility. And what I will do is, in this lecture, I argue that this consensus is somewhat spurious, in that implementation Pigouvian prices or Pigouvian taxes is not as Ausländisch an endeavor as this consensus suggests. In particular, in the current situation, a day before the announcement of the Green Deal, it is worthwhile to think carefully about the full potential and the full power of carbon pricing, and with reference to Pigou to carbon taxation. Now let me highlight a little bit in what way I will use this term. I will use the term Pigouvian taxation in the following sense. With taxation, I refer to direct pricing so when a government imposes a direct price in contrast to indirect pricing via emissions trading. But when in an emissions trading scheme a price caller is introduced, I subsume it under the direct pricing. In what follows, I will defend two claims. I will argue that there are sound theoretical and practical reasons in particular for calling the political feasibility of Pigouvian taxation into question. At the same time, I will argue that there is a Pigouvian opportunity at three different levels at the national EU and an international level, and it is essential. This is my argument. It is essential that we will take this opportunity very seriously. Otherwise, I will argue the transformation process, which is needed, and which has been proposed will not materialize. Let me highlight why many people, also scientists and economists, believe that there are difficulties to implement Pigouvian prices. And when we see basically in a few minutes the more detailed plan of the EU Commission, you will see some skepticism remains. So there is first the uncertainty about the pricing trajectory, about the social costs of carbon. How should we price a ton of emissions? The second aspect is the distributional concern. Regressive distributional impacts on the poor households. So a carbon price, of course, impacts the poor households more than the rich households because the poor households spent more, the share of their expenditure on heat and then the electricity is much higher compared to the rich households. So then the fragmented responsibilities leads ministries to an excessive focus on sector-specific policies and technology policies. The commitment problem. So can we really trust when tomorrow the EU Commission announced a price to treasury that this trajectory is a quantity target, this will really something which investors can rely on. The lack of acceptance and carbon pricing and carbon markets are perceived by many as sometimes repugnant and in particular by some environmental groups and what does carbon pricing mean when only incomplete international cooperation is in place. So I will basically phrase this as a drama in 3x, the national policy, I will tell you a little bit the German case, even if you're not interested in German policies. So here, this case might offer some lessons and I will move on to the EU policy and then to the international climate policy and here we will focus on three aspects on coal capital and cooperation. Let me start with the national policy. In Germany over the last, I would even argue over the last 20 years we rely on our climate policy very much on law and order very much on regulatory measures. But recently we start to rethink our paradigm of climate policy and have introduced market-based measures and in particular carbon pricing systems. And last year we did this outside the emissions, the European emissions trading scheme in particular for transport, for heating and for buildings. And the next year in this slide is the plan which has been agreed on. From next year on we will see a carbon price outside the EVTS sector for building, for building and for heating and for transport, roughly about 25 euros per tonne CO2. Then we will have a national emissions trading scheme with a fixed price and in 2025. So then the fixed price period will end and we will unleash the national carbon prices. And here you can see this is probably in the blue line the growth rate of the carbon price which is needed that Germany can fulfill its European obligation. So we will see after 2025, after 2026, in this sector a significant increase. And it is quite remarkable that Minister Altmaier highlighted that this price increases will be adjusted according to the new quantity targets announced tomorrow by the EU Commission. It could be the case that the German plan will be almost disappear because the EU Commission, it is not clear, will announce probably to expand the current European emissions trading scheme to transport heating and buildings. But this is not decided yet and it will not be decided by tomorrow. So we will see this at the building of next year, but at least you can see Germany has implemented a national emissions trading scheme for transport, for heating and for buildings. And this is a quite important, I would say experiment and let's see where this experiment will lead us. The second aspect I mentioned is the regressive impact of carbon pricing on the poor households. And you can see this here you have the 20% of the poorest households and you have the 20% of the richest households. And if households are not compensated, of course, the poorest households will pay in the end the bill. The burden is much higher for the poorest households than for the rich households if there are no compensation mechanisms. We proposed, we means economists and academics, we proposed an equal per capita recycling. And if we would recycle the revenues generated by carbon pricing in an equal per capita manner, this will lead to a significant reduction of the burden for the poorest households. It will also have a positive impact on the middle class households and the rich households will pay more. In the end, the politicians haven't decided upon an equal per capita recycling mechanisms. Instead, they have reduced the electricity prices and have increased the social transfer. At least the schemes leads to a situation where the poorest households have now to be a lower burden, but the middle class in the end will pay the bill. There is one unresolved issue which is important for Ireland, but also important for Germany. And this is horizontal equity because in each of the income quintiles you have a huge, a huge divergence and a huge variety and a huge variance. And this we call horizontal equity concerns in particular the divide between the urban and the rural area. And here we are working now what kind of compensation schemes are needed for that. The problem with this German idea and this will lead me immediately to the European perspective is if you have a European emissions trading scheme for electricity and for industry. And you have another one for transport for heating and for buildings. So the problem is then you have huge differences in carbon pricing across the sectors. And with this differences across the sectors, there's a huge risk of large scale efficiency losses. But this could also create some social and political problems when in one sector you have a very high carbon price like in the transport sector and a quite low one. So there are a lot of arbitrage opportunities and there might be this observation might kick off then in the future a debate how to harmonize the carbon prices across the sectors. Now, what this experiment shows is that we can solve some of the problems, even if there's uncertainty how to fix the carbon price. We can send the quantity targets, and we can combine emissions trainings with direct begubian pricing in a reasonable way. Distribution concerns are an important issue, but per capita recycling or the reduction of other regressive energy taxes at least provide a solution or at least can help to manage the transition. Repugnant markets. Some people believe that markets are repugnant. We should not deal with environmental issues with market forces. But in some of our experiments, this shows when an emissions-based scheme is designed properly, in particular when a price flow is introduced, people voluntary increase their abatement level. Inefficient sector-specific policies. Yes, this is still a problem in Germany. We have to deal with this fragmented markets. And this is something which will be cured or will be made worse by the Green Deal and let me explain a little bit now what we can expect by tomorrow. So the Green Deal could become a regulatory tsunami, a regulatory tidal wave. The good news is everything is up to reform. The proposals for the vision of the European emissions-training scheme and also the non-emissions-training sector. The bad news is everything is up to reform. It will be now a period of substantial regulatory uncertainty and this includes in particular energy and industrial policy. And energy and industrial policy has strong interaction with the climate policy. Now let me explain what's ahead of us. And you can see here in this simple graph the following. Tomorrow the EU Commission will very likely announce that the emission targets will be tightened from 50 to 55%. And it is now very open to what extent the agricultural sector and the forest sector will be included. But the most important thing is Germany has to increase then the emission reduction target in the non-ETS sector from 38% to 50%. And the same will be true not in this order of magnitude for other EU member states. And we need basically to evaluate for example what this means for Ireland. So when this will be done so you can see that in the non-ETS sector we will have a strong reduction of emissions. And the ETS sector industry and energy basically is untouched about this or relatively untouched. Then we will see basically a price let's say between 37 and 43 euros per ton CO2. This is a significant price change but nevertheless we will see a huge difference between EU ETS and non-ETS. And this worries in particular many people in the transport sector. There is another option. The other option will be that all additional emission reductions will be absorbed by the ETS. And then this will lead to an increase, to an embrace increase up to 52 euros per ton CO2 to 72 euros per ton CO2. But this would change the whole game in Europe. What will happen? What will happen is due to this strong price increase we will see a rapid phase out of coal very very soon. And in particular in Germany last year we had agreed on a large package of a coal commission for the phase out of coal by 2038. So the coal phase out will become, we will phase out coal much earlier than that. I would say with this price within the next decade. But then again the non-ETS sector has to do not too much, I wouldn't say nothing, but a little bit. And then you again can observe a huge price differential between ETS and non-ETS sector. And this will lead to a debate how can we harmonize both systems. So when you read the document of the EU commission, so there is some ambiguity and a lot of uncertainty how to deal with this issue. Sometimes the EU has the option to do nothing. The other option would be to come up with a comprehensive emission trading scheme comprising all the sectors or just to impose technology standard for transport. From an economic point of view it is quite clear that we need for such a large scale transformation, carbon neutrality by 2050. We definitely need a unified system and a carbon price, which has really the potential to transform our economies. So what you can see here is this is the share of emissions from energy use. And you see also the effective CO2 price and the range is huge in Europe, between zero euros per tonne CO2 up to 350 euros per tonne CO2. And this enormous efficiency cannot survive when we transform our economies. So this is basically describing the situation from an energy and the climate angle, so to say. However, there's another dimension. And this dimension will shape now in the future the design of our systems. There was a conclusion of the European Council and the conclusion is the Union will over the coming years work toward reforming the own resources system and introduce new own resources. Which basically means the EU Commission, the European Union wants to have an own tech space. These are steps to a fiscal union. And this is quite important. Now the EU Commission and the European Council have identified three potential sources. The one is the plastic tax and here I have subsumed digital tax and the financial transaction tax tax, the carbon border adjustment mechanism and additional revenues from auctioning permits within the European emissions trading scheme. Now, if you do the calculation right, the plastic tax is something which is a very national and local environmental problem. Digital taxes and financial transaction taxes might not have such a revenue potential. Carbon border adjustment mechanisms are very complicated to implement. And in the discussion we can elaborate a little bit more why this border adjustment mechanism has not a huge revenue potential, but the additional, the potential additional revenues caused by the auctioning of permits is huge. And I will tell you in a minute how large it is. But here I would like to emphasize and explain you why this fiscal federalism, this changing fiscal federalism in the at the European level will shape the design of future climate policy. Now we have to stay to school and again I apologize that I have a German example because it's much more easier for me to blame my own country than to blame another country. So therefore we have now the status quo and what is the status quo. So Germany, for example, receives the full revenues from auctioning and then a price floor would be introduced or the sectors would be expanded. So there's a national financial interest for Germany to do this, because then the revenues would be higher and we need more revenues because of our quite expensive climate policy. So in the future, in the possible future, when the revenues are kept, and Germany is only allowed to receive a maximum amount from auctioning. So then a price floor and sector expansion does not increase the revenues. The price floor and sector expansion would be not just in the interest of Germany. It would be also in the interest of the European Union in particular for an efficient climate and energy policy. But when the maximum amount from auctioning is kept. So then the national interest for a price floor might be reduced significantly. So this will shape the options so the preferred option my preferred option and I would like to defend this that we need one consistent European emissions trading scheme across all the sectors. This could create now a conflict between you and the member states because the you will now demand revenues as an own resource. There's another option to implement an ETS sector in the harmonize Texas but again, they might also then to to create strong incentives for this. And now a second European ETS and national ETS might be then a preferred option from an efficiency point of view, it is a less preferred option, but politically, it is a real, a real possibility. Because the member states might then be in a much better position to keep the revenues within the national borders. So what's the amount, the amount is huge it's over until 2050. It's roughly 800 billion euros. And here see basically you could reduce the revenues for the member states. And this is the proposal made by a very interesting paper for Clemens first and Pisani three financing the you so then member states will reduce the revenues. And then basically they repay some parts of the recovery fund, and then still there's a net revenue for the you. And this is a quite significant thing, but this would require 80% allowances would be auctioned. And after transparent the agriculture sector will be covered in a significant increase in the carbon price. Here there is an important aspect and this aspect is now discussed heavily within the UN this are the negative emissions. What are negative emissions and here I can be only very brief. The negative emission technologies are required for carbon neutrality. After 2050 net negative emissions are necessary to limit the global mean temperature well below two degree. So otherwise, we would not be able to achieve that aspirational goal. The emission by 2050 investments in negative emission technologies even before 2050. But this net negative emissions will lower the price in the UTS, of course, because then the traditional abatement technologies are less competitive and dependent on the marginal abatement costs of net emission technologies. So then the price will be reduced. And after 2050 only negative emission technologies can enter the market because we are then at the at the zero at the carbon neutrality at the zero net emissions. And then the Commission has to pay has to pay the suppliers of this technologies via options. And therefore, after 2050 at the European level, the Beguvian tax has to become a Beguvian subsidy for negative emission technologies. And this subsidy requires another source of revenue. Now I would like to speed up a little bit and at an international scale I can be I can be very short and then I will conclude. Now be there that we are a we are now in a very peculiar situation. We are at risk turning a forward looking reform agenda into a status quo preserving mass instead of a uniform price unleashing a regulatory tidal wave and an excessive focus and technology standards would lead us to such a situation. The conflict over revenue generation between the Commission and the Member States prevent the implementation of a consistent and fully integrated ETS and under investment in negative emission technologies because of options are probably underestimated and therefore the you Commission has less revenues available. Now let me say a few words and on the international climate policy and then I can be, I can I can conclude and I will skip here a few slides. At an international scale almost 50% of the emissions have a carbon price of zero on only 10% are priced at the level of two degree. This comes for a huge price for the for the global community. And this is basically quite dramatic because in this post COVID situation, we observe that not only China and India are investing again in coal fire plants, but also the smaller Asian countries like Vietnam, Indonesia, and so on. So what does this mean for our aspirational goal. I told you that basically the Paris agreement decided to limit the increase of global mean temperature around two degrees Celsius. So this can be translated and calculated into a global carbon budget which is roughly 1000 gigaton CO2. In the infrastructure investments, if we use them over the economic lifetime without coal, we already would absorb roughly 500 gigaton CO2. So basically operating the under construction and the plan coal fire plants will operate over the there over the economic lifetime, we will come up basically we will eat up the whole global carbon budget which is consistent with a 1.5 degree Celsius. What we see now is the shelf coal fire plants in many, many countries, in particular in China and India will come back into the pipeline. So this is the price we are paying because we have not reasonable internationally carbon pricing schemes. If you look at this map. It shows very clearly that here the pink countries are very much coal dependent countries. And what we have to do in the next decade, we have to negotiate with this countries at an international level because otherwise when all these countries will continue with their investments in coal. The Paris agreement can no longer the Paris goals and the Paris agreement will fail. So this is a quite traumatic situation. What can we do about this. I think we should start to negotiate with the other countries on carbon pricing. We should help them with international transfers and and credits paid below the market interest rate to change and to transform their economies. So this is now I'm at the end and I would like to conclude here. I have convinced you that there is now a bigger opportunity within the you because of its ambitious targets and the regulatory efforts without carbon pricing, the transformation process cannot be implemented is not feasible. However, it is crucial to avoid turning a forward looking reform package a forward looking reform agenda into a status goal preserving regulatory mess. The comprehensive the Google and price reform at all levels, albeit institutionally very demanding is a worthwhile endeavor. A dialogue between policymakers and expert is required. Policymaker must shy away from a thorough examination of their policy instruments whereas we experts must pay a careful attention to the limits of political feasibility. Thank you very much indeed, Professor Aidenhofer, for your most timely address, given being on the on the eve of the State of the Union tomorrow. We have, we have quite a few questions in and to some extent you you addressed in your letter remarks, some parts of these questions but let me put a first question to you, please. If, as expected, Commission President van de Lijen announces a 55% target for 2030 tomorrow, Ireland, as with every other member state will need to redraft its national energy and climate plan and increase its non ETS emission reduction targets. How is this likely to impact cooperation between Member States and the European Commission. Yeah, that's a very good question. I think that's that's why delicate. I think that the key to that cooperation is indeed on the one hand you will see increasing carbon prices. This could create the friction in particular with the Eastern European countries like in Poland and it's quite interesting that Poland is now starting also to talk about the cold phase out that this was completely unthinkable, even nine months ago. And the cooperation is, it's all about this, this, this, this revenue issue. So, the you Commission has to find a way to design this revenue raising and this revenue recycling in a way which is, which is compatible with the, with the preferences of the Member States. So the paper I have, I have quoted here in my presentation, the paper basically argues that the Member States should should reduce step by step. Their share on on on the auction revenues. Instead, the GNI contributions can be reduced. The European debt will be paid back and then there is something left, but I can anticipate some some some significant some significant conflicts here. And this is something which which needs a very, very talented statesman graph chip so to say to overcome this issue as a scientist I have not much to say but but I would say cooperation depends on sort of the distribution of concerns. Yeah, yeah. We've two slightly raised questions from colleagues here in the IIE a Durham Moriarty asks, what have been the implications of the recent US return to cold strategy during the Trump administration on global cooperation. What is this threaten cooperation among EU Member States, especially in the cold intensive regions of the Eastern Member States. So let me highlight that in the United States we do not observe a renaissance of coal and the reason is, is very simple that the gas price due to fracking it's much lower than the cold price. So despite of Donald Trump's aspiration we, we don't see a renaissance of coal in the United States. Even even Donald Trump cannot compete with the power of the relative prices so that's, that's, that's an interesting message. So what about the Eastern European countries. So my reading is that the most important. The most important country here is Poland because Poland very much relies on coal. I think so Poland by and large is is is on on page. I don't see here a huge problem to bring Poland on board. There remains an important problem in Southeast Asia, China, India, but those in the smaller countries like Vietnam, Indonesia, Turkey, Japan again. So that's, that's a problem. And here I think when we think how to, to, to, to, how to re, we shape our thinking at the national scale. We should not assume that we have to cooperate over the next years with all the countries around the globe with all the 194 states and governments. It is very important and significant to, to talk to the Asian countries and I would say in the mid term, the coal issue is the most important thing at an international scale. Thank you. You've partly addressed the second part of that question I referred to Andrew Gilmore was saying, how can we negotiate with countries outside the EU, when there is difficulty in convincing some EU member states to commit to these targets. That's, you're saying about Poland being the key, the key player here. But, but I would say, we, we, we convinced them so it's by and large so of course there's some friction but it's a remarkable achievement now basically that all the member states are roughly on board. How can we convince countries outside Europe here I would highlight one one aspect and which I skip this slide. We think that we are operating in a, in a, in a low interest rate environment. And that's true. But this is not true for for countries like Bangladesh so when Bangladesh wants to finance something with with a government bond so the government has to pay 728% per hour. What we could do is we could offer countries like Bangladesh, a lower, a lower credit below the market interest rate. And, and, and, and in, in exchange of this offer, we could basically then say to Bangladesh, so you should introduce a reliable carbon pricing scheme. And you should invest more in green investments in order to create some economic incentives and this would be a disaster for the European funds, because in Europe, the interest rates are very low the interest rates in Asia are much higher. In that sense, it wouldn't, it wouldn't. So we, we have a very low interest rate in Europe, and we would earn high interest rate in Asia, which, which would make the whole thing at least in the midterm, even economically feasible. In that sense, creating a conditional transfer scheme negotiating with these countries could be at least a worthwhile, an option which is worthwhile to to assess and to bring it on the table during the negotiations. Thank you. And could I could I change focus for a moment because we've been looking at the regulatory impacts and the government and and carbon pricing and so on. But today's British Guardian newspaper reports that Facebook and Google have independent or separately committed to carbon neutrality in their in their businesses. So joining people like Apple and Microsoft and so on. And to what extent has the world of business got the message that in our political system has been maybe more struggling with. And that's a very interesting, very interesting question. So I would say business, the investors community, not to forget the sample banks. They are now white, quite keen to ask the question how can we take into account the climate risk in a much more proper way. I would say the business community is prepared and but but even the business community looks to the to the to the politicians and ask for an increasing carbon price when so last last week or the two weeks ago. The CEO of Volkswagen announced that he would be in favor of a 100 euros ton, your tone CO2 carbon price in Germany. So this is significant right and and I think the business community can push the, the, the, the politicians, the political community to come up with quite ambitious plans. And I, my main, my main argument is with a lot from the lion. There's no doubt will will announce a very ambitious target, but we need also dedicated and and cleverly smart design policy instruments that's that's important. The question just in might be opposite to to that point, Professor. I'm told that last Friday MEPs in the Environment Committee agreed to establish an independent EU climate change council made up of 15 experts who will propose further adjustments to the blocks emission reduction targets in line with the latest science. Do you see this as a sufficient council to ensure dialogue between policy makers and experts, such as you have advocated. Yeah, it's, it would be definitely a good starting point when when such a council is is not a lane duck so to say and you know that every politicians know how to design a council, which is, which is almost harmless. And the most, the most important thing is, is this council should have the mandate, not just to talk about the targets, but to evaluate the instruments, which have been implemented, and also the costs. This is very crucial. So it's not just to give advice but also to monitor and and and and to to to to analyze this very very carefully in an ex ante manner where they made proposal what policy what the policy makers should do in the future, but also even more important is the exposed evaluation of policy instruments. So what we what we do very often is we are have endless discussions about the pros and cons of a carbon price or technology standard, but very often what we are missing is a careful evaluation of what what worked and what did not work. And I think that's that that that's that that's very important. Why is this important. Why is this important. More than ever, it is important because carbon neutrality by 2050 is such an enormous transformation of a whole economy that we cannot do this with the traditional policy instruments which have been successful in the past, which is regulatory because technology standard law and order. Thank you. There's, there's a question from another I a member, which addresses a particular Irish dimension to this issue. In Ireland, agriculture accounts for roughly 30% of emissions, and there is a general rural urban divide when it comes to the need to urgently address the challenge. How can we ensure that different sectors are not pitted against each other when we need such transformational change. I recall that you talked about the horizontal diverges in in reducing the the regressive aspects of carbon dioxide, carbon carbon taxation. And so what sort of measures to mitigate these horizontal tensions may may exist please. Yeah, that that's an enormously important question and it is a widely under research questions in also my economists. So what what, as a general rule, I would say that in particular transport is too cheap in in in the large cities and it is too expensive in the countryside. Right. So we need we need a sort of a differentiated carbon prices and this can be done either we differentiate the carbon prices directly between the rural areas and the urban areas, or we do it in a in another way. So if basically people who who who have a hard time at the countryside, a specific rebates, so to say that that that would be another option. And I think that's along these lines. We have to think carefully about this, but in the end, when this is not feasible so I would even I would even go for differentiated carbon prices but my preferred option would be that to differentiate the recycling mechanisms, according to the rural urban divide. The political feasibility you started off with this, the political feasibility of carbon tax has been very, very close to to zero. And we've we've seen that things are changing radically in this area, but I fear that the time is starting to is is catching up with us, Professor so I think it's, it's timely for me to congratulate you on the extraordinary your remarks, and the challenges that you have put before us. And I think certainly, as we as we look at the state of the Union address by the new president tomorrow, we will look at it with with new insights. We, we are very grateful to you indeed for sharing your your ideas and your priorities with us. I should also say that we are indebted to our partner with the ESP for making this talk possible, and to thank you and our audience and wish you a good afternoon. Thank you very much, Professor. Thank you very much. It was an enormous honor to participate in this seminar. Thanks a lot. Thank you.