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What Does the New OECD Chief Mean for Climate Action? - Selin Kumbaracı

On Friday, March 12th, the Australian candidate for OECD Secretary-General, Mathias Cormann, was selected for the role, beating the Swedish candidate and former EU Trade Commissioner, Cecilia Malmström.

The choice between the two, while controversial in other aspects as well, has especially drawn attention due to how Cormann’s record on climate action is not the most reassuring.

The OECD can be characterized as a sort of think tank—informing, influencing, and setting standards—when it comes to developing policies on complex international issues. While one of the organization’s key areas of focus is tax policy, particularly the hotly debated issue of the digital tax, climate change is also a major area of concern for the bloc’s members.

As such, it is particularly Cormann’s record as Australian finance minister, spanning from 2013 to 2020, that has drawn the most attention in this area. The Abbott government, which Cormann was a part of, struck down Australia’s carbon pricing scheme and did not take effective measures in reducing emissions, such as the setting of a targeted net-zero emissions date.

It is furthermore argued that statements Cormann has made himself, not just the responsibility he can be seen as bearing as a member of the Abbott government, also shows his not being fit for the position of OECD chief, especially at a time when a large number of the OECD’s member countries are moving towards carbon neutrality.

Indeed, Cormann expressed his support for the repeal of the law regarding Australia’s carbon pricing by saying that the Australian emissions trading scheme was, “an act of economic self-harm which does nothing to help reduce global emissions,” in addition to labeling carbon pricing as a, “very expensive hoax.” No other regulatory framework has been put into place, though, in order to act as a replacement for the carbon price.

While Cormann has stated that he would, “work with member countries and partner organizations to deploy every policy and analytical capability available through the OECD to help economies around the world achieve global net-zero emissions by 2050,” if selected for the position, his past positions raise some questions regarding his current stance.

Moreover, the selection of an Australian candidate, broadly speaking, is somewhat controversial due to how the OECD has directed criticism toward Australia as a result of its insufficient action when it comes to climate change.

Additionally, given the way in which European countries—which mostly have ambitious climate goals—constitute a significant part of the OECD members, Australia getting this important role has also been questioned.

The opposition does not come from just one source. A coalition of different groups and individuals had written an open letter to the OECD, detailing the shortcomings of Cormann, in terms of his ability, or lack thereof, to act as an effective champion of ambitious climate policy.

A statement he had made regarding climate action as Finance Minister was also included in the letter as a point of objection. The specific example was how, “in May 2017 Mr. Cormann described commercial banks placing lending restrictions on coal as ‘very, very disappointing,” to showcase an instance when Cormann also expressed opposition toward climate action by other actors, not just the government.

This letter, highlighting his unsuitability for the position, was signed by 29 experts and activist groups, ranging from the heads of Greenpeace International to the Dean of the Fletcher School at Tufts University.

There is also opposition from more domestically based sources as well, such as the leader of the Australian Greens, Adam Bandt, who had written a letter to the ambassadors of those nations in the OECD that had a vote on who would take on the role of Secretary-General. Bandt, among other things, has criticized Cormann for his role in the Morrison government, where there was a push for a “gas-led recovery.”

As highlighted by British Shadow Secretary of State for International Trade, Emily Thornberry, the significance of the OECD related both to its work in supporting less developed countries in taking the necessary climate mitigation and adaptation measures as well as supplying the economic expertise to set up “effective carbon markets and green investment banks.”

As such, Cormann’s past positions on issues such as carbon pricing, emissions trading, and investment in fossil fuels become more of a concern when taken in this light.

In the end, however, regardless of the different groups, experts, and politicians that have expressed their opposition to Cormann’s selection, he nonetheless has been chosen to head the OECD.

Thus, in terms of what to expect from the OECD in the next five years of Cormann’s time as Secretary-General can best be summed up in his words, where he has seen the role of the organization as assisting in identifying, "market-based (...) solutions which maximize reduction outcomes in a way that preserves energy affordability and is economically responsible."


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