What Hank Paulson and Denmark’s Prime Minister Have in Common

By Dorinda Elliott

Judith Rodin of the Rockefeller Foundation, Institute Chairman Hank Paulson and Prime Minister of Denmark Helle Thorning-Schmidt speak at the Clinton Global Initiative

The Clinton Global Initiative organizers could hardly have chosen a better interlocutor for an onstage conversation about climate change with Paulson Institute Chairman Hank Paulson yesterday. Danish Prime Minister Helle Thorning-Schmidt practically said Paulson’s lines for him: “There is no reason to think that confronting climate change is not also good for the economy,” the prime minister said at the annual powerhouse confab of leaders, CEOs and NGOs. Thorning-Schmidt went on to explain how Denmark has decoupled economic growth and CO2 emissions, saying that once the government set a stable political framework and policies focused on the long term, “companies started producing green solutions.?”

“I’m just delighted to be on this panel with a leader who understands business so well,” Paulson responded. Referring to the Risky Business report Paulson co-sponsored on the cost of climate change in America, he stressed the danger to businesses of doing nothing to plan for environmental change.”I am looking at this through the lens of risk. Climate change is not only a risk to the environment, but it is the single biggest risk that exists to the economy today,” Paulson said. He expressed frustration with business people who argue that investing in climate change adaptation and mitigation is an unnecessary luxury. “Short-term is the enemy out there…The only way to build prosperity is by taking a long-term approach.”

Thanks to a carbon tax and incentives for green businesses, Denmark has emerged as a world leader in renewable energy. “What [Denmark’s] Prime Minister explained is magic; unleash the market state and a wave of innovation and bring down the cost of alternative energies and change consumer behavior.” The United States should take a similar approach, he said. “We need a national policy to unleash innovation and…to change behavior,” he said, “and the best way to do that is put a price on carbon.”

Could the Danes be models for future US-China cooperation? Thorning-Schmidt recently visited China to help the Chinese roll out new renewables technologies. To solve climate change, it’s “critical” that China and the United States, as the two largest emitters of carbon, show leadership, Paulson said, adding that there is lots of opportunity for collaboration. “No one innovates better than we do,” he said, “and no one can roll out new technologies quicker than the Chinese.” The Paulson Institute recently launched a Climate Change and Air Quality Program, which is working to help China tackle pollution. China has announced a “war on pollution,” in part because of domestic political pressure. “What’s the point of GDP growth if people are dying from dirty water and dirty air? The Chinese are demanding action,” Paulson said, “and the government is focused on getting things done.”