Limiting global warming to 2°C impossible without honest & bold public policy: President Tharman

On Jan. 21, 2025 (Singapore time), President Tharman Shanmugaratnam spoke at the 2025 World Economic Forum in Davos, in a session titled “Aligning the Three Nature Markets”.

The three nature markets refer to a system of credits that aims to help manage the use of three groups of natural assets, carbon, water, and biodiversity.

President Tharman warned that without bold public policy, limiting the global warming of the planet to 2°C or less may not be possible.

Stapling on credits

President Tharman discussed finding alternative methodologies to tackle existing problems, noting that in many cases, the problems and solutions were already known.

But the fundamental problem was finding financing, and also political will, to implement these solutions.

One of President Tharman’s suggestions was to graft existing systems of credits together, with carbon credits forming the framework for the “stapling on” of water credits and biodiversity credits.

The carbon credit market already has an established infrastructure, although President Tharman acknowledged integrity and greenwashing issues.

Those issues were in the process of being ironed out, with organisations such as the Integrity Council for Voluntary Carbon Markets working to improve the integrity and trust in carbon credits markets.

President Tharman acknowledged that to create a whole ecosystem for water, biodiversity, and carbon credits might be possible in theory, but bringing it about would exhaust the private sector, and the negotiators it would need.

Common currency

President Tharman suggested a simpler solution that took advantage of the progress made in establishing carbon credit markets.

As the carbon credit market is more developed, it would be better to strengthen that system, and then "staple on" water and biodiversity credits.

Water, he said, was similar enough to carbon, and in some ways simpler still, as it was an easily understood resource.

With existing technology, it is possible to find water in the ground, track its use, its level of pollution, conservation, and waste.

Water is much closer to carbon than biodiversity is to either, especially when it comes to the practical task of finding ways to price it, and to think about the full social cost of mismanaging water.

Difficult to design biodiversity credit market

Biodiversity, and thus any credit system used to manage it, was a “more beguiling problem”.

This was because there were not yet precise, quantitative ways of assessing biodiversity benefits in a way that could be compared across different projects , regions and geographies.

A biodiversity credit market would require more rigour, and examples of nascent biodiversity credit initiatives relied on qualitative assessment because quantitative assessment was not yet available.

"In other words, there’s no common currency," President Tharman said.

He suggested that since the carbon credit markets were the most developed, rather than creating a new, all-inclusive framework for carbon, biodiversity, and water, it was more effective to staple on water and biodiversity credits to the carbon credit market.

A clear moral and political tone

The panel, which included two senior leaders of Non-Governmental Organisations, as well as an industrial financier, acknowledged the potential of credit markets, but put forth other solutions they felt were more effective, such as revamping taxation.

President Tharman acknowledged their concerns but said that the discussion needed to start with an understanding that the world was “well behind the curve on every front”.

The world is behind on government action on carbon pricing, on mandates, and even on setting “a clear, moral and political tone that had to be there in order to drive climate action”.

Honest and bold public policy

President Tharman explained just how much being this far behind had cost the world.

The hope of limiting global warming to 1.5°C is "already gone".

“We’re not going to keep it below two degrees without much more honest and bold public policy," he said.

The world is not comparing ideal solutions to imperfect solutions, as all potential solutions are imperfect in some way.

President Tharman acknowledged that not all implementations of credit systems would be properly managed.

Where systems are poorly implemented, regulation is lax, or bad actors allowed to operate freely, such problems needed tackling.

But it is still necessary to “keep pushing”, to mobilise public opinion, especially that of the youths, but also recognise that the “private sector has to move”.

In closing, President Tharman said:

"So let's improve how we do things, get independent civil society more engaged, and find ways in which the scientists and economists can make the case persuasively, particularly for ordinary people, and not make it so easy for politicians to get off the hook."

Top image via World Economic Forum