TRANSCRIPT: How political unrest across the West will impact the world: A conversation with UN's Mark Carney
Ian Bremmer:
Hello and welcome to the GZERO World Podcast. This is where you can find extended interviews of my conversations on public television. I'm Ian Bremmer, and today we are taking a hard look at three of America's closest allies. France, Britain, and our nice big neighbor to the north. Yes, I'm talking aboot you, Canada. They're all on the verge of sweeping political change. When you put together these snapshots of political turmoil and then you toss in the United States for good measure, you get a broader story about a West in disarray. How do these political transformations impact our ability to deal with some of the world's biggest challenges like war in Europe and the Middle East, the AI revolution, and climate change?
My guest today, one of Canada's most interesting men, with apologies to Jim Carrey, Mark Carney. He's on this short list to become the country's next prime minister. He holds the unique distinction of having led the central banks in both Canada and England. He's also the United Nations special Envoy for Climate Action and Finance, and he has a lot to say about this moment in politics and how it could impact the future of the planet. The two of us recently caught up in Toronto. Here's our conversation.
Mark Carney, it's really good to see you.
Mark Carney:
It's great to be here, Ian.
Ian Bremmer:
Lots to talk about to you today, but I think of you as a climate guy. And you're wearing an Oiler's pin, which confuses me, it is dissonance. That's all I'm saying. Are you going to fossil fuels now?
Mark Carney:
A couple of things, I grew up in oil country. I was born in Northwest Territories, but my formative years were in Edmonton where the Oilers are headquartered. And what I saw over those years, over those decades is we turned, we Albertans turned a resource that was lying in the ground, needed huge engineering in order to turn it into the oilsands which almost 5 million barrels a day go to the United States. And it's that sort of engineering prowess, that innovation, all that expertise, capital, capital from the private sector, also from the public sector. We need all of that in order to do the energy transition, and I think Alberta is going to play a huge role in it. Look, the Oilers had the toughest start in the league this year and they turned it around. We've got the greatest player in the world, we've got a fantastic coach. We've got depth. There you go.
Ian Bremmer:
Okay. We'll get to climate. But let's start with Europe because you and I know each other well from your UK central banking days.
Mark Carney:
Oh, yes. A quieter time.
Ian Bremmer:
Yes, and Brexit was not easy to manage. A lot of people consider it one of the biggest own goals. Do you now see Macron, Emmanuel Macron, after getting absolutely thumped, his party historically so in the European parliamentary elections, immediately calls a snap election for this parliament. Very dangerous thing to do. Is that on par with what Cameron polled by saying, I want to do a Brexit vote?
Mark Carney:
Well, I think first you have parliamentary elections and you have parliament for a period of time, and then you have other elections. That's different from when you have a referendum. In a referendum and a decision is taken. And you see, for example, in the UK election right now basically Brexit is not being discussed because the decision was taken and it's viewed as irrevocable. We'll see over the fullness of time. I think what President Macron did, and you'd have a view on this, is he wants to know what the French people want for their government. As we all know that sometimes in voting for European elections, you vote for a variety of things. It can be a protest vote, it can be specific things at the European level, it can be directional, whatever. He'll get a bigger turnout, he'll get a very clear mandate for those who come into parliament, and then he will work with whatever the French people deliver.
Ian Bremmer:
But it is possible, of course, that the French people, and yes it's a parliamentary vote, it's different from Europe, but I mean if they return Le Pen's party with a majority, they become prime minister in the French government. I mean, that's not just a France issue that's an EU issue.
Mark Carney:
Well, France is an important part of Europe, but France is not Europe. And the system has an ability to bring in different perspectives. Look, I think in the end what the president wants to do, and he's clear about this, is to hear what the French people want. And he has proven time and time again. I'm an admirer of his, and he's proven time and time again an ability to work with a wide range of partners. So we'll see what kind of partner he gets in the election.
Ian Bremmer:
So I heard you also say, and you just teased it, but you said, look Brexit is not being discussed right now in the UK election. It's not a part of it. So we'll see, in the fullness of time. Labour's expected to win in a big way coming up and certainly no surprise there. But assuming that that occurs, do you think that there are bits of Brexit that will be re-calibrated in terms of the EU relationship?
Mark Carney:
It's not clear. There are a wide range of aspects of the UK-European relationship, which don't work. There's massive red tape, for example, in agricultural products, massive red tape and delays at the border, the inner workings of a very interconnected financial system, for example. There's just inefficiencies. I'll give you another example. To go to climate, the ETS, which is the carbon market, it used to be one big liquid carbon market. Now you have two markets. The UK market's smaller, it's more volatile. There's more uncertainty about investment. It doesn't really make sense. So there's a range of things that could be made better if the UK government and the European government wanted to work together, and it's all operating in a G-Zero world. You saw this coming, but this is now a reality. And the question is looking out in this world, who are the more like-minded partners? One of the assumptions or the assertions underpinning Brexit was that there was going to be an old open global liberal economic order where the UK could boldly go forth and strike trade deals with China and other emerging economies. They said, “Well, that's not the geopolitics today.”
Ian Bremmer:
So it's not that the Europeans don't care about climate anymore, but security and migration have become much more urgent issues and the Greens have underperformed in Europe as a consequence of this. What are the practical implications we are likely to see? Let's start with Europe for being able to continue to advance the transition energy agenda.
Mark Carney:
Yeah. So I think, look, it's significant, the result. That's part of the reason why we have elections, but I think we also need to put it in broader context and zoom out from individual countries, France particularly, look at Europe as a whole. For example, if you look at the next president of the European Commission, I think it's fair to say that well, the European People's Party largest party President von der Leyen, she will now need support from the Greens in order to get over the hurdles. So that provides some balance to the overall balance of climate policy. That's first thing. Second thing is we're operating in a world of heightened importance of security, but also of national competitiveness. We will soon see the report from Mario Draghi on European competitiveness, and to paraphrase what he said is the world's change radically. There are some regions that are manipulating the system for their advantage, and there's others, i.e China, that are trying to make us permanently dependent on them.
We, Europe, need to recognize that and build out industries, and he starts with industries in and around climate, clean energy as where European strengths are. So it becomes an economic national security and European competitiveness issue, and that will help drive much of it. Now to draw to specifics what may be on the table, I think there'll be questions about the ban on internal combustion engines, the moratorium after 2035, the exact timing of that. There is unlikely to be significant additional money at the European level for climate, those solidarity funds, which have been quite important, for example, to Italy, but it probably reinforces on trade policy, carbon border adjustment mechanisms and that whole shift. In fact, I think this will accelerate the shift in trade policy. So that embodied carbon, to use the phrase of John Podesta, you see with the US headed in this direction as well, that that becomes one of the key elements of market access.
Ian Bremmer:
Move to the United States. And on the one hand, I mean Biden has been a president that has promoted a climate agenda and is a big piece of the Inflation Reduction Act. At the same time, the US today is the largest producer of fossil fuels in the world, and we just saw a big announcement. A big piece of the $18 billion tariff against China is 100% tariff on Chinese electric vehicles. You look at all of this, and how do you feel about the role the world's largest economy is playing in an energy transition?
Mark Carney:
Well, I think you're optimizing or working towards several objectives here.
Ian Bremmer:
That are not necessarily completely overlapping.
Mark Carney:
But they can be aligned. We are going to be using, collective we are going to be using fossil fuels for the next quarter-century and beyond. The question is where are those going to come from? Are they going to be low cost, low risk? In other words, political jurisdictions and low carbon. And so, the US has its low cost, its low risk politically and relatively low carbon. It can get lower carbon and some of the biggest US energy companies have signed up, for example, to zero methane by 2030 pledges, which is consistent with that. We talked about the oil sands a moment ago. That's actually our challenge. We're low cost, low risk on a marginal basis, marginal cost.
Ian Bremmer:
But higher carbon.
Mark Carney:
But higher carbon. That's why we need to do carbon sequestration in Canada. So that points in that direction. So that's where you get the alignment on conventional fuels. I think more broadly, the US is looking to build up domestic industries. Industrial policies, sometimes it's for climate reasons, other times it's for economic reasons, and the tariffs on China reflect a desire partially to de-risk that relationship, but principally to develop domestic wind, solar, domestic hydrogen first and foremost. Now, that's an investment or a bet that the United States can make. I'm not sure it's one that all jurisdictions can.
Ian Bremmer:
And is this a relationship with the—Americans not having a carbon price, and the Europeans do, of course, and that's caused a lot of friction. How do you see that getting resolved and resolved more broadly?
Mark Carney:
Yeah, I think it's going to have to get resolved by measuring the amount of carbon in a good and ultimately in a service. And it's starting in oil and gas, believe it or not, kind of improbable area. But as I say, the zero methane pledges that came out of COP 28 for 45% of global production has pledged to zero methane. So those are going to become table stakes for delivering. But what John Podesta put on the table on embodied carbon as being one of the drivers of market access into the US, that's the way you square the circle between Europe, which has a carbon price and the US which has I'll say a series of subsidies or support mechanisms and regulation. Canada, which has a mixture is don't tell me how you got there. Just tell me the end result. Tell me how much carbon is in the delivered, whether it's a ton of steel, whether it's a ton of cement, ultimately whether it's an automobile. How much carbon do you have in that? And if it meets a certain threshold, it can come in and if it doesn't, it can't.
It's WTO compliant, it's where the system is going to end up. I'm quite confident on that. It's going to be messy and it's going to take a while to get there, but if I'm a business, I'd be thinking in those terms today, and that's how you invest.
Ian Bremmer:
So let's move to Canada. So Canada relationship with the United States frequently been talked about historically as an afterthought. It's friendly. Nobody really cares about it.
Mark Carney:
We care about the US. Just to be clear.
Ian Bremmer:
But increasingly the Americans care about the Canadians. My experience here this time around relationship is becoming more strategic. You agree with that?
Mark Carney:
I agree with that. Yes.
Ian Bremmer:
What are the ways you think that's manifesting?
Mark Carney:
Well, I think historically it's been longest undefended border, common values, look at our people on your TV, that kind of approach from Canada. And I think there's a slow awakening. I think it needs to speed up to be honest, and we better not hit the snooze button on this, slow awakening of the fundamental strategic aspect of the relationship. We're operating in a world where security is paramount. You need resilience. You need to look to those countries where you have common values and you need to reinforce them. I think part of the way we do that, the first way we do that as Canadians is we become an essential trading partner of the United States. In other words, we're providing things to the United States that from a strategic perspective, the US absolutely needs. So what does it need? It needs clean energy. We've been talking about that in size.
It needs critical metals and minerals from a reliable supplier. It's essential to the ultimate success of that whole industrial strategy around clean energy. I think as well, what it needs is a reliable partner in the backbone of artificial intelligence. Just the scale of development there, you need clean power for that. You need the right regulatory framework, you need the right values, you need reliable people, you need cyber defense is all things that Canada can bring. And it's going to sound odd, but even the United States needs capital, and we have some of the most sophisticated institutional investors in the world, many of whom are within a few blocks of here, and they bring smarts. They bring expertise, particularly in infrastructure investing, which is what the US is just in the very early stages of you could call an infrastructure boom.
It's an infrastructure era, really is what's going to happen the next couple of decades in the US and I think in Canada as well. It's going to be about building out the new infrastructure. We can provide all of that, and if we're providing all that, if we're working towards providing that, it's going to make the US stronger, it's going to make the relationship stronger, and it will bring a series of other benefits to both of us.
Ian Bremmer:
So I know you wouldn't necessarily mind being prime minister in the future. If there were a Carney administration, how would it differ from what Canada's seen in recent years?
Mark Carney:
Well, whoever over the course of the next decade, I think there's a decisive decade very much for Canada. We're here talking about Canada, US, and that is a huge component of it. We have a massive opportunity in Canada. We can be part of the solution for the US, but gain huge benefits for all Canadians as a consequence of that. So I think an even greater focus on that relationship and a focus on execution. I mean, this is about tens and tens, ultimately hundreds of billions of dollars of investment that needs to happen over the course of a very short period of time. So I think first and foremost, in and around that. I think as well, we have some huge domestic responsibilities here. We need to build 6 million homes over the course of the next 10 years. We need to build 6 million homes. That's what we need to do. We need to ramp up from our—
Ian Bremmer:
Housing prices are just way too high right now. People are very angry about it.
Mark Carney:
Prices, and rightly so. Prices, availability, the quality of homes, there's a right way and wrong way to do it, but we've got to execute against that. So again, a real focus on tangible delivery. I think that's one of the things that we need to do. We need to get much better at delivering for Canadians, delivering for our allies. Then the last thing, I mean, there's many other things, but last thing I'll emphasize for this is look, anytime you have these big transformations, climate, AI, transformation, transformation the global economy, all the things that you live every day and you've been very prescient on, it brings opportunities but opportunities for people who have skills. And so we need to provide Canadians on a huge scale, the opportunity to retrain, and it's massively exciting. A moment like this, if I can get the skills to participate, to master the machine, if you will on the AI side, fantastic. It's empowering. If I'm just sitting there with my existing skillset today, it's massively threatening. This is a fork in the road. We have a choice on that, and our governments need to align with that.
Ian Bremmer:
Mark Carney, thanks for being here.
Mark Carney:
Thanks for having me, Ian.
Ian Bremmer:
That's it for today's edition of the GZERO World Podcast. Do you like what you heard? Of course you do. Why not make it official? Why don't you rate and review GZERO World five stars, only five stars, otherwise, don't do it, on Apple, Spotify, or wherever you get your podcast. Tell your friends.
