Lagarde and Mnuchin clash on energy transition strategies
ECB President Christine Lagarde and US Treasury Secretary Steve Mnuchin have clashed at the World Economic Forum in Davos over how the world should transition to cleaner energies.
Speaking on a panel Friday as the event drew to a close, Lagarde told the audience that central banks needed to lead the economic modeling of how these changes for the environment should come about.
Banks, institutions and companies should move away from quarterly and medium-term forecasts and start thinking in terms of thirty years out, she said.
Speaking at the same panel, Mnuchin responded by saying that he didn’t think forecasting the cost of protecting the environment was possible.
“Christine, I think you can have a lot of people and model it, but I just don’t want to kid ourselves. I think there is no way we can possibly model what these risks are over the next 30 years with a level of certainty, given what I think is the changes in technology along the way,” he said.
Lagarde argued that long-term modeling could help firms understand costs and the processes that are involved in the switch.
“If we can push companies into the direction of actually anticipating the transition, pricing it, and making sure that they move to cleaner and cleaner energy uses, then it helps,” she said.
Mnuchin said that it was very difficult to estimate the cost and that “we are overestimating” it.
“So, if you want to put a tax on people, go ahead and put a carbon tax. That is a tax on hard working people. I personally think the costs are going to be much lower 10 years from now — because of technology — than we think they are today."