Bridges Trade BioRes • Volume 9 • Number 16 • 18th September 2009

Global Investors Anxious to Cash in on Low-Carbon Economy

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A major group of investors representing some US$13 trillion in capital is calling on policy makers to strike a strong and binding international climate change treaty when they meet in Copenhagen this December.

The international group of 181 investment institutions - including banks, pension funds, and asset management organisations - says the current state of uncertainty on climate change policy is holding back global investment. The low-carbon investment opportunities that would be created by a firm Copenhagen deal would be a boon to the global economy, the group said.

The statement emerged on 16 September at an all-day forum on international investment and climate change hosted by Thomas DiNapoli, New York State Comptroller who is responsible for the US$116.5 billion New York State Common Retirement Fund.

The forum was also notable for the presence of Nicholas Stern, the former World Bank chief economist, who delivered the keynote address.

“Unmitigated climate change poses a threat to the global economy,” Stern told participants. “But building a low carbon economy creates opportunities for investment in new technologies that promise to transform our society in the same way as the introduction of electricity or railways did in the past.”

Aggressive targets

The policy statement calls on Parties to agree to cut emissions by 50 to 85 percent below 1990 levels by 2050. The investors envision a two-pronged plan with developed countries making the majority of cuts.

In the statement, developed countries are expected to reduce emissions by 20 to 40 percent by 2020, with a long-term goal of 80 to 95 percent cuts by 2050. For their part, developing countries are expected to deliver “measurable and verifiable emission reductions.”

But the current state of negotiations suggests that this goal is unlikely to be agreed upon without significant changes in the tone of key states. All eyes are on the US as the December meeting of the UN Framework Convention on Climate Change draws nearer. But the American Clean Energy and Security Act goal of 17 percent emissions cut below 2005 levels - rather than 1990 levels - by 2020 falls far short of the target outlined in the investors’ statement.

Yet in his speech, Stern said he is optimistic based on what has been accomplished in recent years. “Progress over these last two to three years has been quite remarkable, and I think we’ve got a good chance for getting all that,” Stern said. “Maybe we won’t get all the details of the treaty framed up at Copenhagen, but we need clear sense of direction.”

Hopes for deeper emissions cuts were buoyed in recent days when Yukio Hatoyama, Japan’s new prime minister, pledged to cut emissions by 25 percent below 1990 levels by 2020. Under the previous government, Japan - the fifth largest greenhouse gas producer - had pledged an 8 percent cut below 1990 levels.

Hatoyama is set to meet with US President Barack Obama and Chinese President Hu Jintao next week at a UN climate change summit on 22 September in New York. Observers say the meeting is meant to break the current deadlock between developed and developing countries on how to share the burden of emissions cuts.

The deep divisions between rich and more industrialised developing countries - such as China and India - are seen as one of the primary obstacles to tackle in the lead up to Copenhagen. There was some room for optimism on the issue when on 17 September India announced that reducing greenhouse gas emissions - in addition to mitigation - would now be an equal part of its climate change strategy. Still, the emerging economy insisted that these reductions would not be legally binding.

Investment as a tool to combat climate change

Participants at the investors’ forum voiced their frustration over the absence of solid policy that would allow them to confidently take advantage of an increasing number of low-carbon investment opportunities.

Low-carbon investments are already helping to shape a “cleaner, quieter, safer, and more biodiverse” world, said Stern, who now chairs the Grantham Research Institute on Climate Change at the London School of Economics. “But these investments will be much more effective if the right climate policies are in place. Investments will drive the political process.”

Of key importance to investors are large-scale billion dollar projects, such as nuclear and gas-fired power plants, that are awaiting a clear policy stance from government. “Without the policies to encourage clean energy, investors are stuck at the starting gates,” said Mindy Lubber, president of Ceres - a Boston-based coalition of investors and environmentalists - and director of the Investor Network on Climate Risk, which helped organise the forum.

“Investors have a crucial role to play in building a low-carbon, energy efficient global economy,” Lubber said. “But without strong policies that encourage clean technologies and discourage high-polluting technologies, their hands are tied.”

In addition to their call for emissions cuts, the investors’ statement called on negotiators to create conditions to move toward an ambitious and effective global carbon market and called for revisions to the Kyoto Protocol’s Clean Development Mechanism (CDM) that would ensure real, permanent, and verifiable emission reductions.

Wednesday’s forum was co-organised by Ceres, the Institutional Investors Group on Climate Change, the Investor Group on Climate Change Australia/New Zealand, the P8 Group, and the UN Environment Programme Financial Initiative.

More information

A copy of the policy statement can be accessed here: http://www.incr.com/Page.aspx?pid=1126

ICTSD Reporting; “Global Investors Call For Binding Climate Policy ,” REUTERS, 17 September 2009; “Investors Worth $13 Trillion Urge Strong Global Climate Treaty,” ENVIRONMENT NEWS SERVICE, 16 September 2009; “Change on climate: India ready to quantify cuts,” INDIAN EXPRESS, 17 September 2009; “Largest Group Ever of World Investors Calls For Strong Global Climate Change Treaty,” REUTERS, 16 September 2009.

One response to “Global Investors Anxious to Cash in on Low-Carbon Economy”

HSR0601 20th September 2009 at 15:35
Nowadays, the world-wide overpopulation growing consistently is using up tremendous fossil fuel at an alarming pace as the own conventional resources in some dense countries is facing drastic dent.

For that reason, it is widely accepted that the price of fossil fuel is expected to go up and up simply, which is behind major states taking a bold and speedy action in a bid to put the global economy on a solid ground.

Relying on worthless, painful and wasteful oil wars, that is, the original source of this great recession, to waste time bickering on meaningless things and drag feet on a defining energy bill are sure to shake the embryonic effect of stimulus package that is an interim measure for build-out of a new foundation.

As with “Inaction” cost, $9trillion over the next decade in health care and social security, supposedly the same is of inaction on the most-needed energy bill.