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Climate Change: Heavyweight Investors Urge Action

Jan 19 2010

BY IDN GLOBAL DESK

IDN-InDepth NewsAnalysis

(IDN) – As the UN climate change secretariat prepares for the first global round of post-Copenhagen meetings at its headquarters in June in Bonn, an international coalition of investor groups is calling for concluding a legally-binding agreement this year.

The group wants such a treaty to comprise comprehensive long-term measures for mitigation, forest protection, adaptation, finance, and technology transfer, including a global emission reduction target of 50-85 percent by 2050, consistent with estimates from the Intergovernmental Panel on Climate Change (IPCC).

The coalition — consisting of U.S., European and Australian investor groups and managing $13 trillion in assets — argues that there are competitive advantages for countries with comprehensive climate and energy policies.

“But we cannot wait for a global treaty,” says the group. The U.S. Congress and other global decision-makers should “take rapid action” on carbon emission limits, energy efficiency, renewable energy, financing mechanisms and other policies that will accelerate clean energy investment and job creation.

“Germany’s comprehensive policies, for example, have sparked significant private investment in industries focused on addressing climate change, leading to eight times more renewable energy jobs per capita than the United States,” the investors say in a statement released January 14 in New York.

The climate investor meeting was hosted and organised by Ceres, the United Nations Foundation and the United Nations Office for Partnerships. Ceres is a leading coalition of investors, environmental groups and other pubic interest organizations working with companies to address climate change and other sustainability challenges

“As powerful as these investors are, they can’t underwrite a clean energy transformation at the critical scale needed without clear rules only government can provide,” said Mindy S. Lubber, president of Ceres and director of the Investor Network on Climate Risk.

“Government policy can make clean energy cost-competitive by leveling the playing field with fossil fuels. Only government policy provides the long-term certainty that can turbo-charge private investment in clean energy, address the climate change threat and protect our planet.”

“Nations that address the energy challenge most effectively will quickly realize huge global economic opportunities. The race is on and there’s a need for speed,” said Pennsylvania State Treasurer Rob McCord, who joined Lubber and other leading investors in announcing the investor statement at the UN.

“Many of the most immediate impacts from global warming are affecting the poorest countries, which are least responsible for the problem and least prepared to adapt,” said Timothy E. Wirth, president of the United Nations Foundation.

“To keep the rise in global temperatures to acceptable levels, the world will require a huge increase in capital investment for low-carbon infrastructure in developing countries (where most of the global energy growth will occur in the next 50 years). Most of this investment will have to come from the private sector — financial leaders like those participating in . . . (January 14) summit.”

“Some 85 percent of the financial resources needed to cope with climate challenges must come from private sources. In effect, the battle over climate change will be won — or lost — in the hands of private investors,” said Bjarne Graven Larsen, CIO of ATP, Denmark’s largest institutional investor. “In order to play this role effectively, strong, stable and credible policy frameworks are crucial. We are waiting for policymakers to deliver.”

“Given that Copenhagen was a missed opportunity to create one fully functional international carbon market, it is more important than ever that individual governments implement regional and domestic policy change to stimulate the creation of a low carbon economy,” said Peter Dunsombe, chairman of the IIGCC (Investor Group on Climate Change), a network of European investors.

“Time is of the essence and world leaders from both developed and developing countries need to act now to compensate for the lack of progress at an international level.”

“Investors have a critical role in helping drive the new clean energy economy forward,” said Amir Dossal, executive director of the United Nations Office for Partnerships. “National governments can provide an enabling environment, including sound climate and energy policies, to encourage investors to use their capital to advance large-scale solutions for a low-carbon economy, leading to sustainable development. We must develop innovative public-private partnerships to bring about this change.”

“Sustaining the momentum on combating climate change and delivering a legally-binding treaty in 2010 represent two of the big challenges of the year in terms of achieving sustainable growth and poverty reduction,” said Achim Steiner, UN Under-Secretary General and UNEP Executive Director.

“This statement underlines that investors, representing trillions of dollars of assets, remain firmly focused and resolved on realizing a low-carbon, resource-efficient green economy. Governments should swiftly act on the pledges and promises made at the meetings in Copenhagen in respect to emissions reductions and finance.”

The coalition of investors considers following measures critical:
– Short- and long-term emission reduction targets
– Policies that put an effective price on carbon such that businesses and investors reassess investment value and redirect their investments
– Energy and transportation policies to vastly accelerate deployment of energy efficiency, renewable energy, green buildings, clean vehicles and fuels, and low-carbon transportation infrastructure
– Financing mechanisms that can mobilize private-sector investment on a large scale, particularly in developing countries
– Measures and financing to support adaptation in developing and developed countries
– Policies requiring corporate disclosure to investors of material climate-related risks and programs to manage those risks.

Without government actions, private-sector investment will not reach the scale required to address climate change effectively. While leading studies indicate that the costs of action to reduce GHG emissions are both affordable and significantly lower than the costs of inaction, developing a global low-carbon economy will nonetheless require substantially increased levels of investment from the private sector.

For example, the UNFCCC Secretariat estimates that more than $200 billion in total additional investment capital for mitigation is required each year by 2030 just to return GHGs to their current levels by then.

The International Energy Agency (IAEA) estimates that additional investment of $10.5 trillion is needed globally in just the energy sector from 2010-2030 to stabilize GHG emissions at around 450ppm. This equates to roughly 0.1 percent of the total value of world financial assets and approximately 0.23 percent of the total value of debt and equity securities.

“So this is certainly an achievable level of investment — and one that would yield returns in terms of energy savings, energy security, reduced capital expenditures for pollution control, and avoided climate damages,” the coalition of investors says. (IDN-InDepthNews/18.01.2010)

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