Decisive action in Doha necessary and possible

If governments around the world pay heed to some major stakeholders spanning the globe, the UN climate change conference in the Qatari capital Doha will endorse decisive actions leading toward a world all sensible human beings want for themselves and generations to come. Viewed from that perspective, December 7, the last day of the conference, will be a historic day.
Among the important commercial stakeholders are the institutional investor networks representing trillions in assets under management. They published an open letter on Nov. 20, which urges governments of the world’s largest economies to start a new dialogue on climate change policy in order to avert dangerous climate change and its resulting economic impacts. The letter, announced ahead of international climate negotiations beginning in Doha on Nov. 26 calls for:
l Clear, consistent and predictable policies that encourage low carbon investment;
l Knowledge sharing between governments on effective climate and clean energy policies, building on successful existing national and regional measures; and
l Stronger international agreements that send clear market signals about the future of climate policy and reductions in greenhouse gas emissions.
According to the 2012 International Energy Agency World Energy Outlook, released on Nov. 12, current policies and recent trends will lead to long-term average global temperature increase of 3.6°C, a level which scientists have suggested could cause catastrophic and irreversible changes to the global ecosystem.
The letter points out that the re-election of President Barack Obama, the leadership transition in China and the upcoming gathering of policy makers in Doha for the UN climate change conference provide an opportunity for investors and governments to begin a new dialogue on climate change and to advance the ambitious policies necessary to substantially reduce emissions and mitigate their potential impact on the world.
The letter was prepared by the European Institutional Investors Group on Climate Change (IIGCC), the North American Investor Network on Climate Risk (INCR), the Australia/New Zealand Investor Group on Climate Change (IGCC), the Asia Investor Group on Climate Change (AIGCC) and the United Nations Environment Program Finance Initiative (UNEP FI). It is also supported by the UN-backed Principles for Responsible Investment Initiative (UNPRI).
Drawing on investor experience, the letter outlines the key features of successful climate change and clean energy policy that attract low-carbon investment. These include:
l clear short term, medium term and long-term greenhouse gas emission reduction targets;
l timetables for these targets, alongside enforceable legal mechanisms;
l incentives to shift the risk/reward balance away from high-carbon in favor of low-carbon investment
The four regional climate change investor groups — IIGCC, INCR, IGCC and AIGCC — also announced the formation of the Global Investor Coalition on Climate Change (GIC) to represent the international investment community on climate change policy and investment issues at a global level. The GIC, which will be working closely with other networks including UNEP FI, PRI and the Carbon Disclosure Project (CDP), will provide a focal point for engagement with international policy-making bodies. Institutional Investors Group on Climate Change
IIGCC Executive Director Stephanie Pfeifer said: “Serious climate change will only be averted if governments and private investors work together. With severe weather events increasing in frequency and intensity, economic losses as a result of these events is increasing in turn. These losses impact upon the investments and retirement savings of billions of people. Well-designed, stable policy which stimulates clean energy investment is essential to put economies on a low-carbon path and avert the serious economic impacts of climate change.”
Chris Davis, Director of Investor Programs at Ceres and INCR, said: “Strong carbon-reducing government policies are an urgent imperative. Hurricane Sandy, which caused more than $50 billion in economic losses, is typical of what we can expect if no action is taken and warming trends continue. Investors are rightly concerned about the short and long-term economic risks of climate change and understand that ambitious climate and clean energy policies are urgently needed to avoid catastrophic impact.”
IGCC CEO Nathan Fabian said: “Investors are ready to allocate more funds to low carbon solutions, which can support the economic development objectives of nations. Realizing the level of investment needed to avoid the worst impacts of climate change requires that investors and governments work together. Now is the time for investors and governments to step up their dialogue on reducing climate risk and supporting low carbon investment.”
Alexandra Tracy, Senior Adviser to AIGCC said: “Billions of dollars of investment will need to be made over the next 20 years to upgrade emerging Asia’s infrastructure and energy systems. In addition to the sheer volume of capital that must be mobilized, this transition requires complex policy development to manage issues of energy security, social equity and environmental impacts. Investors in Asia will look for effective global and national policy frameworks in both developed and emerging markets to support this process.”
Investments in R&D (research and development) can also lead to new technologies that radically bring down the future costs of reducing greenhouse gas emissions, says the OECD. The group’s new report Energy and Climate Policy: Bending the Technological Trajectory presents empirical evidence that targeting public R&D support for smart electricity grids and for renewable energy penetration can result in important complementarities. The report also finds that a long-term price signal equivalent to the prices seen during the 2008 oil price peaks ($90-$130 per barrel of oil in 2008 prices) would mark a turning point in innovation, triggering a permanent switch toward innovation in renewable energy sources.