Frank Pegan is the CEO of Catholic Super, an Australian superannuation fund currently managing AU$5.21 billion. He spoke ahead of the UN Climate Leadership Summit about the value of carbon pricing for investors.
A dangerously warming planet is not just an environmental challenge – it is a fundamental threat to efforts to end poverty, and it threatens to put prosperity out of the reach of millions of people. Read the recent Fifth Assessment Report from the Intergovernmental Panel on Climate Change if you need further evidence.
If we agree it is an economic problem, what do we do about it? There is general agreement among economists that a robust price on carbon is a key part of effective strategies to avert dangerous climate change. A strong price signal directs finance away from fossil fuels and toward a suite of cleaner, more efficient alternatives.
This logic is not lost on governments and companies. Momentum is building around the globe to put a price on carbon. Consider these facts:
We’re about 16 months away from the 2015 UN climate meeting in Paris, intended to reach an ambitious global agreement on climate change. Now, more than ever, there is a need for innovation to scale up climate action.
The Bank’s Carbon Partnership Facility (CPF) is helping blaze that trail.
The role of the CPF is to innovate in scaling up carbon crediting programs that promote sustainable, low-carbon economic growth in developing countries. In its first set of programs, the CPF moved past the project-by-project approach to larger scale through the Clean Development Mechanism’s Programme of Activities, catalyzing investment in methane capture from landfills, small-scale renewable energy, and energy efficiency.
December 2009 does not seem so long ago. The UN climate conference in Copenhagen had just come to a disappointing end, and I headed home feeling depressed. I returned to China for holiday and was surprised to see the widespread awareness of climate change and the collective sense of urgency for action. The concept of "low carbon" was discussed in all major and local newspapers. To my amazement, I even found an advertisement for a "low carbon" wedding. I finished my holiday and went back to Washington with optimism and hope: Despite the failings of Copenhagen, China, the biggest emitter in the world and the largest developing country, was going through a real transformational change. China clearly saw action on climate change as serving its own interest and as an opportunity to pursue a green growth model that decouples economic development from carbon emissions and resource dependence.
In the past five years, the world has witnessed the emergence of China as a leader for tackling climate change. A few weeks ago, colleagues at the World Bank Group heard an evidenced-based presentation by Vice Chairman Xie Zhenhua from the National Development Reform Commission (NDRC) of China, who showed what China had done in the past, is doing now, and plans to do in the future. He shared his candid assessment of the challenges, mistakes, and lessons learned from China's experience.
China’s progress is impressive. Between 2005 and 2013, average economic growth has been above 8 percent while the country’s emissions intensity has decreased by 28.5 percent compared with 2005 levels. This equates to emissions reductions of 23 million tons of CO2. These reductions were achieved through massive closures of inefficient coal fire plants, aggressive energy efficiency programs, expanding the renewable energy program, and large investments in clean technology.
While these numbers are impressive, sustaining them will be harder. Over the last 10 years, China has targeted its "low-hanging fruit" for mitigation options. The challenge today is how China will sustain annual GDP growth of more than 7 percent while continuing to reduce its economy’s emissions intensity.
Today was an exciting day in Cancun. For me, it marked a break from the rhetoric of negotiations to focus on the reality of action on the ground to combat climate change. This morning’s weather was picture perfect as the World Bank’s President, Bob Zoellick arrived at the Press Conference Centre in the Moon Palace to voice the Bank’s support for the concrete actions of the Alliance of Small Island States (AOSIS).
AOSIS consists of 43 island and low-lying countries that encircle the tropical belt around the globe. Given the very real threat posed by climate change, they have been attending international meetings on climate change for the last 20 years and are frustrated at the pace of progress and the lack of ambition. They are here in Cancun to fight for their survival and to call upon their partners and the international community to be ambitious. In the negotiating text, they want to see reference to 1.5 degrees, “loss and damage” and a legal form to the agreement. After 20 years of talks, AOSIS is going beyond negotiations and embarking upon concrete actions to lead by example: They are intent on entering an era of renewable energy and energy efficiency—hence today’s press conference.
Amidst a blaze of flashing cameras, a Memorandum of Understanding (MOU) was signed by the Prime Minister of Grenada in his capacity as chair of AOSIS, Dr. Lykke Friis, the Danish Minister of Climate, Energy and Gender Equality, Helen Clark, Administrator of UNDP and the World Bank President Robert Zoellick. Simon Billett of UNDP who had been stellar in his efforts joined me on stage as we facilitated the signing. This MOU calls for the introduction of renewables and energy efficiency into these island states with an initial injection of US$14.5 million from the Danish Government as part of their Fast Start financing pledge.
Esta tarde llegué a Cancún. El sol brilla. El mar es azul. El hotel Moon Palace –sede de las negociaciones– es un hermoso centro vacacional con playa propia de un kilómetro de extensión y arena blanca. Se insta a evitar el uso de chaqueta y corbata y muchos delegados visten las tradicionales guayaberas mexicanas.
Los anfitriones han hecho un excelente trabajo de diplomacia y logística en la preparación de este evento. ¿Por qué parece, entonces, que los turistas lo están disfrutando más que los representantes de los países participantes?
Porque nadie sabe cuáles serán los resultados. Cada uno de los presentes cree que otra persona debería proponer algo más y algunos lo están expresando con mucho sentimiento. Se ha ido el entusiasmo por un posible acuerdo forjado en Copenhague el año pasado. No hay en el horizonte un jonrón, una clavada, ni un hoyo en uno a la vista. La analogía ahora pertenece al fútbol americano: se trata de hacer avanzar el balón con paciencia por el campo de juego con la esperanza de marcar un tanto el año próximo, el siguiente o dentro de cinco años. Sobre todo, no hay que dejar caer la pelota para no perder terreno rápidamente.
I have recently returned from CarbonExpo in Cologne, along with most of the unprecedented 70-person Bank delegation we sent this year. For the uninitiated, CarbonExpo is an annual, oh, call it a high-energy trade fair, where carbon finance project developers, financial institutions, auditors, policy makers, and international organizations meet to strike deals and innovate ways to reduce greenhouse gas emissions and financ