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:
What generates 70 percent of the greenhouse gases emitted from cities like New York, Beijing, or New Delhi? Not long ago, I might have answered “cars.” But the real culprit is buildings – our homes, offices, schools, and hospitals. Many of which use electricity, water, and fuel extremely inefficiently because of the way they were initially designed.
In fact, about 40 percent of the world’s electricity is used to cool, light and ventilate buildings, even though much more efficient technology exists.
The longevity of buildings is why we need to think much more about them at the new construction phase. Decisions about building materials, insulation, and plumbing live on for decades or longer. That’s why IFC, the private sector-focused arm of the World Bank Group, is working to help builders and developers in emerging markets lock in climate-smart choices at the early design stage.
Our new certification tool EDGE, which stands for Excellence in Design for Greater Efficiencies, was designed specifically for emerging markets, where housing needs are set to grow exponentially as a result of urbanization pressures. It is Internet-based and easy to use, offering developers a range of inexpensive design choices that might otherwise be overlooked in the rush to build.
Buildings certified by EDGE use 20 percent less energy than their peers, offering long-term emissions savings and lower utility bills – a major benefit in affordable housing.
One of the concrete things to come out of Cancun was the agreement on REDD+ or Reducing Emissions from Deforestation and Forest Degradation. The "+" includes the role of conservation, sustainable management of forests and enhancement of forest carbon stocks. The decision in Cancun establishes a framework for rich countries to pay for preventing deforestation in developing countries. While the details are yet to be worked out, the setting up of the mechanism itself was a big step.
REDD+ is clearly one of the 'winners’ from Cancun. It is an important development for Africa, where a critical piece of the climate change puzzle lies in preserving and managing its forests well. Although Africa currently contributes only a small amount to global greenhouse gases, the main source of the continent's emissions is deforestation.
Over the years we have been engaged in many forest management projects across the continent. The World Bank has been working with several countries to pilot approaches in sustainable forestry that have provided valuable lessons for the REDD+ mechanism being set up now. During Forest Day in Cancun, many of us discussed how to make the most out of REDD+, and how to ensure that the lessons learned from the Forest Investment Program (FIP) activities in Burkina Faso, Democratic Republic of Congo, and Ghana can help Africans get more value out of conserving forests than chopping them down. This approach is critical, given Africa's development needs and growth in population. How do we create REDD+ partnerships that bring real value and payments for conservation? How do we ensure the playing field is level for all countries and players in REDD+? Answering these questions will be key to fostering an integrated mitigation and adaptation approach to Africa's forests.