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Copenhagen: Seeking investment in a low-carbon future

Rachel Kyte's picture

The masses are gathering for the first day of COP15 of the UNFCCC, but on Friday an important curtain raiser took place with the backing of the Danish government and convened by ATP, the Danish public pension fund. The “Key to Climate Investing" event gathered significant current and potential investors in the economic activities that will be necessary for a path to lower carbon intensive growth - they included funds, commercial banks, public pension funds and privately managed public pension funds from across Europe and the Americas.

The meeting was important for three reasons:

First, while oftentimes negotiators and the secretariat have indicated that they don't know what the private sector wants, in precise terms (presumably in terms of language), the investor community could not have been clearer or more unanimous: "we need you to act by setting targets, which will lead to an investment climate, and set incentives to encourage long term investment where it is needed.” 

Second, the majority in the room realized that they cannot sit back and expect this to happen organically from the environment ministers that underpin the negotiations. They will need to craft practical solutions with governments, especially ministries of finance, who to a greater or lesser degree are or are not focused on the implications of climate finance agreements.

Third, that for emerging markets it’s not a story of investing in efficiency, but in the energy infrastructure needed to help them meet their needs while meeting global goals around carbon intensity. That means massive leveraging of public funds, to crowd in private funds, by risk sharing, applying smart subsidies, and regulating in a focused way (ie turning the numbers being talked about today into the numbers indicated by Stern and others).

With this consensus from the investor community, one expression found in the 2009 Investor Statement on the Urgent Need for a Global Agreement on Climate Change, the time immediately after Copenhagen needs to be spent putting some real financial structures together that can demonstrate how leveraging can happen to scale, how it will not obviate from needs of developed countries to commit to binding emissions reductions, and how this will be of value to developing countries in the implementation of their NAMAs. So stamina everyone, it’s not all over in two weeks time.

Comments

Submitted by Alan Johnson on
I think you're absolutely right to emphasise the critical role of private finance in enabling low-carbon growth. But to expand your developing country mitigation action point, even when international financing becomes available, there will be a huge and more prosaic investment preparation and capacity building agenda to bring to market commercially viable low-carbon investments of the right quality and quantity. For example, are offsets available in local markets? can renewable energy producers sell to the the grid and get a return? are there markets and standards for energy efficient appliances and buildings? are sector-wide or avoided de-forestation investments possible? So, I agree, it certainly won't be over in a couple of weeks.

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