Investors say it’s time to act
It seems the world’s leading investors are sick of not being listened to on the critical issue of climate change, and financing the transition to low-carbon technologies. And they’ve decided to do something about it.
A group of 258 investors with $US15 trillion under management – or about one quarter of the globe’s market capitalisation – have declared that they stand ready to invest in new technology and have implored governments to give them the mechanisms to do so.
They say that if governments are serious about their pledge to cap average global warming to a maximum of 2°C, then it is time to act and provide the investment climate that would unlock the trillions of dollars needed to achieve this.
Chief among these, of course, is a carbon price strong enough to encourage that investment, as well a range of complementary measures to encourage investment in renewables and energy efficiency. It echoes similar comments in recent weeks by many of the world’s largest industrial companies.
It’s estimated that around $US500 billion a year is needed to help meet the 2°C target over the next decade, but the investment in 2009 reached little more than a third of that total, and in 2010 will barely scrape above $US200 billion – a big number but still $US300 billion short.
Worse, the investors say, the world faces climate-related GDP losses of up to 20 per cent by 2050 and severe risks to individual assets, and they want to protect their investment.
"Climate change may be out of vogue in Washington today, but it poses serious financial risks that are not going away and will only increase the longer we delay enacting sensible policies to transition to a low-carbon economy," said Jack Ehnes, the CEO of the California State Teachers' Retirement System, the second largest public pension fund in the US with $US141 billion in assets.
The group includes 33 investors that come under the Australian-based Investor Group on Climate Change, including AMP, AXA, Colonial and BT, which has called for Australia to implement a carbon price.
The statement highlights the fact that, while more was invested in renewable technologies on a global scale than in fossil fuel technologies in the past year, Australia anticipates little more than $2 billion a year to be invested in renewables over the next decade, while an estimated $50 billion will go to supporting and expanding existing infrastructure in the next five years alone.
“Investment flows to countries with regulatory certainty and strong returns. It’s as simple as that,” said Frank Pegan, the chair of the IGCC and CEO of Catholic Super. “Australia should implement a carbon price as soon as possible to attract investment and avoid being last in the low-carbon race.”
The group’s statement is clear about what’s at stake: “Investors are concerned with the risks presented by climate change to regional and global economies and to individual assets. At the same time, investors are interested in the large potential economic opportunities that the transition to a low-carbon economy presents.
“Investors have a fiduciary responsibility that requires them to seek optimal, risk-adjusted returns on their investments. At present, in the absence of strong and stable policy frameworks, many low-carbon investment opportunities do not currently pass this test.”
So they suggest that domestic policies include not just a carbon price (through a well designed carbon market) but frameworks to deliver renewable energy, energy efficiency and other low-carbon infrastructure – in short, the sort of complementary measures that have become a political football in Australia these past few week.
More specifically, the group recommends short- mid- and long-term greenhouse gas reduction targets, policies to accelerate the deployment of energy efficiency, renewables, green buildings, clean vehicles and low-carbon transport infrastructure, and the phasing out of fossil fuel subsidies – which the G20 has agreed to do but, like the Copenhagen Accord which sets the 2°C target, have yet to decide how to do it.
They also want strong action in the international arena, including defining of the mechanisms for the $100 billion a year to support mitigation and adaptation in the poorest countries, a rapid timeframe for a scheme to protect forests through the REDD mechanism, clarity on the future of international carbon markets such as the UN’s Clean Development Mechanism, robust agreements on measurement, reporting and verification, and finally a clear commitment from Cancun to seal a binding international treaty in South Africa in 2011.
It notes that countries that have had strong policies that provide long-term certainty and enable credible mid- to long-term risk assessment have already managed to attract significant capital in low-carbon investment policies. But in other countries, frameworks have remained weak and uncertain (that could be Australia) or have been damaged by indication that strong policies will be retroactively scaled back in the face of the economic downturn (sounds like Spain).
Pegan notes that Australia should not be using the US deadlock as an excuse not to act, but should be paying more regard to the actions of its principle trading partners in Asia, where governments have been proactive and large industrial groups are retooling their businesses.
Pegan says this gives a clearer picture of the future of climate change and energy investment trends.
Comments on this article
The dog ate my homework.
Roger Reitze, with his unsubstantiable argument about ocean chemistry, has introduced a variant in the old "dog ate my homework" excuse - "I lost my bookmarks". Talk about laugh!
How about:
http://www.nodc.noaa.gov/cgi-bin/OC5/WOD/getyearlydata.pl
Ocean acidification
Roger Reitze - there is serious scientific research currently on-going into what the decline in ph levels will do to coral and other marine organisms that rely on a calcium carbonate shell structure - the implications are likely to be disastrous for the marine food chain - let alone local communities which rely on reefs as buffers to oceans. Marine researchers working on this in Tasmania give us a about 30 years before it has a major impact (it is already evident in the changing shell structure of marine creatures). So yes this is serious - but I guess if you're in a state of permanent denial on this issue not amount of evidence is going to change your mind.
Ocean acidification
I recently lost all my bookmarks, so I can't reference this, but not long ago, I looked up the pH of the ocean over time.
Since 1850 it has risen and fallen, sometimes as low as now and even lower, sometimes higher.
Unless I was very selective with my choice of time period, I couldn't make the entire data set support increased ocean acidification.
It should be noted that increased CO2 in the oceans fosters plant growth which of course is the real solution to too much CO2.
On land, increased CO2 increases plant (and crop) growth.
Double CO2 gives roughly a 75% increase in crop yields.
Why are we trying to stop this?
Catholic Super?
Frank Pegan's comments are from a press release dated 27 March 2009. I find it ironic that the CEO of a super fund using the name Catholic can be so callous in advocating a carbon price that will hurt low income earners the most. What is needed to encourage investment is tax concessions, not higher electricity prices across the board. If this works so well for the film industry, it should be extended to R&D and marketing of renewables. Over-subsidising all technologies through a carbon tax will result in less efficient renewables being marketed than by requiring each technology to compete for retail dollars.
One small step at a time...
Science first Shaun (below) & once settled the insurance Co's can then have their 'day' in the sun.
No doubt one (insurance company) has already following Al Gore's reported beachside property acquisition in the US recently. Gore clearly isn't overly concerned about the threat of rising sea levels!
Don't trust the scientists? What about the insurance co's?
This discussion is very interesting but ultimately going no where. I understand that some people don't trust the vast bulk of scientists that run the pro-anthropogenic warming line but perhaps you should trust the insurance companies. They have also done their research. They have no incentive to put a value on a risk that does not exist - in fact if their research showed there was no risk then they could make good money by effectively betting against it - but they don't. The insurance companies have been the first to call for action and are putting up premiums in effected areas and industries. I assume the people that are complaining about the pro-anthropogenic warming "conspiracy" are taking advantage of all the opportunities that are coming their way - shorting carbon, , going long oil & coal, buying beach front property.
Still Seeking Facts !
Noted with interest thanks Chris Wright, however, your reference (below) to a "solar-flare' hypothesis (since debunked)" prompted me to revisit the cited Paper since that was NOT my understanding of the primary thrust of the Paper.
Indeed, no where in the Abstract of the Paper is there mention of a 'solar flare hypothesis' ? Rather, the title (& substance) of the Paper leads me to an entirely different explanation for the impacts upon global temperatures rather than just 'solar flares' ?.
So, I invite you (&/or others) to revisit this Paper & provide a rebuttal of what appears to me to be a well documented & quite plausable argument. Not, I might add from a skeptic (as you define the author) but as best as I can determine, from a well credentialed scientist seeking answers by presentation of his findings via the tried & true scientific method.
Roger Westlake's oceans
Roger, acidification is a relative thing. Your comment re the oceans being basic starts nowhere and gets us nowhere. The issue here is that acidification is happening. It is affecting ocean chemistry. That, in turn, is affecting ocean life forms, ecpecially those which have shells or rely on food which comes packaged in shells.
This discussion is not about semantic nonsense which is happening in your head, it is about the 71% of the world's surface which is covered by the oceans, and the damage which is measurable, documented and real.
The Oceans
Unfortunately Alan is wrong about the oceans
The oceans are basic (pH 7.5-8.4) and all the CO2 in the world would not make them acidic. The "trick" is that the alarmists state the oceans are becoming "more" acidic (even though they were not acidic to begin with) whereas the truth lies in them becoming less basic - but they will never become acidic.
Seeking Facts ...ahh!
Dear Jim,
The author of the paper cited appears to have made a name for himself as his research supports his skeptical views of anthropogenic climate change. I understand we have been around this merry-go-round before with the 'solar-flare' hypothesis (since debunked). Hopefully he's right and he goes onto win a Nobel Prize for proving man-made global warming isn't happening! Frankly, I'll go with the vast bulk of scientific opinion which stresses the severity of the problem and the need to take action. Not having the time to provide links to all the recent scientific papers on increasing CO2 concentrations, rising ocean and land temperatures, increases in ice melts, projections of sea-level rises and feed-back loops in the peer-reviewed science - you may just want to have a look at this webpage which has links to most of them:
http://climateprogress.org/2010/01/04/the-year-in-climate-science-scientists/
Re ocean acidification:
http://www.annualreviews.org/eprint/QwPqRGcRzQM5ffhPjAdT/full/10.1
Make an Effort - Seek out the Facts!
Alan Lauder & Chris Wright (below) - surely you can deliver some evidence in support of your comments below! If not, then you're doing yourselves a disservice & your cause more harm than good.
Would it be too much to ask that you each make an effort & follow the link I provided earlier at 12:43pm. It's a little heavy with empirical scientific evidence but the conclusions are not too hard to understand.
A rebuttal based upon empirical scientific evidence would be a good start.
Carbon (Dioxide) Price Failure
"..carbon price strong enough to encourage that investment.."
Tell them they're dreaming, son. With the failure of the Chicago Climate Exchange and carbon price descending in Europe due to the fragility of the man-made global warming hoax (erroneously now called 'climate change") the only people pushing for a carbon (dioxide) price are the bankers and brokers.
Other businesses do NOT want the addition to expenses. Some will go offshore, others go out of business.
And the pensioners will freeze in the dark.
Not a happy thought!
The oceans
Unfortunately Chris is right about the oceans. The oceans are absorbing a lot of the carbon dioxide that is being released, but it is turning them acidic. In agriculture, acidic soils are a problem however acidic oceans will pose a much bigger problem, starting with anything that has a shell.
The Age of Stupid!
Wim states - "Time to let this new technology stand on its (unsubsidised) merrits" - as opposed to all those fossil fuel energy sources which of course are unsubsidised by governments around the world - NOT!
Thank god there are some people with the foresight to push for a move away from fossil-fuel dependence - do you seriously believe letting CO2 levels rise to over 500ppm is not going to have catastrophic impacts on the world's ecology and climate? Don't worry about extreme weather events, sea levels etc - messing with the chemistry of the world's oceans will be plenty bad enough for most of the world's population.
On the Contrary..
Hmmm - Sorry Andrew, but I think Roger, Wim & Mike (below) are spot on with their comments. If you're so convinced of the validity of your 'belief' perhaps you would so good as to provide some evidence in support of your argument.
Meantime, you may care to follow this link
http://arxiv.org/PS_cache/arxiv/pdf/1005/1005.4639v1.pdf
for what I regard as empirical scientific evidence in support of where we're coming from?
Free Lunch in La La Land
Andrew,
That's great - let's spend a couple of Billion on something that only works during the day - how innovating ! If you want a real solution, now, then it must be Nuclear.
There's no such thing as a free lunch
Roger, Wim and Mike below are all on the same tram ride to nowhere.
The imperative driving investment in renewable and efficiency technology is the need to bring them on line as quickly as possible to avert the worst effects of climate change. If we twiddle our thumbs, focus only on 'least-cost' approaches and wait for things to happen on their own we'll find we're spending all our money on insurance payouts from increased flooding, bushfires, sea-level rise, etc. and lamenting the opportunity that got away.
Alternatively, if we want to get these technologies moving now, we need to stump up cash in a way that is fairly distributed across society to get us the results we want.
To take one example, if we want the solar thermal plants delivering electricity across the sunniest parts of Australia we can wait for 10 years for a carbon price to rise to the level required to make investment attractive or we can legislate a feed in tariff in this term of parliament and get it happening now.
Time to act
There's nothing stopping anyone from investing in low carbon technologies. What these people are is rent seekers. They want governments to coerce people into supporting their uneconomical investments.
Why don't they just rob banks instead? That would be far less damaging to our civilization.
Show me the money
They are interested because they can see the vast amounts of (subsidised) money to be made.
Just another vested interest group.
Time to let this new technology stand on its (unsubsidised) merrits.
Flawed
Imagine if each house had it's own solar power with the technology to store it (the environmental utopian dream) there would be no emissions and no demand for grid power. What kind investment opportunity does that present the "Investors" in 2050 ?
The "investors" want to make money from trading carbon and that money will ultimately come from the punters ! Australia should treat renewable energy technology just like a new electronic consumer item - leave it six months and it will be half the price !