Making the Business Case for International Funding in US Climate Legislation
As the Senate deliberates on climate change legislation this Fall, strong provisions related to international cooperation and investment in greenhouse gas (GHG) mitigation and adaptation are necessary. Recent news reports show that various fossil fuel intensive industries are ramping up for even greater free allowance allocations to meet their emerging climate risk obligations. It is imperative that the slice of the allowance set aside and auction revenue pie, marked for international finance and embedded in the Waxman-Markey bill from the House, is not lost in this feeding frenzy. The Waxman-Markey approach strategically avoids the annual appropriations process for financing climate mitigation efforts abroad and creates the beginnings of self-sustaining finance mechanisms. State Department Climate Envoy Todd Stern testified on the importance of these provisions in a September 10th hearing before the House Select Committee on Energy Independence and Global Warming.
The US Business Case:
First, these international investment provisions will support substantial exports of US clean energy and low carbon technologies. The US cannot sit on the sidelines as Europe, Japan, Australia and others pursue low carbon export and investment opportunities.
Second, international investment empower the US Government and companies to cooperate on policy and technology strategies with key developing countries that can lead to concrete sectoral and economy-wide commitments through financial incentives.
Third, international investment provisions in domestic climate legislation, linked to emerging global carbon finance markets, provide an important cost-containment tool for companies required to reduce their emissions in the United States.
Fourth, findings from leaders in the national defense community suggest that addressing climate change globally is a matter of national security. Increased impacts such as drought, flooding and sea level rise will have an increasing impact on political stability of vital US interests. US companies in partnership with the US Government can enhance mitigation and adaptation efforts globally which benefits our democratic ideals.
Finally, US businesses require a global response to climate change mitigation to protect their own company supply chains from interruption due to climate impacts and adaptation issues.
Accordingly, the following key principles for finance assistance must be preserved and fully funded in emerging legislation:
- Robust provisions for valuing standing forests and other sector-based offsets. Other offset provisions can be shaped to build capacity for sectoral mitigation commitments by developing countries.
- Bilateral and multilateral mechanisms, backed by US financial commitments that are substantial and sustainable, to accelerate clean energy technology deployment. These provisions can significantly reduce investment risk for US companies and leverage the massive private sector investment flows required to transfer technology and address global GHG mitigation and adaptation requirements. A blend of public risk reduction mechanisms and funds coupled with private sector capital is an essential part of any meaningful strategy to open international export markets for US technologies and address climate change.
- Robust assistance to the most vulnerable populations for adaptation to climate change, with a view to reducing the greatest impacts of climate change. Addressing these concerns will require significant technology and infrastructure support from US companies.
These issues will be under negotiation at the upcoming G-20 in Pittsburgh as well.
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