COP-16: What is Business Doing in Cancun?
It is a frustrating time for business entities that are seeking policy certainty that will unleash investment in a global low carbon economy. For instance, U.S. policy certainty seems to have been pushed off for at least two years based on the failure of Congress to pass cap-and-trade legislation and the mid-term election outcomes that signal even less support for such legislation. Internationally, there is a growing sense of business concern with the United Nations Conference of the Parties’ ability to agree upon a comprehensive way forward after 2012 when the first commitment period of the Kyoto Protocol expires. Yet hundreds of private sector technology, retail and investor interests are in Cancun for the 16th Conference of the Parties and looking to find strategic ways forward nonetheless.
Probably the focal point of the business community during the Cancun meetings took place outside the negotiating halls at the nearby World Climate Summit http://www.wclimate.com/World_Climate_Summit/HOME.html described by its organizers, including Richard Branson and Ted Turner, as the forum for “business and finance to accelerate solutions to climate change. The summit is a new open and collaborative platform where the most inspiring, influential and innovative business, finance, and government leaders convene to collaborate, implement, and scale solutions locally and globally, during the next 10 years.”
Some key takeaways from the World Climate Summit:
· Policy certainty is absolutely necessary to send signals to the capital markets for investment at scale in clean energy technology, but the private sector must engage in turning this corner itself rather than simply waiting for more policy signals to emerge. Innovative collaboration must advance rapidly as part of this effort. Several new partnerships and initiatives were pledged at the event.
· Climate change-focused business interests need to break out of their sector by sector trade association silos to more strategically influence national and international policy debates. A specific example that created a lot of stir was the suggestion made during the opening plenary with Siemens, Coca-Cola, Climate Change Capital and Ernst & Young. During this session, it was noted that climate-focused business association strategies must emerge to more aggressively take on the U.S. Chamber of Commerce and similar groups in other capitals that create the misperception that addressing climate change is strictly about higher costs to society. Business must cohesively engage and build the opportunity case in a way that the public and lawmakers grasp while also pushing back on business opposition of more entrenched and powerful interests.
· China was repeatedly cited and lauded by the business community for its efforts to advance a clean energy, industrial revolution that seeks to harness the capital and technology of the private sector. The United States was generally an afterthought or source of frustration in these business discussions. Specifically, investors are supportive of China’s 12th 5-year plan that will seek an overall reduction of the national carbon footprint by 40%-45% by 2020. The plan identifies specific complimentary policies and measures for the “Magic 7” industries that are its foundation: 1) Energy efficiency and environmental protection technologies, 2) Next-generation information technology, 3) Bio-technology, 4) High end manufacturing, 5) Alternative and renewable energy, 6) New Materials (special performance and high composite materials), and 7) Clean Energy Vehicles. In addition, most analysts expect the plan will produce a domestic cap-and-trade regulation in the next few years and ahead of the United States.
· The U.S. Overseas Private Investment Corporation www.opic.gov will provide at least $350 million in financing for new private equity investment funds and set a target for this fund to invest more than $1 billion in renewable resources projects in emerging markets, representing one of the largest initiatives by the U.S. Government to support the international effort to mitigate climate change. No Congressional action is required for this to move forward. It signals an increasing effort by the Obama Administration to meet pledges for international climate finance that also leverage private sector capital.
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