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.
COP 16: The Heat Goes On......
In news that is sure to come as a surprise to those of us who were trapped under 2 feet of snow earlier this year (remember the Snowpocalypse?), the World Meteorological Organisation (WMO) has released data at the UN climate talks in Cancun confirming that 2010 was one of the hottest years globally on record. Specifically, it appears that 2010 will rank in the top 3 warmest years since the beginning of instrumental climate change records in 1850, continuing a warming trend that scientists have linked to the steadily increasing emission of heat trapping gasses into the atmosphere.
At various times in the course of the ongoing climate change debate, there has been a disconnect in some areas of the U.S. between scientific reports such as the WMO's and governmental or other public perceptions of and reactions to climate change. That appears to be changing, however, based on a couple of recent reports concerning the effects of climate change on particular resources. For example, as reported by the AP on December 2, Alaska wildlife officials have released a report acknowledging that scientific and traditional evidence increasingly shows climate change at unprecedented rates throughout the Arctic. The Alaska report, entitled "Climate Change Strategy," says warming temperatures could affect Alaska's bodies of water and also notes the potential for fire patterns, altered stream flows, and coastal erosion. This represents a significant departure for the state, which is suing to overturn the federal listing of polar bears as a threatened species because of declining sea ice habitat.
In a similar vein, a New York Times piece released just before Thanksgiving notes that residents of the Larchmont neighborhood in Norfolk, VA, are now forced to pay close attention to the lunar calendar to avoid the effects of tidal flooding that increasingly are disrupting life in their community (as well as elsewhere along the East Coast). The Norfolk residents are forced, among other things, to park their cars in different areas, change their routes, avoid traveling to certain locations at certain times, etc. The principal cause of this disruption is the fact that Norfolk -- which is bounded on three sides by water -- has experienced the highest relative increase in sea level on the East Coast -- 14.5 inches since 1930. As water backs up into city streets and front lawns become too saline to support grass, the residents have vigorously lobbied city, state, and federal authorities to take action. Indeed, significant investments have already been made, but with the sea level continuing to rise, there is a growing perception that it makes less sense to continue to do so. In any event, as with the report out of Alaska, the issues in Norfolk highlight the disconnect between public perceptions/action regarding climate change and reality that is increasingly difficult to ignore. So, whereas Virginia AG Ken Cuccinelli is trying to prove that a prominent climate scientist engaged in fraud when he was a researcher at the University of Virginia, the affected residents of Norfolk are less interested in such politically motivated debate. Rather, as one resident interviewed for the Times article expressed, "No one who has a house here is a skeptic."
COP 16: What a Difference a Year Makes
This is the second year that MLA has participated in the annual UN Climate Change negotiations (COP 16), and the differences between the proceedings this year and last are fairly significant. On a superficial level, there's the location -- last year's talks were in frigid Copenhagen, while this year government representatives, NGOs, business interests and protesters have converged in sunny Cancun, Mexico. (I understand it is quite chilly there today, so I will refrain from sharing the temperature down here, but suffice it to say that if one -- entirely hypothetically of course -- had a few extra moments in between meetings to sip a margarita on the beach, it would not be unpleasant).
