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November 12, 2011
Window of Opportunity for Acting on Climate Change Closing Fast
    by Robert Kropp

The International Energy Agency warns that without a binding international agreement within five years, global temperatures could increase by 6°C.

Following last year's disappointing United Nations Climate Change Conference (COP15) in Copenhagen, Paul Clements-Hunt, Head of the United Nations Environment Program Finance Initiative (UNEP FI), told, "85% of financing for climate change mitigation will come from private investment."

However, as Ole Beier Sørensen, Chairman of the Institutional Investor Group on Climate Change (IIGCC), observed, "Investors operate under fiduciary duties to their clients and their beneficiaries. They will only be able to invest in climate-relevant assets and scale up their efforts if these offer risk-adjusted returns."

An imperative of private investment support for the transition to a low-carbon economy is the presence of strong and stable policy frameworks. But as the recently published annual World Energy Outlook of the International Energy Agency (IEA) points out, the current policy frameworks of most governments achieve the opposite effect.

"Subsidies that encourage wasteful consumption of fossil fuels jumped to over $400 billion" in 2010, the report reveals, while despite the lingering global recession primary energy demand increased by five percent and greenhouse gas (GHG) emissions reached an all-time high.

Climate scientists have concluded that the global temperature increase must be kept below 2°C, or 450 parts per million of CO2 in the atmosphere, to prevent the effects of climate change from becoming irreversible and even multiplying. Is this goal achievable? According to IEA, it is increasingly unlikely. According to the report's 450 Scenario, four-fifths of emissions permissible by 2035 are locked in place already; if governments do not act decisively, all the permissible emissions under the scenario will have been reached by 2017.

The report offers two other scenarios as well. Under the New Policies Scenario, in which recent policy commitments are cautiously implemented, global temperatures will rise by 3.5°C. Under the business-as-usual Current Policies Scenario, global temperatures will rise by 6°C.

The last time global temperatures rose by 6°C was at the end of the Permian period, which occurred about 250 million years ago. The event led to the extinction of 95% of the planet's species, according to Mark Lynas, the author of Six Degrees: Our Future on a Hotter Planet.

"Delaying action is a false economy," the report warns. "For every $1 of investment avoided in the power sector before 2020 an additional $4.3 would need to be spent after 2020 to compensate for the increased emissions."

IEA concluded its Outlook on a cautiously optimistic note, observing that the United Nations has designated 2012 as the International Year of Sustainable Energy for All. However, it appears that world governments are again failing to live up to their responsibilities, especially to future generations; many now seem to think that an international binding agreement is feasible by 2020.

Such a timeline would be too late to keep global temperature increases below 2°C, according to Fatih Birol, chief economist at IEA. Birol emphasized that needed changes in investment patterns would not occur without international agreements.


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