where checking accounts rebuild communities
Back to homepageInstitutional ReportsSRI Financial Professionals DirectoryToolsNewsSRI Performance and TrendsAbout Us   

January 09, 2012
The Pros and Cons of COP17
    by Robert Kropp

Nations agree to agree on a binding emissions reduction treaty, and the Green Climate Fund is established, but details on both are lacking and may not prevent warming of more than two degrees Celsius.

The narrative following last month's COP17 climate change conference in South Africa has focused on positive developments, some of them unexpected. Thanks in large part to intensive last-minute lobbying efforts by the European Union, China and India agreed to emissions limits for the first time, and as a result an agreement was reached to establish binding commitments by 2015.

Implementation of the commitments, however, will not occur until 2020.

Negotiators also agreed that developed nations will mobilize $100 billion per year by 2020 for climate adaptation and mitigation in developing nations through the Gre en Climate Fund. Thus far, the agreement merely sets out the legal structure of the Fund, and not where the money is to come from.

Nevertheless, that an agreement on binding commitments was reached at all came as something of a surprise, and in the view of some is enough to provide corporations with a compelling reason for addressing climate change more aggressively in their business operations.

This week, former UN climate chief Yvo de Boer told the UK-based Guardian, "The world is moving forward on climate change, with business now able to seriously calculate the implications of a low-carbon economy."

"An international agreement for global action on climate change is within our reach and should therefore be considered within every forward looking business strategy," de Boer continued.

And while funding for the Green Climate Fund was left unclear at the conference, de Boer said, "The Fund will have a facility to fund private sector initiatives. It will seek actively to promote business involvement and catalyze further public and private money."

The need for increased clarity of government policy is shared by investors. According to Paul Clements-Hunt of the United Nations Environment Program Finance Initiative (UNEP FI), "85% of financing for climate change mitigation will come from private investment."

A report issued in September by three major investor climate change networks called on governments to work toward a binding international treaty, support the development of international carbon markets, and support funding mechanisms such as the Green Climate Fund.

In a report published during COP17, the Brookings Institute stated, "Private sector investors will deploy their capabilities and capital on low-emission investments only to the extent that risk-adjusted returns are positive and competitive."

The Green Climate Fund provides for a private sector facility, enabling it to finance private sector mitigation and adaptation activities at national, regional, and international levels. But according to the Brookings Institute, strengthening "the enabling environment for private sector investment will be critical, but not sufficient."

The Fund "should look to ways to use its funds to catalyze the private sector more directly for scale-up and leverage."

Additional leverage is necessary because, according to the recently published World Energy Outlook of the International Energy Agency (IEA), $500 billion per year between 2010 and 2035 will be needed to keep the increase in global average temperature below two degrees Celsius.

Unfortunately, delaying until 2020 the implementation of legally binding limits makes it increasingly unlikely that global temperature increases will be kept below two degrees Celsius. According to the IEA's report, by 2017 the global environment will have locked in the entire carbon allowance of the energy sector to 2035, unless action is taken immediately.

COP17 also extended a second commitment period for the Kyoto Protocol, and it appears likely that the Clean Development Mechanism (CDM) will be extended as well. The CDM allows developed nations to meet some of their emissions reduction obligations under the Protocol through emissions reduction projects in developing countries.

On the other hand, Japan and Russia have refused to accept emissions limits under a second commitment period, while Canada has withdrawn from the process entirely. In 2007, Canada's greenhouse gas (GHG) emissions were 26% higher than 1990 levels and 34% higher than the target it agreed to in the Protocol, and faced fines for failing to reach its 2012 targets.

The increases in Canada's emissions are due primarily to the extraction of oil from the tar sands in the province of Alberta. In addition to emitting high levels of greenhouse gases (GHGs), the controversial practice requires the consumption of three barrels of natural gas to create one barrel of oil and leaks approximately three million gallons of contaminated water into surrounding rivers and groundwater each day.

So while positive signs did come out of COP17—in particular, an agreement on eventual binding limits sends a signal to business and investors that governments seem ready to accept their responsibilities to address climate change—the likelihood is, as Graham Sinclair of AfricaSIF recently told, "We're going to blow past two degrees Celsius."

Following the conference, the Intergovernmental Panel on Climate Change (IPCC)—whose Fourth Assessment Report established the two degrees Celsius limit—stated, "The series of agreements reached on Sunday by nearly 200 countries in Durban lays a foundation for the global community to tackle climate change."

However, IPCC continued, "The earlier action is taken, the cheaper and more effective it will be."


| Reports | SRI Financial Professionals Directory | Tools | News | SRI Performance and Trends | About Us | Contact
© SRI World Group, Inc. - All rights reserved
Terms of use - Privacy Policy - OneReportTM Network