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Group of 285 global investors with more than $20T in assets under management calls for urgent action on investment-grade climate change and energy policies; guidelines for governments

24 October 2011

Saying that “investment-grade climate change and clean energy policy is required to shift private sector investment from high-carbon to low-carbon assets”, a group of 285 investors has urged governments and international policy makers to take new and meaningful steps in the fight against climate change.

In a joint statement, the group, representing more than $20 trillion in assets under management, stressed the urgent need for policy action which stimulates private sector investment into climate change solutions, creates jobs, and is essential for ensuring the long-term sustainability and stability of the world economic system.

Investor support for climate action as expressed in such a statement has more than doubled since November 2008, when 150 investors with $9 trillion in assets under management first came together to urge government leaders to act on climate change.

Current levels of investments in low-carbon technology and infrastructure are substantially lower than the $500 billion per year deemed necessary by the International Energy Agency (IEA) to hold the increase of global average temperatures below 2 °Celsius—the target agreed to in Cancun last year.

Climate change presents major long-term risks to the global economy and to the assets in which we invest. At the same time, well designed and effectively implemented long-term climate change and clean energy policy (“investment-grade policies”) will not only present significant opportunities for investors in areas such as cleaner and renewable energy, energy efficiency and decarbonization, but will also yield substantial economic benefits including creating new jobs and businesses, stimulating technological innovation, and providing a robust foundation for economic recovery and sustainable long-term economic growth.

...With data from the IEA indicating that global energy-related emissions of carbon dioxide (CO2) in 2010 were the highest on record, it is clear that the need for action is urgent. However, current levels of investment in low-carbon technologies fall far short of what is needed. Private investment will only flow at the scale and pace necessary if it is supported by clear, credible and long-term policy frameworks that incentivize investments in low-carbon technologies rather than continuing to favor carbon-intensive energy sources. Therefore, as we approach the United Nations Framework Convention on Climate Change (UNFCCC) Seventeenth Conference of the Parties (COP-17) in Durban, South Africa, in November-December 2011, we wish to reiterate the calls we have made in previous Investor Statements about the importance of both domestic and international climate change policy in catalyzing the required levels of investment needed to transition to a low-carbon economy, and to outline the elements of “investment-grade climate and energy policy” necessary to attract large scale investment in solutions to climate change.

—2011 Global Investor Statement on Climate Change

Coordinated by three leading investor groups on climate change—the US-based Investor Network on Climate Risk (INCR); the European Institutional Investors Group on Climate Change (IIGCC); and the Investors Group on Climate Change (IGCC) in Australia and New Zealand—alongside the United Nations Environment Programme Finance Initiative (UNEP FI), and the Advisory Council of the Principles for Responsible Investment (PRI), the statement represents the largest ever grouping, by both number of signatories and assets under management, to call for policy action on climate change.

The statement is supported by the findings of a report commissioned by the three investor groups and UNEP FI. This report underscores the importance of investment-grade policy which will enable institutional investors to allocate capital towards climate change solutions, including appropriate government incentives to compensate for heightened risk and sufficient scale of technology deployment. The report also emphasizes that long-term policy stability is critical and retroactive changes can significantly damage investor confidence. Contained within the report are case studies on the climate policies of six major emitters and further examples of investment-grade policy, which may prove instructive for national governments and negotiators considering future policy initiatives.

Investors sent the statement and report to the G20 and other governments in anticipation of the United Nations Framework Convention on Climate Change at Durban in November/December. On the domestic policy front, the investors said that governments need to ensure that effective policies exist. According to the group, an integrated climate change and clean energy policy framework should include:

  • Clear short-, medium- and long-term greenhouse gas emission reduction objectives and targets, and comprehensive, enforceable legal mechanisms and timelines for delivering on these objectives and targets.

  • Comprehensive energy and climate change policies that accelerate the deployment of energy efficiency, cleaner energy, renewable energy, green buildings, clean vehicles and fuels, and low- carbon transportation infrastructure.

  • Comprehensive policies directed at reducing greenhouse gas emissions from sources other than energy, for example waste, industrial emissions, fugitives, land-use change, deforestation and agriculture.

  • Policies supporting investment in renewable energy generation, including measures that support the access for electricity generated from renewable energy sources to electricity transmission and distribution infrastructure.

  • Financial incentives that shift the risk reward balance in favor of low-carbon assets. This includes strong and sustained price signals on carbon, well-designed carbon markets and other appropriate incentives to enable private investment in clean energy. An integral part of this should be the removal of fossil fuel subsidies.

  • Adaptation measures to reduce unavoidable climate impacts.

  • Corporate disclosure of material climate change-related risks.

Furthermore, the group aid that governments need to ensure that the policies are well designed. Based on their experience with investing in renewable energy and energy efficiency, the investors suggested that investment-grade climate change and clean energy policy should:

  • Provide appropriate incentives to invest. Specifically, policy needs to recognize that investing in areas such as renewable energy and energy efficiency is not risk free, and therefore needs to be designed to allow investors to make appropriate returns relative to the risks that they are taking and the costs, risks and returns of other investment opportunities.

  • Recognize that scale is critical to addressing risk and enabling low-carbon investment opportunities to be more cost-effective relative to high-carbon opportunities. Scale allows unit costs to be reduced and allows expertise in the development and deployment of new technologies to be gained.

  • Be transparent—i.e., it should be clear how the policy is designed and implemented (or intended to operate in the case of new legislation).

  • Be of appropriate duration. Investors—in particular, those making large investments in areas such as infrastructure and power generation—need long-term policy certainty. If policy instruments have a short time horizon or there is the likelihood that future governments will significantly change the policy framework, investors will tend to invest elsewhere.

  • Avoid retroactivity. Where governments wish to adapt or change policy they should commit to clear prospective timeframes and set clear criteria for these changes.

  • Seek to harness the power of markets to find the least cost ways to deliver on climate change objectives.

  • Align with wider policy goals including economic, energy, resources and transport policy objectives.

Governments need to ensure the effectiveness of the institutions charged with implementing these policies, the investors said. In particular, relevant regulatory or oversight bodies should have appropriate resources, and have the ability and authority to ensure that climate change and related energy policies are effectively implemented.

International policy recommendations include:

  • Continued work towards a binding international climate change treaty that includes all major emitters and sets short-, mid-, and long-term greenhouse gas emission reduction targets.

  • Support the development of the Green Climate Fund and other comparable funding mechanisms.

  • Accelerate efforts to reduce emissions from deforestation and forest degradation (REDD and REDD+).

Investor Network on Climate Risk (INCR) is a North American network of institutional investors focused on addressing the financial risks and investment opportunities posed by climate change. INCR currently has more than 100 members with more than US$10 trillion in assets. INCR is a project of Ceres, a coalition of investors and environmental groups working to integrate sustainability into the capital markets.

The Institutional Investors Group on Climate Change (IIGCC) is a forum for collaboration on climate change for investors. IIGCC brings together European investors to engage with policymakers, companies and investors on addressing long-term risks and opportunities associated with climate change. The group currently has more than 70 members, including many of the largest pension funds and asset managers in Europe, representing assets of around $10 trillion.

Investor Group on Climate Change Australia/New Zealand (IGCC) The IGCC represents institutional investors, with total funds under management of approximately $700 billion, and others in the investment community interested in the impact of climate change on investments. The IGCC aims to encourage government policies and investment practices that address the risks and opportunities of climate change, for the ultimate benefit of superannuants and unit holders.

United Nations Environment Programme Finance Initiative (UNEP FI) is a global partnership between the United Nations Environment Program (UNEP) and the global financial sector. UNEP FI works closely with more than 200 financial institutions who are signatories to the UNEP FI Statements. Its mission is to identify, promote, and realize the adoption of best environmental and sustainability practice at all levels of financial institution operations.

Advisory Council - Principles for Responsible Investment Initiative (PRI) The Advisory Council is the strategic governance body of the Principles for Responsible Investment Initiative (PRI). Established in 2006, the PRI Initiative is managed by the PRI Secretariat to promote responsible investment and support investors by sharing best practice and facilitating collaboration.

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October 24, 2011 in Climate Change, Policy | Permalink | Comments (20) | TrackBack (0)

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NO MORE SOLYNDRAS PLEASE.

What no more Solyndra ? this is not the end of the world Solyndra, at least this money was spent for a interesting experiment. You republican prefer to give the money away to oil compagnies through subsidies and tax cut, so no more tax cut and subsidies to big oil, and corn ethanol, ok ?

If it has the words "climate change" in it - it is print suitable for wrapping fish and only that. Recall Algore's recent hissyfit with all the bad language, crying how no one listens to "climate" anymore. Doh!

Take a hint alarmists - Al's right on this one. NO ONE IS INTERESTED IN "INVESTMENT GRADE CLIMATE CHANGE." They are VERY INTERESTED in new energy, low temperature nuclear reactions, micro-grids, home CHP systems, zero-point etc.

These climate risk clowns have been trying to bamboozle the public for 20 years to give them more, more, more, money to alter the temperature of the Earth - it's OVER. Say goodbye to climate investment and HELLO to energy efficiency, energy democracy, energy of, by and for the people - investment. That's what's coming. Sorta like a freight train of long suppressed knowledge. The energy paradigm on Earth is going to change massively with massive consequences for old-school energy purveyors.

The iceman goeth. Energy Independence is here. Resistance is futile.

About that Solyndra thing. There are numerous sustainable energy success stories because of the DOE loan guarantee program... and one failure. Conservatives must focus on the one failure and ignore the successes because Republicans have prostituted themselves to oil company money.

Why not whine about the Billion$$ invested in black budget weapon systems that go south every year? Or fat cat guvmnt agencies that pay themselves $400k salaries to work for the people? Or Billion$$ in military adventurism to defend oil, or "anthropogenic climate change" or oil and gas subsidies, etc. etc. etc...

Take away all the subsidies, mandates, rebates etc. for maize ethanol in the US and wind and solar and they would all go away tomorrow. Hydro-electric is the only "renewable"? energy source that would be missed; wind and solar do not make 1 percent of US electricity.

Nuclear energy is economically "sustainable" for billions of years with massive amounts of Uranium in the oceans and earths crust, and there is three times as much thorium. Uranium at 1000 $ a pound gives as much maximum energy as 3,000,000 pounds of imported coal worth about 150,000 $. Uranium has sold as low as 8 $ a pound.

If reprocessing were universal, the amount of Radio-active materials needed to be safegarded per person for a life time of energy in the US would fit in a Mexican coke bottle and leave room for all of the Coke. Uranium is natural on the earth and does not need to have special safegards. No one could tell if all the uranium ever mined were dissolved into the oceans, but it would be a waste of the fuel. This fuel is being wasted in the US today. Reactors have been built with no water to boil off and force materials into the environment quickly. The failed reactors did not cause 20,000 deaths and more as the failed towns did.

Get rid of the sale of cigarettes in Japan before any reactors are closed because of invalid fear of low levels of radiation. Then you can stop the highly radioactive airplane flights. ..HG..

@Eschewo

The Solyndra loan guarantee process was initiated under a Republican president. But that pesky detail doesn't fit the narrative, does it?

Not another penny should be invested in large natural gas fueled power plants anywhere in the world. There are enough new buidings in areas where there is natural gas to use micro-turbines with heat capture for cooling or heating. Even the coal now used for power plants can be converted into methane for co-generation units in buildings and homes.

Subsidies spent for ethanol, wind and solar woud reduce CO2 releases far faster and more effectively if spent on cogeneration units. Co-generation units will pay for them selves now in most cases, but even more savings would come if the gas were delivered to them at nearly as low a price as utilities get.

Co-generation for buildings must be required like insulation and other energy saving lights and devices are, but they will soon pay their capital and operating costs in savings of energy. The much higher volume of production will make for cheap units.

The extra CO2 released, instead of using wind power, can be captured by new permanent large trees where forests once were. Groasis boxes are good for restarting forests.

Spend your billions on cogeneration for new buildings in China alone. ..HG..

That BEST report has the whole denier community up in arms, because they did not expect such a piece of heresy from their darling Judith Curry. Since they have always had only one simple strategy, their reaction have been a predictable one. Turn up the rhetoric another notch, as evidenced here in this thread.

In the mean time the science stands rock solid and all they have going for them is dogma.

Far superior to uranium based nuclear is the LFTR. This group could fully fund LFTR research and build units for sale. Liquid Flouride Thorium Reactors do not produce any long-term radio-active waste, are inherently safe, and contrary to Henry's statement about cheap uranium is vastly cheaper than uranium. Thorium is 10 times more abundant than Uranium, but the really important thing is that only 0.7% of uranium is fissile. Extracting this U235 from U238 is a very expensive process. See flibe-energy.com

Funding LFTRs is the most important thing this group could do to prevent pollution and global warming. I have been a supporter of AGW in the past but have changed my views slightly. I still agree with the goals, just not the reasons. There is good evidence that the world has been warmer within the last 10000 years (going back to pre-dinosaur age is not relevant) and obviously survived without damage, but this did not entail high CO2 concentration. Polluting our world is definitely a bad idea. Excess CO2 is acidifying our oceans and destroying the base source of our oxygen and food chain. As a species we are committing suicide.

That last statement also applies to most western countries financial model, but that is another topic.

Anne: You must mean the theorization, speculation and statistical data manipulation stands rock solid? When you use the scientific method, including experiments, to verify anthropogenic global warming, come back and talk to us.

This is unprecedented. Extremely wealthy people are asking the government to make them more wealthy by making exceptions to the rules. Gee. If this works, they might do it again someday.

@ejj: Did you read the BEST report, which takes a fresh look at the data and confirms that, lo and behold, those hundreds of scientists who have been working in the field do know what they are doing?

"Excess CO2 is acidifying our oceans and destroying the base source of our oxygen and food chain. As a species we are committing suicide."

Alarmist anxiety: "An emotional disturbance that 1) is not primarily based on an actual, here and now situation; 2) tends to be based on catastrophic fantasies of what might occur rather than on a realistic assessment of the actual risks within any given situation; 3) tends to energize behavior that moves one away from one's primary goals in life rather than towards those goals; 4) tends to result in highly ineffective and self-defeating behaviors rather than effective and self-actualizing behaviors." MTU.edu Anxiety Management

Roy_H, your like, flibe-energy.com, is dead.

Typo: your link, flibe-energy.com, is dead.

New title for this one: "We Are the 1% and We Love AGW!"

To all AGW denialists,
Imagine a large spacecraft going in deep space, carrying a population and life support system with enough plants to remove the CO2 to produce food. The craft carries a very large store of organic material to set up new colony in the next solar system. Now, imagine what would happen if they would burn the organic material to generate electricity while producing more and more CO2, beyond the capacity of the plants to remove the CO2? Eventually, they would poison themselves to death...CO2 toxicity...and other pollutions.

The Earth is our spacecraft in deep space. If we continue to burn all the fossil fuels to generate more and more CO2, we will meet with the same fate! WE will have poisoned ourselves to death.
There is nothing Alarmistic about that. It's simply common scientific knowledge taught in Biology 101, or may be Advanced Biology 202...

Inoculate a bacterial colony in a flask of broth and watch them replicate geometrically...after the nth generations, without a renewable energy source and sufficient mechanism for wastes (CO2) removal, wastes built up as nutrients are consumed, and all the bacteria will poison themselves to death. We are those bacteria in our unsustainable fossil-fuel-consumption frenzy...

Now then, that we have realized the dire need to halt further fossil-fuel CO2 emission, there is a very simple thing governments world-wide can do to spur investments in renewable energy:

Ensure a modest 7%-a-year rise in the retail prices of fossil fuels. No tax will be needed if the prices of fossil fuels are rising by themselves. If prices are rising faster than 7%, the gov.'s may lower the fossil-fuel taxes to save the economy from spinning out of control, like in 2008, 1973, and 1980...

Investments in solar and wind energy will rise massively from the above measure, now that solar PV panels prices are going down fast, and the prices of advanced batteries used to manage the intermittency of solar and wind are also going down fast...

Continuing current trend, ten years from now, people will pay less for renewable energy than for fossil fuel energy prices of today. But, it won't happen unless people will increasingly invest in renewable energy, and people won't invest much in renewable energy unless they can predict with certainty the prices of fossil fuels at nth years from now...

Gee Reel$$, you should ask the oyster farmers here in Washington state about ""Excess CO2 is acidifying our oceans". They'd give you an earful. They can't grow oysters from "seed" spores due to acidic conditions eating them up before they can grow a thick enough shell to protect them. Here's a link to the Seattle Times article about it in 2009
http://seattletimes.nwsource.com/html/localnews/2009336458_oysters14m.html
Another from NOAH
http://www.noaa.gov/features/01_economic/pacificoysters.html
But hey, I know you're gonna believe what you wanna believe. Good luck with that.

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