The Obama administration’s resistance to a new binding global agreement on climate change is not only disappointing; it reeks of political calculus.
US negotiators are bucking the European Union and Least Developed Countries’ push for a binding agreement with emissions reduction targets by 2015, and are instead advocating same-old voluntary actions – a tactic that has given us another 5.9 percent jump in global CO2 emissions in just-reported 2010.
This approach totally ignores what scientists, economists and investors say must be done to tackle this enormous challenge.
Scientists tell us that planetary warming must be kept to an average temperature increase of 2 degrees Celsius to avoid catastrophic changes to our climate, but under business as usual, we’re on a trajectory for 3.5 to over 6 degrees of warming in this century. And even 2 degrees of warming will trigger droughts and extreme weather, cause huge economic damages and disrupt billions living in coastal areas of the planet.
Meanwhile economists say that further delay in mandatory emissions cuts, as advocated by the U.S. negotiating team, is extraordinarily expensive. For every $1 of investment in climate action not spent before 2020, an additional $4.30 would be needed after 2020 to compensate for the increased emissions.The world’s largest investors get that delay is not an option. They see both imminent risks and opportunities from climate change in their portfolios. That’s why 285 investors, with $20 trillion in collective assets — worth more than the entire U.S. GDP — recently issued a policy statement urging world leaders to negotiate a binding international climate change treaty that includes all major emitters and sets short-, mid- and long-term greenhouse gas emission reduction targets.
In their statement, investors 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.
Investors say they need long-term policy stability if they are to shift massive amounts of investments from fossil fuels to cleaner energy solutions. As Stephanie Pfeifer, Executive Director at the Institutional Investor Group on Climate Change, whose members manage $10 trillion in assets, puts it, “Attracting capital at the scale required to meet climate change goals will only be possible when low carbon investments are seen as attractive relative to higher carbon investments. Determined leadership on national and international climate and energy policy will be fundamental in shifting this risk/return balance in favor of low carbon investments.”
It’s frustrating that the Obama administration isn’t listening to scientists or investors, when there’s trillions in capital waiting for the right market signals to be deployed.
And studies show that the right policies stimulate clean energy investing, which leads to economic growth and job creation. Nations like China, Germany, Brazil, and the U.K., with strong, national policies aimed at reducing global warming pollution and incentivizing the use of renewable energy, have fast growing clean energy industries.
The U.S. overall lags behind, but individual states like California have implemented a suite of policies that put them at the forefront of the clean energy industry in this country. The announcement that MidAmerican was investing $2 billion in a 550 megawatt solar facility wouldn’t have happened without California’s strong policies, or the federal Renewable Energy Production Tax credit which is due to expire at the end of this year.
The U.S. needs more deals like the MidAmerican solar plant. It’s the fastest way to grow the economy and create jobs. The wind industry, for example, already employs more than 85,000 people.And despite the negative press about Solyndra, the clean energy industry is growing at a record clip. Clean energy investments outpaced fossil fuel investments for the first time last year.
In fact, Bloomberg New Energy Finance just recorded the trillionth dollar of investment in renewable energy, energy efficiency and smart energy technologies since it began recordkeeping in 2004. Annual clean energy investment rose nearly five-fold, from $52bn in 2004 to $243bn last year, a compound annual growth rate of 29% and is expected to continue rising in 2011.
While this growth in clean energy is laudable, far more must be invested to respond to climate change at the scale that’s required.
The Obama administration should heed the calls of scientists and investors. It can start right away by negotiating in better faith in Durban — and by working here at home to renew the Federal Renewable Energy Tax Credit.
Mindy Lubber is president of Ceres, the US coalition of investors, environmental groups and other public interest groups.
This article first appeared on Forbes.com