[Climate Bonds] COP19 snippets: UN climate negotiations a damp squib / HSBC’s Robins “We need to integrate climate into financial policy” / GGGI CEO says investors should expect change in a rush, leaving assets stranded: “hedge your bets”!

Climate Bonds has posted a new item, ‘COP19 snippets: UN climate negotiations a damp squib / HSBC’s Robins “We need to integrate climate into financial policy” / GGGI CEO says investors should expect change in a rush, leaving assets stranded: “hedge your bets”!

I’ve been in Warsaw for more than a week, more talking private sector climate finance than UN negotiations, despite them being the ostensible reason for the gathering of very many nations. There are so many key people around that you can do a year’s worth of meetings in one burst; very efficient. Of course negotiations were also underway, if you can call arguing for days about a sentence a “negotiation”. The UN Climate Conference looks to be a damp squib. Memories:

– Australian and Canadian government reps trying to torpedo things left, right and centre. This is really embarrassing for the majority of Aussies and Canucks who fully understand climate change is real and has to be addressed. I’m Australian; errrk.

– You can smell the lignite on a foggy night in Warsaw’s Old Town (rebuilt lovingly after being flattened in WW2). The Polish Government wants to keep that lignite flavour to the economy and was determined to shout it from the rooftops. Unfortunate.

– Japan bowed it’s head and said “without nuclear – and renewables not scaling up as quickly as we had hoped – we have to rely on gas … so our emissions targets are wrecked”. Awkward.

– Lots of the usual calls ringing through the corridors for “climate justice“. Right of course. But, after 20 years, not proving to be much of a negotiating strategy with rich countries.

As Jeffrey Sachs says, we’ve wasted 20 years on negotiations and emissions are rising faster than ever. A global carbon scheme remains a great theory in search of practical application; it may still be the long game, but it’s not the short game we now need. See our Capital Steerage and 10 Tweaks blogs for some suggestions.

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From the World Bank’s cool “Building Low Carbon Cities” initiative:

  • If the world’s cities embark on a low-carbon development path, global green house gas emissions could decrease by 30%.
  • Only 20% of the 150 largest cities have even the basic analytics needed for low0carbon planning.
  • Of the 500 largest cities in developing countries, only a small percentage are deemed creditworthy. If we fix that they could be issuing climate bonds to fund low-carbon development.

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Some useful facts from a cracker of a presentation by IEA‘s Philippe Benoit:

  • The global solar PV capacity grew 42% last year and wind energy capacity by 19%. Great result; but long way to go. A few years ago I was involved in a study for WWF by Climate Risk to model growth rates required by low-carbon industries to avoid catastrophic climate change. Based on past examples, the maximum growth rates we can expect over an extended period are 25-30%; modelling showed we needed every low-carbon sector. See our Taxonomy of the Low-Carbon and Climate Resilient Economy for a sense of what those sectors are.
  • On current plans, by 2017 the world will have built all the fossil fuel infrastructure we can to get the maximum emissions allowable in 2035. So in three years we have to stop building all new coal and gas infrastructure. That’s why we don’t support retrofitting existing coal-fired power stations to extend their life, let alone replacing old ones with “more efficient” ones – unless they are made zero-carbon by deploying carbon capture and storage.
  • We’re currently on a path to global warming of 6°C. Of all the energy-related activities we need to undertake to keep temperature increases to a maximum of 2°C, 42% are energy efficiency. That will mean a lot energy efficiency work; yet efforts to scale up energy efficiency measures are not meeting policy targets anywhere. New thinking is needed. Philippe is of the view that we need to build a social compact around energy savings, in the same was that renewable energy has. He essentially means making energy saving “cool”.

Click to see the summary of their Energy Efficiency Market Report 2013 (or pay EUR100 for the whole bedazzle).

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The OECD says there are now 14 dedicated Green Banks around the world. They’re launching a coordination platform so they call learn from each other.

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HSBC’s Nick Robins (also Climate Bonds Advisory Panel member) at the OECD High-Level Breakfast on Wednesday: “We need to integrate climate into financial policy frameworks, making sure that the routine ‘rules of the game’ for banking (such as Basel 3), insurance and investment are aligned with low-carbon, resilient development.” Absolutely right.

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The Global Green Growth Institute, owned by a consortium of governments and headquartered in Korea, develops bottom-up green growth plans for developing country cities, regions and countries. Their CEO, Howard Bamsey, said in Warsaw he was optimistic about change, but warned investors about the sting if they don’t prepare: “When it comes, the change will happen with a rush. If investors get the future wrong, many of their assets will be stranded. If you’re one of the leaders in your economy, you must be hedging your bets.”

He added: “Responding vigorously to climate change can be a pathway to prosperity …. if (countries) choose investment strategies wisely, sustainable development can be an accelerator in lifting people out of poverty.”

You may view the latest post at http://www.climatebonds.net/2013/11/warsaw-snippets-22nov13/