The day after tomorrow
The world is still struggling to implement meaningful climate policy
The private sector is trying to come up with its own ideas
“How dare you!” Even by her impassioned standards, the address to the un General Assembly by Greta Thunberg, a young Swedish climate activist, was coruscating stuff. “How dare you continue to look away and come here saying that you’re doing enough when the politics and solutions needed are still nowhere in sight.” She will have seen or heard little at the un’s one-day climate summit or in the wide range of get-togethers surrounding it which made up New York’s climate week to placate her wrath.
The summit concluded with a torrent of new announcements. There was a commitment by 65 countries and the European Union to reach net-zero carbon emissions—taking as much carbon dioxide out of the atmosphere as they are putting in—by 2050. Germany, Slovakia and others joined an alliance to halt the construction of coal plants; 32 countries are now members. Companies and investors announced measures to reduce emissions from shipping, buildings and more. Narendra Modi, India’s prime minister, set a new 450-gigawatt target for his country’s renewable-energy capacity, more than five times the current level. The un’s secretary-general, António Guterres, professed himself pleased: “Today, in this hall, the world saw clear ambition and concrete initiatives.”
Some announcements were promises of future announcements. Fully 59 countries said that they would shortly be unveiling more ambitious commitments under the Paris agreement, which aims to keep global temperatures “well below” 2°C above those in pre-industrial times; a global round of such increased commitments is to be negotiated next year.
Even if all the pledges are acted on, though, the gap between what the summit promised and what needs to be done remains a chasm. If Mr Modi were to quintuple India’s renewable power capacity over 11 years, that would represent an annual growth no higher than that of renewable generation worldwide in the decade 2007-17—and he said nothing about reining in the support that India’s state-owned banks offer coal companies. India has made no commitment to reach net-zero by 2050 or at any other time—any more than America, China or Russia has.
Away from the un, businesses got in on the act. Some 87 companies, including Nestlé and Salesforce, a big provider of software-as-a-service, pledged to reach net-zero emissions in their businesses by 2050. Jeff Bezos did them ten years better, announcing that Amazon would reach net-zero emissions by 2040 and that it was buying 100,000 electric lorries to move towards that goal. Overall, some 650 companies with a market value of $11trn have signed up to the Science-Based Targets Initiative, a consortium of ngos which certify and monitor the commitments firms make to align themselves with the Paris objectives. Many aim to cut emissions by around 2.5% a year. They are trying to reduce energy consumption in their supply chains and in the way their products are used, too. On average these emissions are almost six times larger than those from a firm’s direct operations, says Alberto Carrillo Pineda of cdp, an ngo which monitors corporate climate efforts.
Unfortunately, while target-setting firms account for 14% of the world’s stockmarket value, they emit only 2% of its carbon. Between 1988 and 2015, according to cdp, 71% of greenhouse-gas emissions came from fossil fuels sold by 100 energy giants. On the afternoon of September 23rd the bosses of companies including ExxonMobil, Royal Dutch Shell and bp sat in the airy Morgan Library for a forum organised by the Oil and Gas Climate Initiative, an industry effort to reduce emissions from operations and invest in technologies that will help mitigate climate change.
The firms vowed to limit methane emissions and highlighted their investment into carbon capture and sequestration. But they also explained that they were continuing to develop new oil and gas fields. “We are meeting a demand for a product that makes the quality of life in the world better,” said Mike Wirth, the boss of Chevron.
They are unlikely to stop unless demand drops off. That might happen if, or when, the regulatory war on carbon enters a new phase. A new report by Principles for Responsible Investment, an unsupported group of investors with $86trn under management, predicts “abrupt and disruptive” climate policies by 2025, as authorities wake up to the urgency of the climate challenge. Mark Carney, governor of the Bank of England, used his un speech to stress the need for businesses to be made to disclose the costs that climate change and climate policies could stick them with.
A complement to better assessing the climate risks of investment is to invest in things that reduce the climate risk in the first place. This is aim of the Climate Finance Leadership Initiative (cfli), a group of banks, asset managers and energy developers handpicked by Michael Bloomberg, former mayor of New York City and a un special envoy for climate change.
There is a huge need for energy investment in poor countries. There is a huge amount of capital in rich-world pension funds. At the moment, though, zero-carbon energy in developing countries does not appeal to those funds’ appetite for safe and reliable investments.
That is where the cfli comes in. By bringing together asset managers, like axa and Japan’s Government Pension Investment Fund, banks, like hsbc, and energy-project developers, such as Enel, it can cover the pipeline of renewable investment projects—from capital raising and allocation to project development.
In a recent report the cfli said that closer ties between private finance and development-finance institutions would allow greater use of tools that share risk between public and private investors. With that in mind, on September 25th the cfli announced a tie-up with the Association of European Development Finance Institutions. The association’s members have experience in emerging markets; they can scope out projects for the cfli and bear some of the risks.
The cfli plans to invest $20bn in the next five years. Compared with the trillions needed in clean energy, that does not sound much. But Daniel Klier of hsbc argues that by creating successful pilot projects the cfli can demonstrate the attraction of its strategies for removing risk from renewable energy investments.
Such promising initiatives are unlikely to placate Ms Thunberg. “All you can talk about is money and fairy tales of eternal economic growth,” she raged at the general assembly before seeking to conscript another un body to her cause. Under the “third optional protocol” to the Convention on the Rights of the Child, the Committee on the Rights of the Child can be petitioned by children being denied their rights. Ms Thunberg and 15 other young people filed such a complaint against five countries that have ratified the protocol—Argentina, Brazil, France, Germany, and Turkey—for following climate policies that do not respect or protect children’s rights. They are nothing if not determined. ■
This article appeared in the International section of the print edition under the headline "The world is still struggling to implement meaningful climate policy"
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