GLCA will be hosting a side event during the upcoming 15th Conference of Parties to the UNFCCC in Copenhagen on Scaling Up Low-Carbon Energy Investments in Developing Countries, from 11:00 to 12:30 on December 16, 2009, in the Halfdan Rasmussen Room of the Bella Center, Copenhagen, Denmark. The side event will focus on policy options and financial instruments to promote and scale up public and private sector investments in low-carbon energy in developing countries.
In September 2009, GLCA organized a High-level Roundtable on Enhancing Private Investment in Clean Energy in Developing Countries, chaired by GLCA member and former World Bank President James Wolfensohn. The Roundtable brought together a small group of distinguished leaders to discuss financial and policy mechanisms to catalyze large-scale private investment flows to clean energy, especially in developing countries.
The side event in Copenhagen will build on the discussions held during the Roundtable. A high-level panel from public and private finance will offer remarks on topics relevant to scaling up low-carbon energy investment in developing countries, such as energy needs; existing investment profiles; potential for scaling up investments; financial and regulatory barriers; policy options and innovative financial instruments to overcome barriers; and recommendations for both policy makers and private-sector investors.
1. High Level Roundtable on “Financing for Low-Carbon Energy in Developing Countries”, September 21, 2009:
Issues of finance are critical to a new global agreement on climate change post-2012. To address these issues, a small group of distinguished leaders from the world of finance were invited for this high-level roundtable.
On July 8, 2008, the G8 agreed to reduce global greenhouse gas emissions by at least 50% by 2050. According to a report prepared by the International Energy Agency for the G8 summit, achieving that goal will require US$ 45 trillion (about 1.1% of average annual global GDP over the period) in additional clean technology investments. A large part of these funds will need to be invested in developing countries. However, there is a significant disparity between the resources required by developing countries to address climate change and the scale of available financing. Using even the most optimistic estimates, the mechanisms that exist today, such as the Clean Development Mechanism, Global Environment Facility, World Bank Climate Investment Funds and the Adaptation Fund of the Kyoto Protocol will not be able to provide the investment needed. In addition, official development assistance (ODA) has been declining since 2005. Additional sources and mechanisms for both public and private finance must be put in place to finance and incentivize the global transition to low-carbon economy and to help cover the costs of adaptation.
GLCA estimates that about US$ 50 billion per year will be needed in developing countries for mitigation and adaptation. The current global financial crisis should not be an excuse for inaction on climate change. In fact, addressing climate change at the requisite scale can be an integral part of the solution to the financial crisis. The transition to a low-carbon economy can support global recovery by creating new jobs and opportunities across a wide range of industries and services.
Given existing market opportunities, the private sector will take on the majority of investments in low-carbon energy technologies. Governments around the world should guide and leverage these investments in the right direction by providing an enabling environment with a stable regulatory framework and necessary incentives.
The questions that investors and policy makers are facing on this front and were discussed at the roundtable are:
• What should be the scale of new financing, and where will it come from?
2. Fourth Meeting of GLCA , May 19 and 20, 2009
The fourth meeting of GLCA was held on May 19 – 20, 2009 at the United Nations Foundation in Washington, DC. At the meeting, GLCA members considered a draft GLCA paper focusing on adaptation and the outcome of the Consultation on Adaptation to Climate Change held on April 27 and 28 in Washington, DC. They also discussed a draft communications strategy and work plan for 2009, and reviewed the status of negotiations towards a new climate agreement and the outcomes of GLCA events in 2008. List of participants
3. Consultation on Adaptation to Climate Change, April 27 and 28, 2009:
A Consultation on Adaptation to Climate Change was hosted by the United Nations Foundation and the Club of Madrid on April 27 and 28 at the United Nations Foundation offices in Washington, DC. The Consultation brought together a number of experts to deliberate on a draft GLCA paper on adaptation including specific recommendations for Copenhagen, to be considered by GLCA, at its 4th meeting in Washington, DC, on May 19 and 20, 2009. List of Participants
The final version of the paper, entitled “Facilitating an International Agreement on Climate Change: Adaptation to Climate Change” was published in June 2009 and circulated among national leaders, policy makers and climate negotiators. The paper was a joint effort by Mohamed El-Ashry, Yasemin Biro, and Tripta Singh. Reid Detchon and Lani Sinclair provided valuable edits.
—GLCA Side-event to COP 14 of the UNFCCC in Poznan, Poland
High Level Discussion on Climate Technology and Finance
During the 14th Conference of Parties (COP) of the UNFCCC in Poznan, Poland, GLCA organized a high-level discussion on climate technology and finance at a side-event on December 10, 2008. A discussion paper outlining the key issues was distributed prior to the event.
The GLCA event in Poznan was chaired by President Ricardo Lagos, moderated by Mohammed El-Ashry, and opening remarks were offered by Mrs. Gro Harlem Brundtland, former Prime Minister of Norway. It brought together 20 distinguished participants for a discussion on:
• Technology development and diffusion – technological options, increasing public-private R&D for clean technologies and their diffusion in developing countries
Participants reiterated that technology is a key element of a global effort to combat climate change. Widespread diffusion and adoption of low-carbon technologies and development of new technologies are both needed to cut global emissions in half by 2050. In order to tackle climate change at the requisite scale, clean energy technologies should be made available to and utilized by all countries. Given that more than three quarters of the global growth in CO2 emissions in the first half of the 21st century will be in developing countries, it is essential to support diffusion of clean technologies in these nations.
In order to reach global emission reduction targets, the participants underscored the need to:
They noted that addressing climate change should be seen as an opportunity and not a burden. The current financial crisis should not be an excuse for inaction on climate change; rather, addressing climate change can be an important driver in dealing with the financial crisis.
Given existing market opportunities, the private sector will take on the majority of investments in low-carbon energy technologies. Governments around the world should guide and leverage these investments by providing an enabling environment with a stable regulatory framework and necessary incentives. Proactive policies which put a price on carbon, eliminate subsidies for fossil fuels, and require (or incentivize) the use of low- or no-carbon products.
The participants also noted that market instruments such as taxes (harmonized carbon tax, international maritime emission reduction scheme -IMERS, air travel levy, etc.) and cap-and-trade systems with auctions of allowances can raise significant funds. Funds, channeled through bilateral and/or multilateral means, can help create enabling environments, build institutional/technical capacity and regulatory frameworks, finance R&D and demonstration projects, leverage private-sector investments, and facilitate diffusion of clean technologies in developing nations.
—Secretary-General’s High-Level Session:
Global Leadership for Climate Action--2nd Meeting of the Members and Senior Advisors