A New Architecture for Climate Finance Must Encourage Private Sector Investment

Posted on December 15, 2018 by bencanellys

“Give a man a fish, and he eats for a day. Teach a man to fish, and he eats for the rest of his life.” In relation to climate financing, the Green Climate Fund (GCF) and Developed Country Parties, do both, and neither particularly well. The recent IPCC 1.5 report has taken away all room for delay: the GCF cannot waste its valuable funding on unaccountable, inefficient disbursements. We need a financial architecture that will let us move much faster than we are.

This COP has highlighted Developing Country Parties’ concerns that they won’t have the capital to meet the requirements of the Paris Agreement. More specifically, that they won’t have the funds to help pay for losses and damage expected from climate change and that they cannot afford to build the necessary infrastructure, such as renewable energy sources and other low-carbon technologies, that the IPCC 1.5 report warns are necessary.

The GCF relies on Developed Country Parties’ pledges to provide that funding. However, these Parties are hesitant to invest and bear the risk for the costs of climate change. Additionally, they are hesitant to grant funding to countries that are technically “developing,” yet have emerged as economic powerhouses.

This hesitation is exacerbated by irresponsible use of funds by the GCF. Experts argue that the use of climate grants, which make up 47% of the GCF’s activities to date, rather than direct investment, are a misallocation of public funds. They can actually harm markets by pushing out small-scale private actors, often going to those who could afford it anyway. Instead, GCF capital should be blended with government money in order to attract private investors and encourage market growth.

Private investors are hesitant to invest in the face of unfamiliar risk. This includes vulnerabilities to extreme weather, droughts, and rising sea levels for coastal economies, but also inaction by governments that will exacerbate these effects. However, private investors are often moving into these markets anyway, which are slowly becoming more viable as investment options. To encourage this, public funds from the GCF and governments should be used to leverage investment from private actors. Instead of being given freely, by themselves, in the form of grant disbursements, proponents argue that they should only be committed in cases where they can encourage private investment at 10x or higher.

Many Developing Countries, LDCs, and SIDS require foreign aid to kick-start these markets. Private investment must be encouraged as part of that funding. There is simply not enough public funding to tackle the problem alone.

Act NOW with the LONG view in mind.

Posted on December 12, 2018 by christashute

Every report and every session at COP24 has emphasized that we need to do more – faster – sooner – NOW. There is also a real emphasis on the importance of long term planning – of looking to at least 2050. Long term planning matters in climate change policy for three primary reasons.

First, a long-term strategy can inform short-term actions. For example, if a developing country understands and incorporates into its strategy electrification for its rural residents through renewables, then it can effectively bypass investment in fossil fuel infrastructure. Developing countries still need to grow to meet the needs of their residents – but the paradigm shift must move from expanding to grow to intensifying to grow. Long-term investments in energy and water infrastructure must be done with this long-term strategy. But the developed world needs to assist the developing world in identifying what the future looks like so they can leap frog.

Second, a long-term strategy can help bring people together around a common vision because it goes beyond the immediate economic consequence to sectors or individuals. There are tradeoffs, people and industries that are impacted by the transition we must make. The more time we have, the easier it is to forge consensus about how we get there and do so justly and equitably. People may disagree on tomorrow – but it is easier to agree in the long term. Long-term visions can also provide certainty for the private sector accelerating investment.

Third, building off the previous two, is the ability to create the more ambitious trajectory we need to save our planet. To be ambitious we must build the political support from the ground up. To be ambitious we must provide enough certainty to motivate investors to invest in the development of new technology and the projects that will build our future. To be ambitious we must not only understand where we need to go, but develop the strategies on how to get there.

For more information on long-term strategy, go to the World Resources Institute website for a collection of expert perspectives, case studies, and working papers.

Private Investors Help Fight Climate Change

Posted on December 9, 2018 by charliekuo

The IPCC 1.5 special report cannot be ignored. Our current pace of environmental degradation will lead to disastrous consequences. Now is not the time to put our heads in the ground and pretend that climate change does not exist. You cannot deny that some force is taking place, changing the inventory of our resources. I remember as a kid growing up in Niagara Falls, the first snow would start early October. Now, snow does not fall in my childhood town until January. Niagara residents would say that rain in October was supposed to be snow and that global warming turned the snow to rain.

Climate change is based on fundamental principles of equilibrium. If a process uses too much of a single resource, nature cannot catch up to replenish what was removed. We experience this principle in our day-to-day activities. Fortunately, we can take action. Through the will of concerned countries, the Paris Agreement was adopted. Delegates from countries committed to the Paris Agreement have gathered at Katowice, Poland for COP24. This meeting of the minds helps push climate change forward, albeit at a slow pace. However, technical, policy and financial experts come together and get the opportunity to address the world their findings.

In the wake of the IPCC 1.5 special report, it is becoming clear that the costs to combat climate change is too great for governments and non-profit financial organizations to bear. Financial experts echo this point of view and call out to private investors to help close the financial gap. After all, we are all in this together.

Financial institutions cleverly developed multiple mechanisms where investors can participate and get good returns. For example, investors can invest in new technology designed to minimize waste or shift to a low-carbon fund portfolio and invest in companies with low carbon emission processes. Financial revolutions occur in numbers, similar to switching to another service provider because of bad customer service, you can choose investments or products with low carbon footprints. Companies must evolve with consumer preferences and will be forced to make changes to stay viable.

Furthermore, ignoring climate change as an investor could expose significant risk and negatively impact returns. The Economist estimated that climate change would incur $4.3 trillion of losses in privately held assets from extreme weather. This means that investing in companies that have not protected their facilities from the effects of climate change may suffer significant costs that directly impact the return on investment.

Traditional methods of investment are no longer the status quo. Consumer demands and market changes must include climate change analysis as part of investment decision making. Although the estimated total investment to meet the 1.5-degree scenario may require up to $3.8 trillion from all parties, market demand and investment strategies are naturally moving to an environmentally conscious economy. We are moving to a place where the environment and the economy are no longer competing forces but can work synergistically. Financial experts are helping to build the mechanisms where the economy can continue to grow and lower pollution at all levels of industry.

A New Mitigation and Adaptation Tool: Low Emission Development

Posted on December 3, 2018 by charliekuo

Today is the first day of COP24! Technical experts and policymakers come from around the world with one goal in mind – progress. Progress in building solutions that give us that extra step toward a solution to climate change. There is no one solution, and discussions occur at multiple fronts over a range of topics.

The decision in COP21 started a shift toward low emission development (LED), which seeks to fundamentally change human behavior as well as industry practices to seek ways to minimize emissions. LED utilizes both mitigation and adaptation strategies. LEDs are also flexible where they can integrate with other planning tools and strategies. Successful execution of LED varies by country but has been widely known to depend on three factors: participation, prioritization, and implementation. Now at COP24, the LED project is bearing fruit. Tunisia successfully implemented LED and now serves as a case study for other counties to benchmark from.

One reason why Tunisia was so successful in adopting LED was that it simultaneously campaigned for public participation, petitioned to political powers, and targeted the youth. Early involvement of stakeholders is key to gain LED traction. LED is best approached by lobbying. Tunisia hosted workshops for the public and designed activities for children to learn the value of conservation. Tunisia’s approach propelled LED to the point where Tunisia added language combating climate change into its constitution!

The second factor requires careful prioritization and scheduling. LED is data heavy and inputs vary significantly depending on the country conditions and available resources. For some developing countries, LED may not be cost effective to implement. However, case studies like the success in Tunisia help strengthen viable LED strategies. Over time, as the LED strategy matures, LED becomes scalable and ultimately lowers the costs in its implementation.

The final and most difficult factor is implementing the LED. Implementing the LED can be messy because it requires careful coordination of multiple stages. The best way to overcome obstacles from implementation is to maintain good record keeping practices and concurrently build the institutional framework creating LED laws and regulations. Establishing the institutional framework helps build trust and hold the parties accountable. This cross-government work is critical to support LEDs.

Moreover, LED is attractive because it works synergistically with any economy. LEDs focuses on national priorities for sustainable development and simultaneously serves as a road map that spurs economic development by driving the economy in minimizing waste and pollution. LEDs are known to guide diversification of an economy.

Finally, LEDs is a pathway for funding and capacity needs. Since LEDs apply both mitigation and adaptation tools, LEDs can benefit stakeholders and prepare the National Adaptation Programmes of Action (NAPAs) that help qualify for the Least Developed Countries Fund (LDCF). LEDs can be eligible for numerous financial sources such as the World Bank ESMAP, US Country Studies program, and “fast start” funding under the UNFCCC.

Tunisia has already implemented the LED strategy in February 2018. Ukraine, Guyana, Indonesia, Mexico, and the UK have already adopted LED strategies, and more parties are following suit.

The Paris Agreement and the Green Economy

Posted on September 28, 2018 by charliekuo

The adverse impacts of climate change are no secret. We are constantly reminded of the gloomy consequences that will arise at our continued rate of consumption without significant intervention. It is predicted that growing wage gaps combined with climate change will cause over 100 million people to fall into poverty. Moreover, this alarming statistic could impact the well being of children in Africa and Asia, causing 120 million to suffer from malnourishment by 2030. Current projections indicate that our urban footprint will likely triple, demand for food will increase by 35%, and the world’s water needs are expected to rise by 40%.The adverse effects of climate change are not exclusive to impoverished and marginalized communities. By 2030 global economic loss is expected to reach 3.2%, indicating that even the private sector is not immune.

With the Paris Agreement, the paradigm shifted to place international focus on the transition from a traditional economy to a green economy ̶ meaning one that recognizes the relationship between environmental sustainability, economic development, and climate change. Under the Paris Agreement, countries must submit their Nationally Determined Contributions (NDCs) to mitigating global climate change while operating within their national environmental and economic objectives. These NDCs set national targets by utilizing mitigation and adaptation mechanisms. Cumulatively, the commitments established by each country aim to meet the Paris Agreement’s objective of holding the increase in global temperature to “well below 2⁰C.” The implementation of mitigation and adaptation mechanisms require funding and corporate involvement to perform the work. In this manner, the Paris Agreement has propelled the green economy forward. As United Nations Secretary-General Antonio Guterres recently stated, “Those that will be betting on the implementation of the Paris Agreement, on the green economy, will be the ones that have a leading role in the economy of the 21st century.”

The International Labor Organization (ILO) announced in its annual report, World Employment and Social Outlook 2018: Greening with Jobs, that 24 million new “green” jobs will be created globally by 2030. Likewise, within the same timeframe, the green economy is anticipated to offset predicted economic losses in traditional industries. The drastic advancements in renewable energy technology and innovation also support this assertion. For instance, more development in solar and hydroelectric energy technology reduced the demand for coal-based energy in many countries. In addition to this, industry leaders such as Microsoft and Amazon developed cloud-based computing services that enable small companies to reduce 90% of their CO₂ footprint. What is even more impressive is that the green economy’s net-worth now exceeds that of the fossil fuel sector (6% of the global stock market), according to a report by FTSE Russel. All of which lends credence to the words of ILO Deputy Director-General, Deborah Greenfield, who insisted that the green economy “can enable millions more people to overcome poverty and deliver improved livelihoods.”

Without a doubt, the green economy’s momentum shows no signs of stopping and has grown to exceed $1 trillion USD. However, this raises the question of how well-prepared are countries to handle the transition to a low-carbon economy. It is important to note even the green economy must be properly guided with the right policies. The aggregate collaboration from countries committed to the Paris Agreement is promising, and could provide the impetus for such guidance and direction for a sustainable economic shift. Only time will tell.

Continuing to Decouple

Posted on October 10, 2017 by michaela

Photograph by Carlos Barria – REUTERS

For the third year in a row, the International Energy Agency (IEA) reported that carbon dioxide (CO2) emissions from the energy sector remained level while the global economy grew. This continues to buck the economic thinking that economic growth, typically measured with gross domestic product (GDP), cannot be decoupled from environmental degradation. The current trend of decoupling GDP from CO2 emissions is largely due to the global growth of renewable energy use. Solar energy was the fastest growing source of renewables in 2016, while hydropower supplied the largest portion of global electricity demand growth of all the renewables.

A recent report from PBL Netherlands Environmental Assessment Agency released September 28, 2017 found that of the five largest emitters, which account for 68% of global CO2 emissions, only India showed a significant rising trend of greenhouse gas emissions. China, the U.S., the E.U., Russia, and Japan all had flat or decreased greenhouse gas emissions in 2016. However, in a departure from the IEA report from March 2017, this report found that global emissions of non-CO2 greenhouse gas emissions rose in 2016. Of these non-CO2 greenhouse gasses, methane emissions represented the largest portion—19% of global emissions. The primary sources of methane include fossil fuel production, cattle, and rice—a staple crop in the developing world.

Photograph: AFP/Getty Images

Meanwhile, another recent study released in September 2017 in Science revealed that a thinning of tropical forest density has led to a net carbon loss across every continent. This indicates that forests are no longer behaving as sinks because they have been degraded through logging, fire, and drought, among other factors. Forests provide a vast natural resource for developing countries yet increasing the sink capabilities of forests through afforestation, reforestation, and decreased forest degradation are among mitigation goals of these countries. This study highlights both the importance and the challenge of those goals. The international target of limiting warming to no more than 2˚C is unattainable without vast carbon sinks like these forests.

The decoupling of emissions from economic growth globally is cause for celebration. However, as seen with India, this trend is still tentative as developing countries work to increase economic growth, which could include increased agricultural production, forests use, and energy use. To continue decreasing global emissions, more work is required to assist the developing world with sustainable development. Increased methane emissions from the agricultural sector and increased CO2 emissions from loss of forest mass are among several challenges facing the developing world as they seek to grow. There are viable solutions to many of these problems. Yet these solutions require significant assistance and resources from the international community.

The developing world requires assistance in electrification and energy diversification in the way of hydropower and other renewables so the decoupling trend can continue. These countries also require capacity building to bolster forestry sector projects; the transfer of technology and best practices to assist with the growth of sustainable agriculture; and of course, continued mitigation efforts from developed countries.

Farming for the Future: Climate Change and Food Security.

Posted on November 9, 2016 by tori

The United Nations weather agency recently announced that the past five years have been the hottest on record, with increasing evidence showing that this is man-made climate change. Thus, the urgency for solutions increases here at COP22 where the United Nations Framework Convention on Climate Change (UNFCCC) is meeting to discuss and improve climate change goals. One way to mitigate climate change is to decrease GHG emissions. One way to do this, is to revise global farming techniques. Today at the “On-farm renewables and sustainable intensification to address climate change and food security” side event, several farming experts discussed opportunities to improve farming and food security. The experts discussed the use of sustainable intensification and renewable energy, co-benefits and trade-offs around land use, deforestation concerns, and exploration of funding options. Most notable was the conversation about sustainable intensification agriculture. Sustainable intensification is the optimization of all provisioning, regulating and supporting agricultural production process. Thus, sustainable intensification projects for agriculture help maintain and enhance production through the promotion of biodiversity and ecosystem services.

The Food and Agriculture Organization of the United Nation (FAO) has several new programs to improve sustainable intensification. “LIBERATION: Linking Farmland Biodiversity to Ecosystem Services for Effective Ecofunctional Intensification,” which will help identify the relationship between semi-natural habitats and on-farm management and biodiversity. This project also seeks to connect farmland biodiversity to ecosystem services. It will do this by examining different strategies to mitigate ecosystem services. Another project, “Mainstreming Agro-biodiversity in Law PDR’s Agricultural Policies, Plans and Programmes (FSP),” which will provide farmers with the necessary incentives, capabilities and support institutional framework to converse agricultural biodiversity in Lao.

Intensification of crop and livestock production are also essential to mitigate climate change and provide food security. In order to keep up with demand for beef and leather, for example, 21 million ha of deforestation has occurred in the Brazilian Amazon between 2000 and 2015 to support cattle. Simon C. Hall, the manager of Tropical Forests and Agriculture National Wildlife Federation (NWF), spoke about insights from the Brazilian cattle sector. The NWF has been working in South America with local partners for over 20 years to eliminate tropical deforestation from agriculture supply chains. They hope to accelerate the development and implementation of intensification for sustainability because the implications of deforestation are staggering: longer dry season, reduced rainfall, increased temperature. Sustainable Intensification on the other hand (when coupled with zero deforestation commitments), will lead to: land sparing, reduced emissions from LUC, reduced losses of wildlife habitat and biodiversity, increased market access, preferential purchasing agreements, and reduced leakage and rebound effects.

These, and many other projects presented at this side event on addressing climate change through new farming techniques, provide examples on how we may work towards farming for a sustainable future.

Finances are the Glue that will make the Paris Agreement Stick

Posted on December 7, 2015 by linda

Starting the second week of negotiations, the Climate Action Network’s held a press conference to discuss their view of the current “state of play” in the climate talks. Two themes clearly emerged; the need for a robust and certain climate Agreement to come out of Paris with clear targets and deadlines to send the correct signal to the industrial and business sector, and the financial support from developed countries to reach those targets and deadlines. What constitutes a robust agreement? Review of ambition goals coupled with a ratcheting mechanism to achieve a 1.5℃ target, resubmission of the INDCs, and setting the goal of 100% renewables and decarbonization by mid-century.

How do the Parties meet these targets and deadlines? By a robust finance mechanism. The INDCs can only be implemented if there is adequate financing that includes Loss & Damage. The billions pledged in Copenhagen and Cancun kept the developing country Parties at the table; now the call is to implement those mitigation and adaptation strategies to achieve decarbonization of the economy. This will come faster for some countries and slower for others depending upon their different capabilities. The collective financing proposed, which would include “all Parties in a position to do so”, is not the way to secure new financing. This, according to OxFam, is the equivalent of the developed countries “holding the money hostage on this issue.” The developing countries will contribute as they can, of course; but a vague reference too their obligation to do so has no place in the text.

What the developing Parties clearly articulated as a priority throughout last week’s negotiations, continues to threaten the stickiness of this Paris Agreement – the provision of finances to enable those countries to put their INDCs into effect. The developing Parties have fastened onto the idea of traditional differentiation and are washing their hands of the language that all Parties will contribute if “they are in a position to do so”. They will only cement a deal that has clear markers for capacity to contribute and places those responsible [the global North] as the major financiers of the efforts to stem climate change.

The Ying and the Yang of the Low Carbon Economy

Posted on November 30, 2015 by mjames

The call for a new low carbon economy is echoing through the halls of COP 21. In the opening ceremony, French President Francois Hollande, Prince Charles, and UN Secretary General Ban Ki Moon all urged the world to transition to a new low carbon economy.

Making that transition requires action on multiple fronts. First, countries must address market distorting and environmentally destructive fossil fuel subsidies. Second, countries must power their economies with renewable energy.

Two separate events today indicated that countries and industry are starting to make that transition. Friends of Fossil Fuel Subsidy Reform unveiled a communiqué calling on all countries to stop the subsidization of carbon intensive fossil fuels. Indian Prime Minister Modi and French President Hollande, launched the International Solar Alliance to help bring solar power to developing countries. Presented separately but connected by common goal, the two projects are cutting the path to a new clean energy economy.

Countries spend almost $500 billion/year on fossil fuel subsidies. They subsidize the consumption and production of fossil fuels. The subsidies unfairly tilt the market towards carbon intensive fossil by preventing clean energy technologies from competing on a level playing field. The FFFSR communiqué urged countries to take the money spent on fossil fuel subsidies and repurpose it to enhance education, health, and environmental programs. Countries have argued that subsidies are necessary to support the poor, who could not otherwise afford fuel. FFFSR research revealed that only 3 percent of subsidies are used to support the lowest income brackets.

The International Solar Alliance (ISA) is multi-country partnership to bring solar power to developing nations. The ISA is focused on increasing solar power generation in the 120 countries located between the Tropics of Cancer and Capricorn. Developing nations often have an abundance of solar potential but they lack the technology and finance to develop their resources. Germany, Italy, and Japan, the countries with the highest rates of solar penetration, are not rich in solar resources but are rich in technology and finance. The ISA will bring solar power to where it has the most economic and environmental potential.

The developing countries targeted by the ISA are areas where power usage is increasing. Adding renewable power to the grid in a developing country displaces high carbon emitting resources. For example, India is third largest consumer of coal in the world, it also has 300 million people who lack electricity. The type of electricity used to connect that group will have a huge impact on global climate change mitigation efforts. India is choosing the renewable energy pathway by setting a goal of 100 GW of installed solar power by 2020. India currently has 4 GW of installed solar power. To bridge this gap, India will need international financial and technology support.

India is investing $30 M USD in a new National Institute of Solar Technology with the goal of reducing regulatory hurdles, developing common standards to speed up production, developing innovative finance mechanisms, and supporting technology improvements. Estimates of the total investment needed to realize the solar potential of developing countries reach $1000 billion; a number that could be easily reached by re-tasking fossil fuel subsidies.

Developing nations have an untapped resource shining down on them. The ISA aims to spur transformative action in this field. Today, Prime Minister Modi started his announcement by stating that many Indians begin their day with a prayer to the sun. He ended his presentation by proclaiming that the ISA represents a “sunrise of new hope.” A sunset on fossil fuels would help the sun rise on a new low carbon economy future.

Economic growth and climate change

Posted on November 22, 2015 by madhavi

Each generation inherits a world that was created out of beliefs contemporary and relevant to a certain time. These beliefs affect prevailing values, values, which become embedded within the framework of decision-making. Often times, these values are based on beliefs that may no longer be understood, known or even correct. Nonetheless, they are transferred from one generation to the next and modified by another generation’s cumulative addition. From this perspective, a lack of understanding of the beliefs that comprise the framework of society can eventually be problematic. And this is evident in the present period.

Let’s take a step back to the 1930’s when Simon Kuznets developed a method for assessing the production capacity of an economy. The method, which earned him the Nobel Prize in Economics, provided the foundation for the calculation of the gross domestic product. By definition gross domestic product or GDP is the sum of all goods and services produced within a country’s national borders during a specific time period; everything from desks to diapers can be included.

Since the 1940s, GDP has become a simple assessment tool of economic capacity between countries and over time within the same country. However as Kuznets warned, though the indicator is useful for determining production capacity, it is limited as a metric to evaluate the state of an economy’s inhabitants. GDP as a single aggregated value cannot assess quality of life and it cannot provide insight on the distribution of wealth.

In spite of the statements of Kuznets and other economists of the time and over time, GDP has arguably become the single metric of not only domestic economic progress but also global economic progress. As the indicator of progress it is the targeted metric of economic policy. GDP is tracked and targeted by government and central bank policy makers with the intent to increase its value over consecutive periods.

There are four components to GDP, consumption spending, investment spending –investment on production capacity, government spending and net exports—spending by foreigners for US goods relative to US spending on foreign goods. In the United States the single largest component of GDP, comprising in excess of 65% of GDP, is consumption. As a result, our economy is targeted to consumption, from increasing employment, to low interest rates, to the built-in obsolescence of the goods we purchase.

Given that GDP was established and gained global traction over 70 years ago, our value for consumption has been inherited and modified over a few generations. We have been taught that we have insatiable appetites to consume and have perpetuated the consumption cycle, to maintain the era of consumerism. But this may be the problem.

Over time, through globalization, commercialization and the increasing busyness of life, consumers have become increasingly distanced from the production process of the good they are consuming. Consumers are no longer knowledgeable about the impact that their consumption demand has on the degradation, exploitation and depletion of planetary resources. Instead what consumers are aware of is price.

Fundamentally, consumers have focused on market price and have delegated the inclusion of value parameters including environmental and social costs to producers, but producers are incentivized to minimize cost and maximize return, a seemingly divergent incentive.

In most cases, market prices do not reflect the cost of a good. Lets look at a t-shirt manufactured in a developing country for sale in a developed market. The price of the t-shirt reflects only a portion of its true cost because it neglects social and environmental costs. The price neglects the costs of the exploited wage paid to the textile worker: the social cost resulting from his missing health care and the health and quality of life impact of the non-living wage. Though it does likely include transportation expense, it does not include the carbon footprint or the waste cost related to the landfilling or alternative disposal of the garment. In net, the cost of the consumption is only partially borne by the purchaser; other societies and the environment subsidize the price.

Consider the market price for the air we breath, there is no price, it is free and we need air to live. But, in spite of it being essential for life, it is a costless component of the production process; waste has been released into the air we breathe for years. If there had been a cost for disposal, or even better, a social value that prevented the release of air borne waste, the pollution that has collected in our atmosphere for the past three hundred years would have been significantly less. As simple as it may sound, consumers could have promoted the welfare of the atmosphere through their collective demand that air quality be preserved. How money is spent sends a very strong signal to producers of what will sell.

Both consumer awareness and economy-wide alignment are requisite to promote sustainable economic outcomes. This is, for example, evident in viewing the relationship between economic growth and carbon emissions over the past few hundred years. The energy consumption rates required to promote production and thereby foster consumption have enabled the speed of climate change activity being witnessed today. Atmospheric carbon dioxide is correlated to GDP growth; but so are degradation and exploitation of the environment.

COP21 will offer the needed international platform to evaluate the basis of climate change activity, which arguably is related to how we measure and drive economic growth. The inclusion of sustainable economic development within the Paris Package provides an opportunity for the inclusion of quality of life and ecosystem balance in the defining of economic growth. These elements essentially recognize that how we measure quality of life is fundamental to the economic outcomes we create. From this perspective COP21 could be the catalyst to move beyond GDP to determine a constructed international standard for economic progress. Ultimately, the goals of the UNFCCC to “stabilize greenhouse gas concentrations at a level that would prevent dangerous anthropogenic (human induced) interference with the climate system” may be better aligned with a measure such as gross national happiness, the better life index or a similar parameter. Further, the long term impact of COP21 may be dependent on explicitly promoting such a value shift.

Riding the Wave of Divestment

Posted on October 7, 2015 by sara

Divestment is essentially the opposite of investment. The climate action group gofossilfree.org describes it as “getting rid of stocks, bonds, or investment funds that are unethical or morally ambiguous.” Generally speaking, institutions divest when they stop financially supporting specific entities because of the means by which those entities generate revenue. Divestment has been used as an advocacy device for many years, as a means of tackling the tobacco industry, sweat shops, and even apartheid in South Africa.

Divestment of fossil fuels began in 2012 with Bill McKibben’s climate change movement 350.org. Since launching this campaign against traditional fossil fuels, hundreds of organizations – beginning with universities and faith-based organizations, and expanding to municipalities, pension funds, and foundations – have committed to divesting from fossil fuels. In the last month the movement has reached a landmark $2.6 trillion divested. According to one study, 436 institutions and 2,040 individuals across 43 countries, together representing $2.6 trillion in assets, have committed to divest from fossil fuel companies.

Many types of investors have embraced fossil fuel divestment, both on the institutional and the individual level. High profile individuals have been particularly active in the divestment from fossil fuels. Specifically, actors like Leonardo DiCaprio and Mark Ruffalo have led the movement to cease investments in traditional fossil fuel companies. Their announcements have served as a means to show legislatures and CEOs alike that United States citizens are taking climate change seriously.

Rather than these red carpet personalities, universities have traditionally been at the forefront of divestiture movements. We continue this trend in Vermont, with many colleges and universities (including VLS) committing resources to exploring divestment opportunities. This has been an important method of expressing students’ and citizens’ dissatisfaction with traditional energy investments. It has also lent support to Vermont’s support of broader energy and climate change goals.

Some studies show that divestiture is not actually effective as an economic driver because it does not force major fossil fuel companies out of business or necessarily compel them to change their practices. Nevertheless, divestment may, in fact, be a smart financial decision, since other recent reports have warned of the negative financial consequences of holding large portfolios of fossil fuels. Additionally, it can have an important impact in terms of shaping national discourse. By bringing climate change issues into the media spotlight, the divestment movement helps to put pressure on the negotiating parties at COP21 in December.

Decoupling the economic engine from GHGs

Posted on October 2, 2015 by tbach

At last week’s Climate Week NYC, the Heinrich Bolls Foundation released a study that found that countries in the Organization for Economic Cooperation and Development (OECD) have already decreased their GHG emissions without reducing their economic growth. In other words, they have “decoupled” economic growth from emissions. A few interesting facts include:

1. From 2004 to 2014, OECD economies grew an overall 16% while fossil fuel consumption dropped 6% and GHG emissions, 6.4%.

2. Since 2004, Germany’s GDP has grown 13% and its emissions have dropped 11%.

3. From 2004-07, the US GDP grew 17% while emissions related to fossil fuel combustion dropped 7.4%.

The study offers four factors to account for this decoupling: 1) using low-carbon energy instead of fossil fuels (driven by a large and fast drop in the former’s costs); 2) increasing efficiency in energy generation; 3) also increasing energy efficiency by consumers; and 4) transitioning from energy-intensive manufacturing to less energy-intensive service work.

Fear of dampening economic growth has hampered more than one politician from supporting climate change regulations. But given that this study is line with the EIA’s conclusion that 2014 saw GHGs drop while GDP increased, blogged about earlier this year, predictions that decarbonizing an economy can create jobs and fuel economic growth are looking very credible.