Sunday, January 17, 2010

Greenwash: Investors push Governments for Cap and Trade Action

Australian, European and U.S. investor groups representing $13 trillion in assets said in a statement issued at a meeting at the UN in New York on Thursday "we cannot wait for a global treaty," They called on the U.S. Congress and other global decision-makers "to take rapid action" on carbon emission limits, energy efficiency, renewable energy, financing mechanisms and other policies that will accelerate clean energy investment and job creation.

Why the strong push from the Investment sector for Government Climate Action? It could be just altruism. But, as always the devil is in the detail. In this case, the push is for carbon trading - Emissions Trading Schemes like Kevin Rudd's Carbon Pollution Reduction Scheme (CPRS), often referred to as Cap and Trade.

I can understand that these people want the Government to set the rules for climate action and reducing carbon use - this gives the market predictability and stability for basing investment decisions on. But these same people have a vested interest in another financial market - the carbon market. It's another way for them to make money. All well and good, except if it fails, so does the prospects for avoiding dangerous climate change.

The meeting was the Investor Summit on Climate Risk, a meeting of 450 global investors at the United Nations that included UN Secretary General Ban Ki-Moon, United States Special Envoy for Climate Change Todd Stern, billionaire investor George Soros, and former Vice President Al Gore.

Australia was represented at the meeting by the Investor Group on Climate Change (IGCC) which represents investors of over $500bn across all sectors of the Australian economy, including many retail and industry superannuation funds.

The meeting called for a legally-binding climate agreement this year with comprehensive long-term measures for mitigation, forest protection, adaptation, finance, and technology transfer, including a global emission reduction target of 50-85% by 2050, consistent with estimates from the Intergovernmental Panel on Climate Change.

"Investors are poised and ready to scale up investments in building the low carbon economy, but without policies that create a stable investment environment our hands are tied," said Anne Stausboll, chief executive officer of the California Public Employees Retirement System (CalPERS), one of larghe largest public pension funds in the USA with more than $205 billion in assets. "U.S. leadership is critical in this regard, including U.S. Senate action to limit and put a price on carbon emissions."

"What investors need most from national and state legislatures are transparency, longevity and certainty," said Kevin Parker, global head of Deutsche Asset Management and member of Deutsche Bank's Group Executive Committee. "Until the U.S. Congress passes climate regulation, America will be at a competitive disadvantage in the development of renewable energy and other climate change industries."

Al Gore, in his speech, drew upon a report that Investment Managers Still Lagging in Response to Climate Change Risks and Opportunities, pointed out that the vast majority of the world's largest investment managers are not factoring climate-related trends into their short- and long-term investment decision-making,

On emission reductions, the statement said "We call on developed countries to establish emission reduction targets of 80-95% by 2050, with interim targets of 25-40% by 2020. Developing countries should have clear action plans that deliver measurable and verifiable emission reductions compared to projected levels."

The statement called for "national regulators worldwide, including the U.S. Securities and Exchange Commission, to require companies to disclose to their investors material climate-related risks and the programs in place to manage those risks."

Excellent stuff! But keep in mind most of the people at this summit are part of the financial and investment establishment. They have a vested interest in market based policies to establish a carbon price - in the Cap and Trade Emissions Trading Systems in place in Europe and proposed for the USA and Australia.

Their statement calls for "governments to put in place market-based policies to establish a carbon price that will signal that investments in carbon-intensive projects may yield lower returns, that new and established zero- or low-carbon technologies can be deployed profitably, and that investment in clean energy infrastructure will yield sound returns."

They "call on governments to support robust, transparent, well-governed markets that include mechanisms for directing private financial flows to low-carbon development in developed and developing countries."

Yet an emissions trading system has great dangers of rorting and not sufficiently encouraging investment to low carbon or carbon neutral projects. Stopping government fossil fuel subsidies should be a major priority, and placing a tax on carbon where it is produced, with subsidies to low carbon alternatives and dividends to the population should be considered.

Friends of the Earth UK prepared a report on carbon trading in November 2009 - 'A Dangerous Obsession (PDF)' - in which they outline that carbon trading could be the next 'sub-prime' crisis.

'A Dangerous Obsession' focuses on the buying and selling of a new artificial commodity - the right to emit carbon dioxide - which the UK and other developed country governments want to see expanded into a massive worldwide market.

According to FoE UK the trade in carbon permits and credits, mainly based in Europe, was worth $126 billion in 2008 and is predicted to balloon to $3.1 trillion by 2020 if a global carbon market takes off.

Releasing the report in November Friends of the Earth's international climate campaigner and author of the report Sarah Jayne-Clifton said: "Pushing a world carbon market as part of a global agreement to tackle climate change risks a double whammy of financial and environmental disaster.

"Carbon trading is failing dismally at reducing emissions, yet allows speculators to grow rich from the climate crisis and hands politicians and industry a get-out clause for polluting business as usual.

"Science tells us rich countries must act first and fast to cut their emissions at home if we are to avert climate catastrophe - and support poorer countries with adequate public money to grow cleanly and adapt to the effects of climate change which they are already feeling.

"The credit crunch has taught us that Governments, not markets are best placed to safeguard our future - at this critical point in the fight against climate change Ministers must step in and lead the way with a new, direct approach to tackling carbon emissions to create a safe and green future for us all."

So what will Australia's CPRS do? Emissions won't begin to fall until 2033, according to Treasury modelling. And the reason they will fall then is the 'predicted' introduction of 'clean coal' technology and import carbon permits from developing countries. Sounds pretty shonky to me. Climate greenwash!


Takver is a citizen journalist from Melbourne who has been writing on Climate Change issues and protests including Rising Sea Level, Ocean acidification, Environmental and social Impacts since 2004.