Mark Kenber: Paris - The great business opportunity of this century?

Reading time: 7 minutes
1 June 2015

LONDON: In an article for Climate Change: The New Economy, Mark Kenber, CEO of The Climate Group, describes the necessity for accelerated climate action from those leaders at the G7, UNFCCC meeting and Climate Week with only 200 days to go until Paris. With strong policy and vision, an attractive environment for investors and a low carbon future can be achieved.

The global energy infrastructure needs an overhaul. As prosperity and populations grow, the demand on our already weakened energy systems will potentially be too great.

But while appetite from investors is proven by the fact renewable energy has grown year on year even during a recession, the rate of investment is still too slow. This is mainly because investors haven’t received the policy support and clarity they need from their governments.

This investment not only stimulates energy security, but safeguards from wasted costs. In our 2012 report, An 'American Clean Revolution: Why the US should play to win on the clean economy', we found that without significant investment, poor water, electricity and transport infrastructure could cost the US economy US$1.3 trillion by 2020.

And better, cleaner energy doesn’t just avoid costs. It brings big profits too. The global low carbon economy is now worth US$5 trillion, and figures in a recent We Mean Business report show businesses are seeing a 27% internal rate of return on average for their low carbon investments. A recent IEA report also showed that global emissions had fallen but the economy continued to grow for the first time in 40 years. Investment in the low carbon economy is clearly a smart business decision.

Global climate talks in Paris (COP21), will determine whether this low carbon transition can happen swiftly – or whether we have years of more indecision.

So, how do we speed things up?

As we went into COP20 last year at Lima, expectations and hopes were high. We knew that if we failed there, failure at Paris would almost be a certainty.

We said we needed two things going into those negotiations; a clear draft text and process to get us to Paris, and the reaffirmation from countries that they would deliver on ambitious climate action commitments, known as Intended Nationally Determined Contributions (INDCs).

Now, over six months past those negotiations, and under 200 days until the start of COP21, the G7 summit marks an interesting moment to reassess how far we are in that process. If things need to change, we need to create that change now. If we wait until we arrive in Paris, we will have left it too late.

The G7 leadership is a unique group. When assembled it has the ability to influence and set the tone for key areas of policy worldwide. So, given the context of this year, what should we hope from the G7 leaders?

Firstly, ambition. The phrase so widely bandied around this year, but one that will continue to be needed right until the gavel hits.

We need these leaders to show not only their own ambition, but strong support on an ambitious global deal. Some have already taken steps by submitting their INDCs, but others around the table still need to do so.

This summit will gather some of the world’s heaviest emitters - Canada, Germany, Japan, the UK and US - and collectively, all seven member states account for over 25% of global emissions.  If these nations can show commitment and ambition, it will only put pressure on those who are still to declare their own INDC targets.

However, these INDCs shouldn’t just be seen by countries as a tick box exercise. They should be seen as a significant investment prospect for forward-looking businesses.

The notion that dealing with climate change costs money and is not any one person or organization’s ‘problem’ has long been portrayed – but the reality is very different. Business, NGOs and sub-national governments have continually shown there is neither cost nor extra energy involved in mitigation; they are doing it because they simply understand the economic growth and security it can bring.

Instead of countries just creating baseline targets, barely meeting the minimum, they should see this as a competitive opportunity. One where if they create robust policy through strong frameworks, they become more attractive to investors and open the option for further, stronger investment into their country. As we saw with the Montreal Protocol, when the policy framework is clear and robust, businesses can - and will - exceed targets.

This isn’t the first time businesses have looked for clarity and ambition from governments; they have been engaged in this debate for some time. But in the next few months we need the support of ‘non-state’ actors, such as big businesses, to not only continue, but grow in the level of support and vision it gives to a low carbon future.

Businesses that are yet to engage but keen to take advantage of these technologies, must be offered the initial support in doing so.

In partnership with CDP, at Climate Week NYC 2014 we launched RE100, a global initiative that celebrates and supports major companies committed to 100% renewable power across their operations. It has the goal that the world’s most influential businesses will commit to 100% renewable power within a specified timeline. By massively increasing private sector demand for renewable power, RE100 will accelerate the transformation of the global energy market.

And it is not just businesses looking to take advantage of this opportunity.

For countries it can bring energy security, better air quality and a strong, more sustainable economy to name but a few. In lieu of national leadership, many sub-national governments and leaders have become the pioneers and champions of a low carbon economy; showing time and time again how this form of investment brings them the returns that national governments are struggling to continue to ignore. 

The Climate Group States & Regions Alliance brings together a network of influential sub-national governments who are leading the way in addressing the challenges and opportunities of climate change. This has been strengthened by the Compact of States and Regions, a platform launched at the UN Climate Summit in New York last year that will allow sub-national governments to grow long-term ambition and accurately report on their emission reduction achievements.

Opportunities and mechanisms to support the mitigation of climate change are already out there.

And proven and widely used by many, the same call for greater support from national governments is going out yet again ahead of Paris. With stronger policy and vision, the prosperous low carbon future becomes a reality.

Paris is without a doubt an event of major importance. It’s the negotiations we’ve been working to for the past few years. But we must remember it will not be the end. The climate change agenda post Paris will live on, and important work will still need to be done until the deal set in Paris comes into force in 2020.

What must be taken away from Paris is that the momentum to a low carbon future is now unstoppable and that change makes environmental, business and moral sense.

Moments like the G7, UNFCCC meetings and Climate Week can help push us there.

From now until December, countries must move past the dated idea that doing as little as possible creates the least amount of pain. Instead, they must embrace the idea that by doing the best they can, they are creating the most attractive environment for future investment and a sustainable, prosperous future for their citizens.

It can, and simply has to be, achieved.

Read the "Paris  - The great business opportunity of this century?" here


Mark Kenber is the CEO of The Climate Group, an international non-profit working with corporate and government partners to promote a prosperous, low carbon future. Since 2004, The Climate Group has been convening leaders, sharing hard evidence of successful low carbon growth, and piloting practical solutions which can be replicated worldwide. The Climate Group convenes Climate Week, a key international platform for governments, businesses and civil society to collaborate on bold climate action and low carbon leadership. This year they will host it in both NYC and, for the first time, Paris.

 

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