Long Way to Go Before Climate Treaty Lifts Cleantech Sector

Nov 13, 2009

If a new international climate treaty is to unleash a worldwide "cleantech" explosion, then countries must go far beyond carbon trading and spotlight the role of technologies in cutting climate change pollution, according to a new analysis.

"There should be an emphasis on the role of technology in reducing carbon emissions and allowing the planet to do more with less," the Cleantech Group writes in an analysis explaining why the Copenhagen climate talks won't drive cleantech for now.

"Carbon trading will help, but the challenge of climate mitigation or adaption goes far beyond regulating the industrial emissions that carbon trading is largely aimed at."

Cleantech refers to the use of technology to boost energy efficiency while slashing costs and consumption. The sector represents "the largest investment opportunity on the planet," said Dallas Kachan, managing director of the Cleantech Group. But the world as a whole hasn't even begun to tap it in the way it should.

The absence of cleantech attention in UN climate negotiations is "a legacy" of them "having traditionally been focused on emissions reduction," Kachan told SolveClimate.

For a "truly meaningful" international climate accord, things must change.

The report says there is a need for policies and funds aimed at accelerating carbon capture and storage technologies to "clean up" coal; the migration to cleaner cars worldwide; and lower-impact farming, such as less reliance on fossil fuel-based fertilizers.

But technologies alone won't make significant impact without "massive levels of scale."

Scale will come from government renewable energy mandates and standards. There must also be wider sharing of technologies with developing nations and a rollback of "perverse" dirty energy subsidies, the report states.

Most importantly, though, huge sums of new funding must start flowing.

According to a range of estimates from respected scientific groups — including British economist and climate change expert Nicholas Stern, the International Energy Agency (IEA), the Organization for Economic Cooperation and Development (OECD) and the United Nations Framework Convention on Climate Change (UNFCCC) — a climate deal that cuts carbon pollution to levels required by science would be in the ballpark of $200 billion to $500 billion a year.

Those billions would "represent massive market demand for clean technology products and services," the report said.

But don't hold your breath for any of this to happen soon.

The final climate summit of the year in Copenhagen (Dec. 7-18) isn't expected to produce anything more than political pledges. On funding "there is still a big disconnect between the amount of capital required to mitigate and adapt to climate change than what countries are willing to spend today," Kachan said.

"There are yet to be any breakthroughs on the main issues: financial transfers and emissions cuts. These are elements that any Copenhagen agreement can't survive without," the report states.

But that's okay for cleantech — at least for now.

Governments are acting without any binding directive from the UNFCCC. Some are already putting hundreds of billions of dollars to work. More than $500 billion in stimulus has been earmarked for cleantech-related activities worldwide.

Most of that money is due to flow in 2010 and 2011, regardless of what happens in Copenhagen.

"The UNFCCC isn't very relevant as a driver of cleantech," Kachan said. In fact, "for the private sector it's never been about the UNFCCC."

This is a change of tune for the Cleantech Group.

In April, the group hosted a forum in Copenhagen that led to a call to action from technology leaders for governments to agree to a consensus on funding emissions reductions in 2009. The implication being that a strong Copenhagen outcome is — or rather, was — vital to cleantech success.

What changed? In a word, America, Kachan told SolveClimate.

"In April, it still seemed possible that the U.S. administration might pass an energy bill in 2009. However, given all the political capital spent on health care in the U.S. over the summer, the energy bill suffered, scuttling America's ability to have anything meaningful to bring to the table at COP15. And without America, there can be no binding global agreement," he said.

A possible outcome, Kachan added, "is a re-convening of countries some six months into the new year, when the U.S. might be in a position to return to the talks and make commitments."

In the meantime, the Cleantech Group is urging the world to look beyond the Copenhagen summit, and the entire UNFCCC process, to better gauge a future cleantech rise.

"There is much media attention being paid to the COP15 talks, but the most meaningful climate initiatives of late have been driven at the level of the G20, the U.S.-led MEF [Major Economies Forum] and the G2 (China and America). The bureaucratic and consensus-seeking nature of the UNFCCC discussions, where countries like Vanuatu are given equal representation, are counterproductive to effecting changes quickly," the report said.

The top economies, and certainly the private sector, "are not letting UNFCCC bureaucracy stand in the way of getting things done," it said. Take China.

"It has done more to show commitments to greening itself than any other country on the planet—more funding, more political will, more ability to scale than any other country," Kachan said.

 

See also:

Report Urges U.S.-China Cleantech Partnership, Not Competition

Why Cleantech Investors Haven't Panicked

Poor Demand Binding Treaty in Copenhagen, as Rich Squash Hope

Road to Copenhagen: Audacious Leadership vs. Nattering Nabobs of Negativism

Road to Copenhagen: Money-Changers in Democracy's Temple

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