Jeff Beyer is our man in Doha, representing the Carbon Trust at a number of events taking place alongside the United Nations Climate Change Conference in Doha, Qatar, and reporting back with his own perspective on what is taking place.
Day One: World Climate Summit - Finance, skills and the changing paradigm of leadership.
I walked past fleets of sparkling new aircraft on the sun-blanched airstrip at Doha International Airport, and saw in the hazy distance a skyline that scarcely existed when the first UNFCCC Conference of Parties took place in Berlin 18 years ago. I'd arrived for COP 18.
My first port of call was the third annual World Climate Summit, which brought together hundreds of leaders in business, finance and government to discuss their collective roles in meeting the challenge of climate change. Among the distinguished speakers was Christiana Figueres, Executive Secretary of the UNFCCC; His Excellency Mr. Al Sada, Minister of Energy and Industry for Qatar; and Connie Hedegaard, EU Commissioner for Climate Action, and former host of COP 15 in Copenhagen, the yearned-for watershed conference that was widely slammed as a failure.
Speakers at the Summit examined the role of public private partnerships in delivering solutions to climate change most cost-effectively, and discussed how to transform the global energy mix to make it sustainable. The expected suggestions included the importance of policy continuity, internalising externalities through carbon pricing, and the role of public sector procurement and incentive mechanisms to support scale-up and decrease costs.
But there were some non-traditional ideas as well, which can be broadly split into finance, skill building, and leadership.
Some financially focused suggestions included arrangements to reduce the effective cost of capital. For example, creative risk-sharing mechanisms can be used to de-risk investments through mezzanine finance or concessional, first-loss investment structures. The UK's Green Investment Bank was highlighted as a pioneer in this space, and the World Bank's International Finance Corporation is looking into it too. Another suggestion was to access the $95+ trillion bond market by learning how to securitise energy efficiency and renewable energy projects.
The role of sovereign wealth funds and pension schemes was also explored as an additional source of finance. Low-carbon infrastructure has a big price tag, and new source of money need to be found since governments are skint, banks are cautious about investment tenures longer than seven years (twelve years was common pre-recession) and companies are selling assets and hoarding cash to improve their balance sheets. Torben Moger Pendersen, CEO of Pension Denmark, explained that since safe bond markets are providing negative real rates of return and equities are too volatile, renewable energy investments are a good option for pension funds. They offer long-term capital investments with attractive rates of return, provided that their major risk - continuous, certain, long-term policy conditions - is mitigated through strong government commitments.
The importance of skill building was also a recurring theme. There is an urgent need to support technology transfer and accompany it with capacity building since much of the globe's future energy infrastructure will be built in the developing world. Helping potential finance recipients learn how to access money through mechanisms like the Green Climate Fund would be useful. Helping to establish emissions trading schemes outside the EU and a handful of other developed countries is also important, and is being facilitated by the World Bank's Partnership for Market Readiness.
Finally, Christiana Figueres moved to discuss leadership in her closing remarks. Asked about her thoughts on potential US re-engagement with the UN climate process, she insisted that the climate change challenge can't be approached with an out-dated notion of limited leadership. The challenge can only be met with an 'omni-partnership' among governments, internationally and at all levels domestically; the business community, who must recognise the business benefits of climate action, especially around energy efficiency; and the public, who must understand the human impacts and potential benefits of action so that their governments and businesses have a mandate to act. Just as the paradigm of knowledge has shifted from a single source (Encyclopaedia Britannica) to one where everybody's knowledge counts (Wikipedia), so must the paradigm of leadership shift from the UN negotiating rooms to one where action takes place at all levels, in all places.