Wednesday 30 December 2009

"How do I know China wrecked the Copenhagen deal? I was in the room", by Mark Lynas

Worth a read to understand the role of China in the failure of Copenhagen. Certainly puts Lula, Obama, Merkel, Brown and Rudd in a better light compared to the chinese delegation. Mark Lynas is the author of the impressive book "Six Degrees: Our Future on a Hotter Planet".

Saturday 19 December 2009

COP15: Copenhagen Accord now released

> Would you like to see a genuine artifact of the COP negotiations? Have a peak at this scanned version of the final text of the Copenhagen Accord. On the same page you can see a copy of the draft text from Friday 5am, as apparently discussed by heads of state on Friday morning. A treat for the history buffs among you.

> One item that stood out: the final text mentions a $100 billion per annum fund by 2020 to address the needs of developing countries; more than expected. It says that the funding will "come from a variety of sources, public and private, bilateral and multilateral, including alternative sources of finance." Sounds a lot like "we'll find the money somehow, by golly".

> On Friday morning the COP15 business delegations issued a strong statement asking for a global agreement. They ended up with "Business, governments and society are intricately linked – climate change solutions will need all three to work together." Absolutely right.

> A window into negotiating tactics: in the early hours of the morning US negotiators inserted brackets at numerous places in the negotiating text for the main strand of the negotiations that includes all countries - the long term action plan. This effectively blocked discussions on this negotiating track. Some observers believe the US wanted to counter moves by developing countries to add their concerns to the text, effectively ensuring that discussions would have to be continued next year.

> COMMENT:   Despite some good detail, the Copenhagen Accord is not a great agreement - nowhere near enough. Even US negotiators have admitted that the Accord won't hold global temperature rises to 2°C; has already projected the deal will, despite the assertions of the deal makers, lead to temp rises of 3.9°C. Last week the Stockholm Environment Institute was telling us that 1.5° and 350ppm are the maximum we can afford. (At least Tuvalu got this on the media agenda.)

But the Accord was never going to be enough; even if we had got a serious deal, the time lag for impacts to be felt would mean we'd miss our short window to get emissions down. Our best short-term hope is to turn mitigation into a profitable activity and hope we can raise enough private debt because of the money to be made over the long term, with a carbon price a nice bonus if and when it happens.

Whatever the Agreement, the conference marks the beginning of a new global discourse of cooperation. The extent to which nations (numbers of Heads of State) are coming together to discuss something hard and real in the full glare of galvanising global civil society activism starts us on a road. COPs will begin to be the new global forum of import, eclipsing the WTO and the G20 (which will now be seen merely as the big nations caucusing ahead of COPs). COP15 may not give us an Agreement that matters that much, but I do think it will provide the mechanism for us to work through the ghastly challenges we're going to face with environmental crisis, migration of peoples, and probably wars.

If we can construct mitigation as a profitable activity (and I believe we can) the Clean Energy race will become the next industrial boom - for those countries choosing to participate (and pity those that don't). It will, eventually, see energy prices drop substantially from where they are now, kicking off further booms. If we can use it to also push through a new generation of energy related productivity improvements, then it will prove a lasting step-up in world economic wealth (technology productivity gains being the primary driver, after cheap energy, of wealth). As long as that wealth can be enjoyed in ways that don't involve cannibalising resources and dirtying our nest, I reckon we have a good chance.

> Back to finance - I've had two exchanges this week with people setting up green fixed-interest investment funds, and two groups planning to issue green or climate bonds. Does two-by-two mean the dance is hotting up?

Thursday 17 December 2009

COP15: 16 Dec snippets #5

> Gossip: the World Bank has just increased the recent green bonds issue by $50 million, because the Dec 4 release sold so quickly.

> Very strong statement put out this week in Copenhagen by "Action by Business on Climate", coalition of WWF, Cambridge Leaders Group, CERES, Climate Group etc, representing 1,000 big businesses. The statement denies that big business would prefer caution and the status quo - and instead advocating a strong Copenhagen deal; and asking if businesses can do it, then why can't world leaders?  They want a legally binding deal that reduces carbon pollution and accelerates clean energy innovation. They want a clear signal that allows businesses to make long term investment decisions in low carbon technologies; Provides incentives to invest heavily in low carbon R&D, and; Protects economies from dramatic impacts of climate change.
Timely contribution. Tell your friends!

> Coral prediction by Stockholm Environment Institute: they're Ok at present, with a 1°C temp rise. At 2° seaweed dominates corals (no good for snorkelling any more, apart from all the ecosystem problems). At 3° temp increases corals die.

> COP15 Trivia (thanks to RePower America)
- Countries represented: 192
- Heads of state that have announced they will attend next week: 110
- Accredited attendees: 23,000 before they stopped accepting people
- Size of Brazilian Govt delegation: 600 (what are they all doing?)
- Fraction of food served at COP15 that is organic: 66%

> "If we don't deal with climate change decisively, "what we're talking about then is extended world war." – Sir Nicholas Stern.

> The UK defence think tank the Royal United Services Institute recently reported that climate change threatens to spark conflicts of a similar magnitude of both World Wars – only this time they will be waged for centuries.

> 36% of people in CPH commute to work on a bicycle - in all weathers. And we're talking about some cold weather. A friend reminiscences about when Shanghai was bike-filled. Maybe when they become as rich as the Danish are they'll get back to bicycling?

Thanks for reading. Access to the conference has now been cut; I'm outta here, back to London!


Please pass on as you see fit.
Find past snippets at
This is one of an occasional emailing. If you don't want to get them please let me know.
Sean Kidney

Tuesday 15 December 2009

COP15: 15 Dec snippets #4

> Monday morning. The world turned up today: it took me an hour's queuing in the 1 degree cold to get to the front door of the Conference Centre with my precious pass; thousands are stuck outside just trying to register. When I get inside I'm told the winding queue for new registrations was measured at 4 kms long. You read that right. 40,000 people have now tried to register to attend the conference's final days. On Friday, when 100+ heads of state turn up with their entourages, only 90 NGO people of the 25,000 here will be able to get in.

> Tuesday morning it starts snowing, as the flashing sign says to the thousands waiting "expect a 5 hour wait to register for the conference". A 5 hour wait outdoors that is.

> Connie Hedegaard, Danish Minister of Climate Change and Chair of the Conference, briefs NGOs, telling them to 'keep up the pressure'. She insisted that now is the time for a deal, that science and everything else is available, over 100 heads of states will be here, there will not be another chance. Postponing will not help but rather complicate so the pressure from civil society must absolutely remain firm.

> She also says "Finance is crucial, long term decisions are needed, a number of ministers are carrying out consultations on financial issues. A levy on financial transactions probably can't be designed and agreed this week but one on aviation and shipping could." Whoa, that would be big news!

> 11.37 am Monday - rumour reaches me that the African Group G77 has walked out of the "contact talks" this morning. The pace is quickening. Tuesday mormning it's India and China that are supposed to have walked out. Best place to figure out what's going on is the BBC rather than here.

> At Carbon Disclosure Project session "CDP is working with a number of govermments on mandatory disclosure proposals. We're encouraging governments to talk with each other so they can have a harmonised regulations."  Indian ex-Minister Suresh Prabhu: "can't we have an integrated financial system that includes carbon disclosure? Mandated? Baselines, MRV and standards need to be fully integrated."

> One friend responded to the snippet about research into how to promote bicycle use in Mexican by suggesting Mexico consider subsidies for bike purchases by women. I will ask my contact to pass it on!

> According to Danish pumps company Grundfos, pumps consume 20% of all electrical energy generated around the world. Apparently they are in more places than you can imagine.

New Climate Risk report looks at infrastructure risks from Climate Change

Infrastructure Summit reports on major legal, investment and standards challenges from Climate Change.
As Kevin Rudd prepares to fly to Copenhagen this week for the last two days of negotiations, Infrastructure Partnerships Australia, Climate Risk Ltd, Evans & Peck, Malleson Stephen Jacques and Zurich Insurance released today a report of the proceedings of their Climate Change and Infrastructure Summit.

The report says that there needs to be a recognition that climate change is real and already impacting on Australia's infrastructure. The report finds that without a new approach to specifying standards for construction and design, there is an increased chance of outages and asset failures - such as those seen during Australia's extreme weather last summer, leaving widespread economic impacts.  There is also risk of legal actions.

Climate Risk CEO Dr Mallon said: "The science is moving too fast for standards to keep up, which leaves the infrastructure sector in a very difficult space. We need some new, more dynamic approaches to folding climate change into the infrastructure development process."

"The summit also revealed that sticking to standards that do not include climate change risks may provide no protection from future litigation. Climate change has to be considered from now on."

"With Melbourne predicted to have another scorching summer, the prospect of rail lines buckling again causing massive economic disruption shows that we can't assume the future will be like the past. "

"These fast-emerging climate change risks to infrastructure were the trigger for this Rapid-Response Summit by the private sector, for the private sector."

The Summit was convened by Climate Risk ltd in conjunction with the nation's peak body Infrastructure Partnerships Australia, infrastructure advisory firm Evans & Peck, law firm Mallesons Stephen Jaques and hosted by Zurich Insurance Australia - 34 private and public sector infrastructure organisations participated.

Dr Mallon says that Australia is experiencing conflicting pressures, with a massive increase in infrastructure investment at the same time that climate change policy is undergoing rapid change. Government and academic research is increasingly pointing to major changes in sea levels and extreme weather events like heatwaves, bushfires and floods, meaning that much greater consideration of the vulnerability of existing and new infrastructure is badly needed.

"The standards for infrastructure development are not keeping up with climate change science." he said. "Because the science is changing so fast,we have to build in flexibility to our infrastructure, and to the standards that guide us, so we can move with that science."

Brendan Lyon, Executive Director of IPA states, "Climate change is a reality and that demands a new approach in the way we plan and procure our next generation of infrastructure.  A key consideration should be designing infrastructure that has options for adaptation, allowing major projects to be upgraded at least cost as the climate changes.

"The infrastructure sector is acutely aware of the risks and challenges posed by climate change and adaptation needs to be part of major projects. What is also required is greater certainty around the price and structure of carbon abatement, allowing industry to deliver fit for purpose
infrastructure for the long-term.

Monday 14 December 2009

Climate Bonds Initiative launched: fast-track solution to low-carbon economy (media release)

Media Release | Climate Bonds Initiative | PASS IT ON!


Copenhagen 14 Dec 2009: The global bond market could play a central role in the fight against climate change, according to an international think tank.

Today the international Network for Sustainable Financial Markets launched the Climate Bonds Initiative, designed to foster the use of long-term debt to finance a rapid, global transition to low-carbon economy. The Climate Bonds Initiative is operating as an autonomous project supported the Carbon Disclosure Project.

While the talks in Copenhagen have been holding everyone's attention, the role of private finance in what will be the biggest economic transformation in history -- estimated in one recent report to be more than three times the size of the whole industrial revolution -- is a side issue.

According to a number of recent reports a trillion dollars a year of investment has to flow into low-carbon industries if tipping points for runaway climate change are to be averted. The Initiative aims to encourage that investment.

Climate Bonds Initiative Advisory Panel members include James Cameron, Vice Chair of Climate Change Capital, Nick Robins, HSBC Climate Change Centre of Excellence, and Jeremy Leggett of Solarcentury.

Mr Robins said: "Putting the emphasis on private financing allows a different perspective. In place of always talking about the 'costs' of climate change, we can talk instead about investment opportunities."

"Bonds will be an important source of finance for action on climate change. The Climate Bonds Initiative provides a welcome platform to investigate the policy and market framework that will simultaneously raise capital for low carbon solutions and provide attractive risk adjusted returns for investors'.

Mr Cameron said: "Bonds have allowed us to finance the building of Europe's sewer systems, the growth of America's highway system, and the financing of two World Wars. We can now use Climate Bonds to finance the quick, global transition required to head off runaway climate change."

He added: "The transition to a low-carbon economy presents capital with what is likely to become the largest commercial opportunity of our time: investing in clean energy and low carbon infrastructure."

Climate Bonds Initiative convenor, Sean Kidney, said there were three work streams for the project: "We are developing policy models and advice for governments and corporations, developing agreed definitions and standards for Climate Bonds, and helping countries develop proof-of-concept projects and bond issues."

"Globally, there is no shortage of funding; for example, there is some $120 trillion being managed by institutional investors. In the wash-up of the financial crisis, fund managers the world over are re-weighting their portfolios towards fixed interest debt. But most of the bonds on offer lock institutional investors into the carbon-intensive economy."

"Discussion with institutional investors such as pension funds has found a large appetite for bond investments related to climate mitigation projects – as long as they first meet accepted risk ratings and rates of return. Many of funds face pressures from their stakeholder groups - governments, public servants, etc – to both deliver solid returns over the long term and to help address climate change with their investments."

The past year has seen green bonds from the World Bank and Climate Awareness bonds from the European Investment Bank. If the Climate Bonds Initiative has its way we will see an explosive growth in what are being called "green debt capital markets".

See the Climate Bonds backgrounder':

Sunday 13 December 2009

COP15, #3. Another nine snippets

> Did you see yesterday's spat between the US and China: US negotiator Todd Stern "says no way US public money is going to go to China"- an expected domestic political position, eyes averted from the fact that once the US has a cap and trade scheme millions of private money will be buying carbon credits from Chinese clean energy projects. China then says it's "shocked" at the comments, and that developed countries had a legal and moral obligation to deliver, based on their history of high emissions. Worth remembering that two days ago China was wrongfooted by Tuvalu, leading to headlines about a split in the G77. Nothing like pushing attention back on a common enemy to try and get the troops back in line.

> HSBC's Nick Robins at last night's Carbon Disclosure Project panel: "The market for low carbon services is now around $530 billion a year. By 2020 it will be $2 trillion a year. This is a big, exciting opportunity for people to get into, now."

> Wandered around the main, vast, negotiating hall yesterday with two friends, taking pictures of the hallowed ground where an agreement to avert disaster (we hope) is being worked out. Countries sit in strictly alphabetical order; the US is way up the back, very noticeable because its sign is in white, while every other one you can see is in black. They're the odd ones out because they haven't ratified the Kyoto Protocol; nice.

> Even the tiny hilltop cafe town of San Marino has a seat, albeit observer. Look it up on Wikipedia. But of course Taiwan was nowhere to be seen.

> Bonds gossip:
- Last week's green bond issue by SEB for the World Bank sold very quickly; it was their third. Expect a fourth tranche in quick time.
- RE manager for a major London-based bank told me, in the corridor, that they were working on a green bonds issue for renewable energy, which would make it asset-backed. Couldn't provide issuer details - yet. Perhaps we're seeing the beginning of a green debt capital market?

> Stockholm Environment Institute briefing: a 2°C target only gives us a 50/50 chance of avoiding runaway climate change; target needs to be 1.5°C and no more than 350ppm. Tough stuff in the context of what the negotiators are looking at, and supports Tuvalu's proposal a few days ago. What was especially interesting about this was that the session was presented by Sweden in its capacity as EU president. Hopefully this is getting through to the EU negotiating team. See research article at

> Interesting aside about their (SEI's) improved understanding of biodiversity inter-connectedeness: if Amazon basin forests dry out to savannah, as many models forecast for 3°+, it triggers an extra 3° warming in northern China to Mongolia, and a 2° cooling in North Africa. Buy real estate in Algiers as a hedge?

> At an meeting today of Public Finance agencies around the world working on climate, the UK Carbon Trust presented a great story about technology transfer. I'd heard the bones before, but it was pointed when explained in the milieu of slow-moving public finance agencies. Last year they were approached by China Energy Conservation Investment Corporation, who wanted to set up a joint venture. They've set up a £10 million pound venture capital fund. One of the first investments was in a small UK company that had developed a low-energy, money and emission saving air-conditioning solution for mobile phone towers. These typically rely on high-emission diesel-fuel generated air-conditioners. The company was selling into the UK market, which has 20,000 mobile phone towers. China is building 600,000 in the coming year; they now have contracts to roll out a good chunk of those. That's technology transfer!

> At that same session the Mexico Energy Ministry person told of research they'd done into how to encourage bicycle use. It showed that the main driver for Mexican men using bicycles was the number of women using bicycles. They're still trying to figure out what to do with the results.

Thursday 10 December 2009

COP15 Thursday: nine snippets this time

> Amazing scenes in the negotiator's Plenary today, with Tuvalu rep arguing and China resisting - both politely but in a very determined way - that a treaty has to limit global temperature increases to 1.5 degrees and to reduce CO2 in the atmosphere to 350ppm. No resolution yet.

> You may have seen news of "leaked Danish PM text" suggesting rich nations sort out climate change via the World Bank rather than the UN and pretty well tell developing nations what to do; quite a controversy at COP, as you can imagine. Gossip here is that a Danish Cabinet Minister colleague leaked it; seems the PM has been pushing it against lots of opposition, and the opposition hasn't given up.

> Hot news: Indonesia announced it's proposing a feed-in tariff for geo-thermal energy. Apparently they have 40% of the world's hot rock resources! See

> Russia announced it would cut emissions by 25% by 2020 (from 1990 levels) if other countries agreed to do the same; they had been saying 10-15%; the EU is saying "we convinced them". EBRD at a seminar today explained that Russia's energy intensity is incredibly bad; they have enormous potential to cut emissions from energy efficiency measures. Hopefully the high returns will entice energy efficiency investors despite political and crime risks. EBRD aims to help de-risk.

> Outlook for a "good" Copenhagen Agreement seems to be improving. Insiders are saying that having so many world leaders (more than 100) turning up, and Obama now coming for the end of the Conference, is forcing a better outcome.

> Also helping was the US EPA announcement this week to formally classify CO2 as a pollutant. That allows Obama to regulate CO2 without Congress - it dramatically increases his ability to deliver at least the cuts he's promising.

> The Saudi Arabian representative was being obstructive again this week; at one point he made a speech about the implications of the East Anglia Uni email leaks and how they raised doubts about global warming science. Apparently the speech was met with silence; no other country followed up. Would've been different under Bush.

> The Conference is quite a buzz; 15,000 people talking non-stop in the conference centre. Thousands of laptops, lots of coffee, chanting anti-REDD demonstrators in the background. The cloak room is open 18 hours a day this week; it advertises that next week, as negotiations come to then end, it will be open 24 hours a day.

> Had a talk with a couple of big EU pension funds this week to see if they'd join Danish ATP pension fund's new €1 billion 'Climate Change Action Fund for Emerging Economies', reported earlier this week. They think they tackle the issue of investing better by building in relevant criteria across all their asset classes - i.e. in the whole fund. The €1 billion, they think, puts it into a sideline rather than mainstreaming the idea.

Tuesday 8 December 2009

COP 15: fours snippets

There is a real excitement in the air, with some 20 thousand people turning up from every corner of the world and a party atmosphere in the streets. The talk, however, is all climate:
1. Nick Stern in a speech a couple of nights ago talked of the stark choice we face between acting fast or sliding into disaster, and thus how important this Conference was to the future of the planet. Lord Giddens talked of the Copenhagen Conference being, with the sense of pressure for a global agreement and over 100 heads of States turning up, the first real gathering for global governance: an historic event.

2. More practically, Q-Cells, one of the world's largest photovoltaic solar companies, claims that solar cells have reached grid price parity in key markets, such as Italy and Germany. That means that solar cells are price comparable with fossil fuel energy (gas in Italy's case) coal and gas for Germany. Big news! Why would you still build coal, let alone high-emission-potency gas?

3. According to the International Energy Authority, 77% of the energy infrastructure that will exist in the world 2050 has not been built. So we have an extraordinary chance to make sure it's infrastructure for a low-carbon, not a high-carbon, economy.

4. Denmark's ATP pension fund, one of the largest in the world, announced that they're setting up
ATP will set up a € 1 billion 'Institutional Investor Climate Change Action Fund for Emerging Economies'. The aim is for the Fund to become a joint initiative involving several like-minded institutional investors.  The Fund will operate on private sector conditions and only invest in projects that are expected to deliver relevant risk-adjusted rewards. 

Monday 7 December 2009

The Copenhagen Diagnosis: Sobering Update on the Science

On the eve of the Copenhagen conference, a group of scientists has issued an update on the 2007 report of the Intergovernmental Panel on Climate Change. Their conclusions? Ice at both poles is melting faster than predicted, the claims of recent global cooling are wrong, and world leaders must act fast if steep temperature rises are to be avoided. By Elizabeth Kolbert

Saturday 5 December 2009

COP15 news: investment required to keep transport emissions down at 2000 levels - US$12 trillion

I've just come from a sobering presentation in Copenhagen by Yuki Tanaka and others of the Japanese Institution of Transport Policy Studies. They have done detailed modeling of global transport emissions and how we can reduce them by 2050.They've done different scenarios, and have settled on pushing for keeping emissions at 2000 levels because they believe the lower scenarios are not likely to be achieved. I started off sceptically,
thinking "we'll need to figure out how to do better than that". But by the end of the presentation, overwhelmed by the robustness of their research, I can see why they made that decision.
Bear in mind this is in the context of rapidly growing economies in Asia and Latin America.
Key points:
To keep emissions just at 2000 levels will require:
- Cars: an enormous 60% shift of passenger traffic from cars to rail and bus. In cities 80% of remaining cars and 40% of light trucks will be electric by 2050.
- Aviation: half of all sub-1600km trips shift to high-speed rail systems, plus 20-30% fuel saving technology improvements in aviation. They do also include some shifting to technologies like
- Shipping: 30% reduction in emissions, largely through large scale engine replacement around 2020, when a disproportionate portion of the world's fleet comes up for renewal
- Bikes: for short-distance trips there'll be a substantial increase in non-vehicle transport - e.g. bicycles - helped by congestion charges and other traffic control techniques in all major cities.
- Rail: large scale electrification of railways and various substantial improvements in rail efficiency. There will be a doubling (yes!) of kms of rail lines in the world by 2050. They have also assumed that the power grid shifts largely to clean energy during this period.
The net extra investment needed above "business as usual investment" already expected is just under US$12 trillion, 54% in developing countries. And this just to keep at 2000 level emissions!
On the optimistic side, if we can ensure, with some tough government planning decisions that help ensure these investments pay a good return for pension funds, then it's a huge financing opportunity.

Tuesday 1 December 2009

Some good news! Last year there was more global investment in renewable energy than fossil-fuel energy - first time!

According to "Global Trends in Sustainable Energy Investment 2009", prepared for the UN Environment Programme's, $250 billion was spent globally in 2008 constructing new power generating capacity from all sources.

Of that, $140 billion was for low carbon electricity generation.

That means, for the first time, investment flows into renewables have overtaken flows into fossil fuel power generation.

A big moment!