Paris, here’s a wishlist from businesses

Businesses say they are doing their part in tackling climate change even as governments continue to drag their feet. As the world meets in Paris to ink a global climate deal, companies say they hope to see more policies in one crucial element: finance.

A global carbon price, abolishing fossil fuel subsidies, more public funding for clean technology development, and policy certainty: This is the wish-list from business leaders and sustainability experts as the international community gathers in Paris this week to negotiate the most ambitious climate deal in recent history.

With just five days remaining for all nations to forge a universal agreement aimed at cutting greenhouse gas emissions, companies and sustainability leaders say finance needs to be a central element of not just the talks but also of the shift towards a low-carbon global economy.

Government officials have been in Paris since November 30 to find a way to limit greenhouse gases so that the global temperatures will not rise more than two degrees from pre-industrial levels.

They have till December 11 to hash out details, including how rich nations should contribute to alleviating the effects of climate change in developing countries and to set a target for when the global community needs to be carbon-neutral.

Finance will be the key in delivering on these pledges, sustainability experts said on Sunday at the World Climate Summit. Some examples are raising the necessary capital to fund clean technology research, shifting subsidies from fossil fuels to renewable power, and private-public partnerships to finance green projects.

The event, held at the Paris Chamber of Commerce on the sidelines of the UN talks, attracted some 250 sustainability professionals and government officials .

Pierre Ducret, chairman of Caisse des Depots, the office that oversees France’s public funds, said the most striking recent trend is that the financial world is for the first time recognizing that it has a big role to play in the battle against climate change.

“Two years ago, the financial industry thought that it was a neutral party with regards to the climate issue,” he said. “It was not the job of the financial industry to deal with the problem. It was the job of the government.”

This position has “dramatically changed”, he added.

Paul Fisher, deputy head of the Bank of England’s Prudential Regulation Authority unit, noted that businesses and financial institutions are realizing that climate change imposes financial and regulatory risks to their operations and could even wipe out the value of their assets.

Many of them, along with other businesses, have started examining their carbon footprint and reporting on their environmental impact, he added.

Bye-bye, fossil fuels

But experts said that even while the financial industry and businesses are ready to do their part to cut emissions, governments need to implement policies that encourage investments in clean technology and phase out fossil fuels.  

Anne Simpson, investment director of the California Public Employees’ Retirement System (CalPERS), a US$300 billion pension fund, said the first important step that green businesses and leaders want is for governments to remove subsidies for fossil fuels, which she described as “dysfunctional”.

I have three airlines and we have always been saying that governments should impose a carbon tax and then the money they take off us, they should give back to the communities. If carbon is taxed and is more expensive than clean energy, then there will be a clean energy revolution.

Sir Richard Branson, founder, Virgin Group 

“Subsidies give fossil fuels a free lunch and carbon a free ride,” Simpson said. “There’s 40 times as much money spent on fossil fuels each year as on clean energy, so there’s real scope in redirecting public money.”

Divestment of fossil fuel assets by owners should then follow, she said, adding that CalPERS is now talking to an Indonesia coal firm about how it can evolve into a clean energy company.   

The money saved from these subsidies should then be redirected to supporting clean energy, experts said.

Stephane Quaknine, CEO of Inergys, a Canadian clean tech investment firm, noted that the only source of funding for startups is venture capital, but these firms do not seem to understand clean technology or find the returns attractive enough.

Governments therefore have a responsibility to shift some fossil fuel subsidies to the clean energy industry instead, he said. 

France’s Total, the only fossil fuel company represented at the event, said that the industry has definitely changed, with oil prices at multi-year lows and owners divesting their coal holdings at an unprecedented pace.

This shift to clean energy is a great opportunity for oil companies to rethink the way they do business and find new ways to expand. As they know the energy market, understand the global economy and are usually very financially sound, they are perfectly placed to be part of the low-carbon future, said Gerard Moutet, vice president of climate and energy of Total.

“Oil and gas companies, at least some of them, are very well positioned to thrive in this transition,” he said. “There is a chance for them to become agents of change, if they have a will to do so.”

Total is investing more into renewable energy and reducing oil’s contribution to its revenue. 

The elusive global carbon price

Panelists also agreed that having a global price on carbon is one of the best ways to direct funds into clean energy technology.

Quebec, a province in Canada, implemented a cap-and-trade system in 2013 and raised more than C$1 billion in 2014 for public transportation projects. David Huertel, Minister of Environment for the Government of Quebec, said that the programme will raise more than C$3 billion by 2020.

“It is important for us to put this money to public transportation because a significant chunk of Quebec’s emissions are from transport,” he said.

Part of the funds raised by the cap-and-trade system went towards helping a Canadian company develop, design and build an electric school bus, which is now plying the roads of Quebec.

“We have 8,000 buses so this is by no means a small impact,” Huertel added. “Now, the company is looking into exporting the buses to other countries, so we have not only reduced our carbon emissions, we have created a viable, profitable business stream for Canadian industry.”

Sir Richard Branson, the billionaire owner of the Virgin Group which runs airlines Virgin Express, Virgin Atlantic and Virgin Australia, said he would also like governments to agree on a carbon price.

 “I have three airlines and we have always been saying that governments should impose a carbon tax and then the money they take off us, they should give back to the communities,” he said. “If carbon is taxed and is more expensive than clean energy, then there will be a clean energy revolution.” 

Thanks for reading to the end of this story!

We would be grateful if you would consider joining as a member of The EB Circle. This helps to keep our stories and resources free for all, and it also supports independent journalism dedicated to sustainable development. It only costs as little as S$5 a month, and you would be helping to make a big difference.

Find out more and join The EB Circle

blog comments powered by Disqus

Most popular

View all news

Industry Spotlight

View all
Asia Pacific’s Hub For Collaboration On Sustainable Development
An Eco-Business initiative
The SDG Co