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December 06, 2010

Low-Carbon Investment Not Enough to Mitigate Climate Change
    by Robert Kropp

A report by the World Business Council for Sustainable Development argues for clear policy signals from governments to encourage private investment in low-carbon technologies.

SocialFunds.com -- At the 16th Conference of the Parties on Climate Change (COP16) currently underway in Cancun, Mexico, Nobuo Tanaka, Executive Director of the International Energy Agency (IEA), told the private sector, "Don't wait for the climate change deal, because it will take time. The cost of returning to a trajectory is getting higher and higher."

In a
report published today, the World Business Council for Sustainable Development (WBCSD) refers to IEA forecasts, stating, "Reducing carbon emissions effectively will require investments in low-carbon technologies of approximately $750 billion per year by 2030, and more than $1.6 trillion per year from 2030 to 2050."

Because only 70% of the necessary reductions in greenhouse gas (GHG) emissions can be met by existing technologies, the WBCSD continued, "There will also be a requirement to create new technologies by rapidly increasing research, development and demonstration (RD&D) technology. At the current rate, however, global low-carbon RD&D technologies are not progressing fast enough to keep up with the challenges of global climate change."

Until now, the report observed, "Competition between companies and the use of market mechanisms has a track record of driving RD&D investment." However, because innovation in the development of low-carbon technologies is hampered by high costs, especially in the absence of a price on carbon, and because "the large-scale investment required for energy innovation…cannot be tackled by individual companies," effective public policies are required "in order to accelerate the innovation scale-up."

Seventy percent of global economic growth is expected to originate in emerging markets, and "a group of dynamic emerging economies are moving from passive technology recipients to innovation leaders," according to the report. RD&D in low-carbon technologies is growing more rapidly in emerging economies than elsewhere, and emerging countries such as China, South Korea, Russia, and Brazil are rapidly increasing their share of patents for low-carbon innovations.

The report provides a number of recommendations for policy initiatives to help drive innovation in the development of low-carbon technologies. Long-term policy frameworks can help mitigate the risks associated with new technologies, and help generate the confidence for investment in them. A price on carbon, the report continued, "is essential to accelerate low-carbon technology development."

Björn Stigson, President of the WBCSD, stated, "We, business and government, must work together to provide a framework in the global market that creates innovation by rewarding investment in new technologies."

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