Clean energy investment that totaled $243 billion last year is at risk of slowing as talks on curbing greenhouse gas emissions bog down, said the United Nations official in charge of promoting industrial development.
Kandeh Yumkella, director general of the UN Industrial Development Organization, said $40 billion a year is needed through 2030 to bring basic energy to 3 billion people, and part of those funds are linked to the outcome of 192-nation negotiations on global warming that hit a roadblock in Bangkok this week.
The talks are aiming to unlock $100 billion a year in aid for developing nations to cope with rising sea levels and more volatile weather, which scientists say are caused by damage to the atmosphere from burning fossil fuels.
“We want to keep that pressure up because we have a feeling that pledges can be made but the cash doesn’t move,” Yumkella said in an interview at a UN conference in New York today. “If there’s a continued slowdown in investment in clean energy it takes longer to build them up again.”
In the strongest criticism yet of the UN talks, Todd Stern, the lead U.S. climate negotiator, said yesterday that a binding treaty is “unnecessary” and may not be “doable.” His remarks limit the chances of a breakthrough this year and underscore the rift between rich nations and developing ones including China, India and Brazil.
Cancun agreements
At the UN talks in Cancun four months ago, countries agreed to put forward national emissions commitments, share technology for clean energy systems and establish a climate fund to help poorer nations adapt to rising sea levels and more intense storms. This week in Bangkok, envoys argued about the agenda for this year’s round of meetings that will culminate in December in Durban, South Africa. The Bangkok talks finish tomorrow.
“We have to change our mindset because it’s increasingly clear we’re not waiting now for a breakthrough moment in Durban or any summit in the near future,” Abyd Karmali, global head of carbon markets at Bank of America Merrill Lynch, said in an interview. “Right now there is a huge financing gap, and one needs to have some new policies and measures to stimulate these technologies in different countries.”
Still profitable
Not everyone is pessimistic. Wind and solar investments could keep rising as long as national and local governments put in place incentives that make them profitable, said James Cameron, vice-chairman of Climate Change Capital Ltd., which invests in emission-reduction projects.
“You shouldn’t care too much if the agreement comes from the global level or the national level,” Cameron said in an interview with Kathleen Hays at WBBR radio. “What could happen is that the failure to reach a global agreement leads to a more robust patchwork of incentives on the national level.”
With President Barack Obama facing re-election next year and some of his Republican opponents questioning the science underpinning the climate talks, the government hasn’t yet shown willingness to set binding targets for reducing greenhouse gas emissions. Stern said the goal of agreeing to a treaty was always out of reach.
“A lot of what was bound up in the very high expectations at the start of this whole process was unrealistic,” Stern said in an interview last night after speaking at a Bloomberg New Energy Finance conference in New York. “I don’t think it’s necessary that there be internationally binding emission caps as long as you’ve got national laws and regulations. What I am saying is it’s not doable.”
UN process
Stern suggested the U.S. may circumvent the UN process saying it’s “not the sole platform” for climate protection, a potential blow to sustainable-energy funding.
Investment in clean energy, including wind, solar and biofuels, totaled $243 billion last year, according to New Energy Finance.
That may be a fraction of the amount needed to cap levels of carbon dioxide, the main gas blamed for global warming, said Mark Fulton, head of climate change research at Deutsche Asset Management. He expects investment to increase gradually as the cost of manufacturing wind turbines and solar cells drops.
“We need $500 billion a year to reach the climate targets people are talking about,” Fulton said in an interview with WBBR. “It would be great to see a global deal. That looks a long way off.”
