No clear signal to markets and investors
Five-nation Copenhagen Accord: No clear signal to markets and investors
Copenhagen, 18/19 December 2009: In response to the agreement reached here late in the evening of 18th December between the leaders of China, India, Brazil, South Africa and the United States, GWEC Secretary General Steve Sawyer had the following comment:
“We have an agreement between five countries. It will be interesting to see what the other 188 have to say. I think most people are disappointed with this agreement, and if it is adopted by the rest of the countries here, I think governments will have failed to live up to the promises they made to each other two years ago in Bali.
The text’s reference to the objective of keeping global mean temperature rise below 2C above pre-industrial levels as stated in the Bali Action plan is welcome albeit still too vague.
The structure of the proposed agreement is a collection of voluntary actions by countries in a form which had already once been proposed in the early pre-Kyoto climate negotiations. This was then known as ‘pledge and review’, with no legally binding commitments, no international architecture.
GWEC had been calling for stringent legally binding emissions targets to spur continued investment in renewable energy and to establish a solid basis for carbon markets. The voluntary approach taken in this declaration would fail to send clear confidence building signals to the market and to investors. If this document goes forward as the basis for negotiation, then it will be important to keep an eye on how the agreement will catalyse investment in clean energy technologies.
The wind energy industry stands ready to deliver on its promise to save 10 bn tons of CO2 by 2020. The boom of wind energy and other renewable energy technologies will continue, driven by national concerns over climate change, and economic and security considerations. However, a clear signal of long-term political commitment into decarbonising our energy system would drive even more private investment to clean technologies. A weak agreement would mean missing a unique opportunity to speed up the energy revolution.
The structure of carbon markets in the post-2012 regime and the relationship between the ‘Convention track’ and carbon markets are not resolved in the document.
On the financing issue, the signals in terms of both short term and medium term finance are positive, and although the document makes it clear that very little of this will be ‘new’ money, the total sums in question would represent a significant improvement on the current situation. Ultimately, however, additional financing will be required to adequately address the twin challenges of climate change mitigation and adaptation.”