Hundreds of corporations, insurance companies and pension funds are calling on world leaders gathering for a U.N. summit on climate change this week to attack the problem by making it more costly for businesses and ordinary people to pollute.
The idea, long advocated by policymakers, economists and environmental activists, is that the world can’t hope to slow the heating of the planet until its cost is incorporated into the everyday activities that contribute to it, such as using gas- or coal-generated electricity, driving a car, shipping a package or flying around the globe.
Business leaders representing trillions of dollars in revenue and retirement savings say they worry that global warming threatens the long-term value of their investments, and they want world leaders to adopt policies that would provide a financial incentive to people to clean up their act.
That could include a tax on carbon emissions, a cap or some other mechanism.
“There’s a market failure that needs to be fixed,” said Anne Simpson, senior portfolio manager and director of global governance at the $300 billion California Public Employees’ Retirement System, the largest public pension fund in the U.S.
Despite a broad consensus that something needs to be done, it has been impossible so far for global leaders to agree on how to implement what amounts to a price on pollution, because energy is so important for economic growth.
“It may be easier to get large businesses to agree that something should be done than to get them to coalesce around specific policy measures,” said Michael Levi, senior fellow for energy and the environment at the Council on Foreign Relations.
At Tuesday’s U.N. summit, 120 world leaders will try to summon some of the considerable political will required if a new climate treaty is to be reached at international negotiations next year in Paris. The one-day summit is part of U.N. Secretary-General Ban Ki-moon’s push to help world leaders to reach a goal they set in 2009: prevent Earth’s temperature from rising more than 2 degrees Fahrenheit (1.1 degrees Celsius) from where it is now.
On Sunday, scientists announced that the world set another record last year for the amount of carbon pollution spewed into the atmosphere.
Ahead of the summit, business leaders such as Apple’s Tim Cook renewed or expanded pledges to help the planet by running their businesses more efficiently, investing in renewable energy or pulling their investments from fossil fuel companies.
Last week, CalPERS and other big asset-holders such as the insurance and financial firms Allianz, BlackRock and AXA Group called for a “meaningful” price on carbon emissions. The World Bank said Monday that 73 countries and more than 1,000 companies have expressed their support for a price on carbon.
Also on Monday, a parade of business and political leaders tried to rally support in a series of speeches in New York.
“It doesn’t cost more to deal with climate change; it costs more to ignore it,” said Secretary of State John Kerry.
Cook said customers care about the planet and will “vote with their dollars” for sustainably produced products. He outlined the steps Apple is taking to reduce the carbon emissions of its products and its supply chain, and called for broader action.
“The long-term consequences of not addressing climate change are huge,” he said. “I don’t think anyone can overstate that.”
While many insist a transition to a cleaner economy can boost economic growth or at least not harm it, many worry it would slow the global economy and make it more difficult for people in developing nations to get access to even basic electricity and transportation. Even those who agree that the transition must take place can’t agree on how to do it.
The International Energy Agency estimates that $1 trillion per year must be invested through 2050 in clean energy in order to keep global temperatures from rising past a level that scientists consider especially dangerous.
Charging a price for carbon emissions could prod polluters to change their ways by making it in their financial self-interest to do so. It would make fossil fuel investments less profitable and therefore less attractive. And it would make clean energy more lucrative.
A host of new investment vehicles are already making it easier for investors and others to sink their money into renewable projects. The market for so-called green bonds — tax-free bonds that fund clean energy, energy efficiency or other sustainable projects — is expected to at least double to $20 billion this year, for example.
Last week the $188 billion California Teachers’ Retirement System announced its intention to boost its investment in clean energy and technology to $3.7 billion from $1.4 billion over the next five years and said that could rise to $9.5 billion with changes in policy. Warren Buffet has said he is looking to double his $15 billion in investments in wind and solar projects.
On another front, a group of activists is calling on foundations and endowments to reduce or eliminate investments in fossil fuel-related companies and direct that money toward clean energy. The group, the Divest-Invest Coalition, said Monday that foundations representing $50 billion in assets have signed on, though the fossil-fuel investments in those portfolios are a very small percentage of the total.
Despite these signs, annual global investment in clean energy is only a quarter of what the IEA estimates is required.
“We’re moving tens or even hundreds of billions, but we’re looking at a $1 trillion every year, and if we’re looking at $1 trillion, we need policy,” said David Pitt-Watson, chairman of the U.N. Environment Program’s Finance Initiative.
JONATHAN FAHEY, AP Energy Writer