In Copenhagen, Follow the Money

GreenOrder

In Copenhagen, Follow the Money

There's an old expression that I have heard comes from Texas: "No matter what we're talking about, honey, we're talking about money."  

That's certainly true about most of what we've been talking about in Copenhagen -- even the negotiations around forestry (it's largely about using carbon markets and emissions offsets as a last chance opportunity to save the great forests of the world).  

A few inconvenient truths about money and property underlie most of the topics on the tongues of negotiators and business people alike -- and even the nonprofits and protesters:  

· It is going to take a LOT of money to address climate change – far more than even the yearly $100 billion Gordon Brown, Barack Obama, Wen Jiabao, and other heads of state are discussing in Copenhagen.
 
· Developing countries assert publicly that the developed countries must foot the bill through financial aid and gifts of technology -- and this claim is backed by a core principal of the original global agreement (PDF) on climate that was signed by the U.S. and all major countries at the Rio Earth Summit in 1992.
 
· Getting that money and technology is what developing countries are demanding in exchange for taking on new obligations on monitoring, transparency, etc.

· There is no way, politically, that developed country governments can come up with all that money and technology in the form of aid.  Carbon markets and spending by large emitters on offsets (such as carbon sequestration through REDD) won't close that gap to within even $50 billion per year, and at least until the later in the next decade.  

· There is no way the owners of most of the existing and forthcoming technology -- private sector companies – will give it away to developing countries… unless their governments force them to do so (highly unlikely) or buy IP from them to give to other governments (likely to be rare).  

· Few of the Copenhagen negotiators understand economics, investment, and business well, or the contributions business can make to solve the problem, or the policy frameworks that would best encourage business to play this role.
 
· All of the above were big issues as far back as the first Conference of the Parties negotiations that I attended, COP-1 in Berlin, in 1995.  


This is not a pretty picture for those who wanted a global agreement at Copenhagen.  These truths are largely the reason that a complete, detailed world climate agreement could not be reached there.  

There is hope, however.  The climate negotiating process is basically an effort between countries and other non-government players to solve one of the most complicated puzzles that society has ever faced.  The process will require a number of agreements, and refinements to agreements, to be negotiated over many years to come.  We may even find that we need new types of international agreements and new international legal frameworks that, for example, could allow voluntary private sector agreements to connect legally and formally to intergovernmental treaties.  

Given the urgency that is clear from climate science, the world needs a great leap forward in the level of action and commitment by countries as soon as possible.  It will be vitally important in moving forward from Copenhagen to the next major sessions in Bonn this spring that countries take a few important steps toward making that great leap in the coming year or two.  

Countries need to strike a preliminary agreement at a high level, including important principles and some of the elements of a global deal.  Here are some further truths that, if not convenient, at least provide parts of the key to solving the climate puzzle and reaching a complete global deal:

· The gap in that $100 billion per year probably can be filled through private sector investment in low-GHG technology – power generation, Smart Grid and extending the power system to those who lack access now, cleaner transportation and manufacturing, etc.   {related_content}

· Major corporations including Alstom, Areva, BP, Cisco, Dow Chemical, Duke Energy, GE, and Google are already doing large-scale investment and collaborating on low carbon technology together with partner companies in China and developing countries.  

· A better functioning international framework for financing the "incremental cost" of technology above the cost of "business as usual" higher-emission technology would open up billions of dollars in further corporate technology collaboration and investment.

· These investments are definitely only about generating returns for the companies involved.  As was made clear in a roundtable on Models for Technology Cooperation on Monday in Copenhagen hosted by GreenOrder, Dalberg, and the Climate Group together with the companies I just mentioned, large technology deals always need to end up satisfying recipient country priorities for job creation, local capability development, energy security, etc.  


It is critical that the business community educate governments on the role that they can play and sell them on the enabling policies and financial mechanisms that are needed. As quantitative proof, business leaders should show them the money -- point to past partnerships that have delivered on the foundational economic and social development goals of the UNFCCC.

Truman Semans is Principal of GreenOrder, an LRN Company. GreenOrder is a strategy consulting firm working with GE and other large corporations in accelerating deployment of innovative climate technologies. He was a climate negotiator with the U.S. Treasury Department and served on the Executive Committee of the U.S. Climate Action Partnership.

Click here for full coverage of COP15 from the GreenBiz.com and ClimateBiz.com teams, including posts from Copenhagen by Executive Editor Joel Makower and Senior Contributor Marc Gunther, and from dozens of guest contributors from the business world.