By Zoe Berkery, a Fellow with the Clean Energy Leadership Institute and works at the Business Council for Sustainable Energy in Washington, DC.
“Policy has always been behind science and enlightened business,” Christiana Figueres, Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC) said to a roomful of business and industry observers (BINGOs) at the 20th Conference of the Parties (COP20) and 10th Meeting of the Parties to the Kyoto Protocol (CMP10)in Lima, Peru during a briefing she gave recently with H.E. Mr. Manuel Pulgar-Vidal, Minister of the Environment of Peru, President – Designate to COP20/CMP10.
Both speakers focused on the need for greater involvement and participation by the private sector in the international climate negotiations. In acknowledging the need for all parties to fully participate, Ms. Figueres compared the negotiations to a “Peruvian waltz” between business and government to motivate each other. Business needs to show governments it’s ready to act, while governments must enact policies that will give businesses avenues for engagement and the necessary signals and confidence to invest.
Simultaneous support and action from both business and government is difficult and uncommon, especially when it comes to issues of climate change and clean energy. The reality is often a chicken or the egg question of whether policy should come first and give business the confidence to invest, or whether business interests shape the policy.
As Ms. Figueres observed, it is quickly becoming clear that an effective and long-term solution to curbing the most deleterious effects of climate change requires a combination of both public and private participation in the shaping of climate policy and financing efforts for mitigation and adaption projects. According to the International Energy Agency, $1 trillion is needed from the energy sector alone between now and 2050 to facilitate the transition to low-emitting economies worldwide.
The UNFCCC process can be a daunting entity for businesses to engage with. It is often viewed as a highly complex, slow-moving bureaucracy, inaccessible to non-state actors. However, the UNFCCC can act as a platform for the private sector to engage on a global scale, increase their reach, and provide expertise on clean energy technologies, products, and services that have the potential to be transformative in developing countries looking to sustainably grow their economies. To close this gap, new avenues and bodies within the UNFCCC are being developed to facilitate private sector engagement. Two examples are the Climate Technology Center and Network (CTCN) and the Green Climate Fund (GCF).
Climate Technology Center and Network
CTCN’s mission is to stimulate technology cooperation and to enhance climate technology development and transfer. In addition, the CTCN aims to strengthen the capacity of developing countries to identify technology needs and facilitate the preparation and implementation of technology projects and strategies that support climate action.
A primary component of the CTCN is its growing network of institutions that respond to requests from developing countries about climate technology development and transfer. Private sector actors are encouraged to participate in the network and are sought for their expertise. During a COP20 event hosted by the Business Council for Sustainable Energy (BCSE) and the International Emissions Trading Agency (IETA), the director of the CTCN, Jukka Uosukainen, noted “the private sector should utilize CTCN to communicate with the COP [Conference of the Parties within the UNFCCC]”.
The CTCN provides a number of benefits to private sector participants who are accredited as members into the network. The commercial opportunity means pre‐qualified access to competitive bidding for delivery of CTCN technical assistance services to developing countries. Companies also gain visibility as they broaden their reach by engaging in new projects and providing relevant expertise. They also become part of network with direct access to national decision makers and thought leaders, further eliminating the barrier between the public and private sectors. Mr. Uosukainen emphasized that the private sector fundamentally understands certain aspects of the market, such as the barriers to technology transfer that many of the well-intentioned decision makers and policy leaders participating in the UNFCCC climate negotiations don’t understand as fully.
Green Climate Fund – Private Sector Facility
Shortly after the China-US announcement, the US announced a $3 billion contribution to the Green Climate Fund (GCF) at the G-20 Summit in Brisbane, Australia last month. The GCF is a fund within the UNFCCC designed to help finance climate adaptation and mitigation projects in the world’s poorest countries.
The GCF could be the key component to crafting a successful climate agreement next year in Paris. Little can be done without adequate financing, and the more contributions the fund receives, the more confident other parties will be to make financial pledges of their own. Hela Cheikhrouhou, Executive Director of the GCF, noted that many other large economy nations were waiting to see what the US would put forth to the GCF. Since the US’s announcement of its contribution to the fund, many other large carbon emitting countries have put forth contributions of their own, including Japan, France, Germany, Britain, Canada, along with a somewhat surprising announcement last week of a $165 million contribution from Australia. Peru also announced a $6 million contribution to the Fund at COP20, pushing the Fund over its original target of $10 billion.
The GCF is unique from other global financing bodies because it includes a dedicated Private Sector Facility component. In other financing bodies, private sector participation is often an afterthought through ‘set asides’ or ‘carve outs’. The GCF’s private sector engagement component has two Active Private Sector Observers (APSO) from Gwen Andrews with Alstom International and Abyd Karmali with Bank of America Merrill Lynch. Private companies are increasingly leading the way on investments in clean energy and resiliency infrastructure projects, and prioritizing an avenue to participate in the fund will help ensure its ultimate success. The GCF has the potential to create opportunity for private companies to bring innovative clean energy technologies to areas of the world that need it the most. Additionally, business and non-state actors that commit to action on climate can now be recognized and applauded through the newly released Nazca Portal.
Science + Business + Policy = Transformation
The climate science is clear. Collaboration and knowledge sharing between policy and businesses is the best defense against the worst effects of climate change, and there are now avenues to ensure that stakeholders don’t wait for other parties to make the first move. It’s imperative that the private sector engages in bodies like the CTCN and the GCF, and that policymakers utilize their expertise and craft supportive policies.
Ms. Figueres offered a challenge to the business and industry community present at COP20 during he business and industry briefing, noting “progress over the last 4‐5 years has been good and in the right direction, but has been decidedly incremental. The time for ‘incrementalism’ is gone. We need to do more.” She continued, “Business must keep moving forward and be ahead of policy – real transformational business has always been.” And with the controversy over the outcomes in Lima over the weekend, there has been no better time for the private sector to step up to the plate.