Environment Ministers Meet to Accelerate Transition to a Low Carbon Society
Huge Investment Opportunities in Energy Savings to Renewables and Reduced Deforestation to Climate Proofing if Markets can be Mobilized
10th Special Session of the UNEP Governing Council/Global Ministerial Environment Forum-Principality of Monaco 20-22nd February
Monaco/Nairobi, February 2008 - More than doubling annual improvements in energy efficiency could play a key role in averting catastrophic climate change, a report to environment ministers says.
Over recent years advances and investments in energy savings in areas from transport and power generation to industry and households has been reducing the intensity of energy used by one to one and-a-half per cent a year.
"If the rate of energy efficiency improvement could be increased to 2.5 per cent world-wide it would be possible to keep carbon dioxide concentrations in the atmosphere below 550 parts per million (ppm) through the end of the century," the findings suggest.
The Intergovernmental Panel on Climate Change (IPCC), 2,000 plus scientists established by UNEP and the World Meteorological Organisation to advise governments, estimates that to avoid dangerous climate change emissions need to be stabilized at between 535 to 590 ppm in 2050.
An increase in investments in low carbon and renewable energies is also underway which, if accelerated and fostered widely could also assist in meeting global climate change targets alongside helping to achieve the Millennium Development Goals.
Currently close to 60 countries have targets for renewables including 13 developing countries while around 80 have market mechanisms in place-feed-in tariffs and renewable portfolio standards- to encourage renewable energy development.
These policy measures are playing an important role in driving national and global markets.
In 2007, financial transactions in the sustainable energy sector reached $160 billion up from just over $100 billion in 2006.
A fundamental change is also emerging in terms of the range of investors entering these markets.
"The quickest growth in sustainable energy capital mobilization has come from four sectors that had previously shown little interest-venture capitalists and private equity investors; public capital markets and investment banks," says the report being presented to the annual gathering of environment ministers at UNEP's Governing Council-Global Ministerial Environment Forum (GC/GMEF) in Monaco.
The rise in such investments is not only triggering new business opportunities in both developed and developing countries while contributing to countering the increase in greenhouse gases.
The new report, drafted to assist the ministerial discussions, notes that more than 2.3 million people now have jobs in the renewable energy sector versus around 2 million in oil and gas and four million in the global air transport industry.
Achim Steiner, UN Under Secretary General and UNEP Executive Director, said: " A transition to a low carbon society and a Green Economy is underway driven by the science and treaties such as the Kyoto Protocol and prospects, emerging as part of the Bali 'Road Map', of an even more deeper and decisive emissions reduction regime post 2012".
"UNEP is among a variety of key players catalyzing this transition and overcoming barriers through partnerships with the financial services sector and industry. Pioneering work with local banks to offer low cost solar loans in India has brought clean energy to 100,000 people within three years," he added.
"An initiative to provide seed money for clean energy entrepreneurs has spawned close to 50 new enterprises in Africa, China and India. The Principles for Responsible Investment, facilitated by the UNEP Finance Initiative and the UN's Global Compact, has secured the support of over 275 institutions handling assets of over $13 trillion dollars," said Mr Steiner.
"Among the challenges facing ministers in Monaco is how to accelerate this transformation to ensure that it is far reaching, widespread and above all speedy. Separate but related challenges include securing the billions of dollars of additional funding needed to assist developing economies to adapt to the climate change already underway alongside the incentives or markets and mechanisms that will be needed to reduce emissions from deforestation and degradation," he added.
"The UN climate convention estimates that an additional $200 to $210 billon will be needed to return emissions to 2004 levels and perhaps as much as close to $200 billion for adaptation measures. Mobilizing this funding on a reliable and consistent basis would appear to be a bargain given the wide social, economic and environmental benefits that will flow-and indeed already area flowing- from such policy decisions," said Mr Steiner.
The Climate Challenge
Mitigation -In order to meet the stabilization target, global emissions of greenhouse gases will need to decrease in 2050 by 18 to 29 Giggatonnes (Gt) of carbon dioxide with such emissions peaking even earlier somewhere between 2010 and 2030.
A variety of recent assessments such as the Stern review; ones by the IPCC and others by the UN Framework Convention on Climate Change (UNFCCC) put the costs of stabilization at between 0.3 per cent up to four per cent of global GDP.
Stern estimates it at one per cent of global GDP costing around $134 billion in 2015 rising to $930 billion in 2050.
Adaptation -The UNFCC estimates that, by 2030, the additional investment costs of adaptation will include $14 billion for agriculture, forestry and fisheries; $11 billion for new water supply infrastructure; $5 billion for treating a higher incidence of diarrhea, malnutrition and malaria; $11 for beach nourishment and dykes to defend coasts and between $8 and $130 billion to adapt vulnerable infrastructure.
How are Investment Trends Going for Mitigation?
There are encouraging signs-wind power for example now receives more investment than large scale hydro and nuclear according to a report by UNEP's Sustainable Energy Finance Initiative and New Finance.
"In some instances renewable subsidiaries have become too large for parent companies". For example, the Spanish utility Iberdrola spun off its renewables in December 2007 giving it a capitalization of $33 billon.
. Over 20 per cent of new investment in renewable energy is in developing countries. In terms of global investment China, India and Brazil are taking the lion's share with nine; five and four per cent in 2006.
. Renewables now provide over five per cent of global generation and 18 per cent of new investment in power generation.
. Estimating investment in energy efficiency is harder because it is normally financed internally. UNFCC estimates that in 2005 $1.5 billion was spent globally in investments in energy efficiency. In a separate but related indicator UNEP estimates that over $1 billion was invested in energy efficiency technology development in 2006.
. Investments in large scale hydro and nuclear amounted to over $44 billion in 2005. In the United States support for nuclear amounts to 2.5 cents per unit of electricity generated whereas wind power, biomass and geothermal receive tax credits worth 1.9 cents per unit.
. The UNFCCC estimates that, by 2030, carbon capture and storage may be part of 70 per cent of new coal and over a third of new gas power generation equal to over $60 billion of additional investment flows.
. The Clean Development Mechanism of the Kyoto Protocol in 2006 mobilized investment in renewables and energy efficiency projects worth close to $6 billion, roughly equal to the level of funds from Overseas Development Assistance or Official Development Assistance in the same areas.
. Voluntary carbon offset markets, outside the formal markets, was worth $55 million to $200 million in 2006.
. Investment funds dealing in carbon, which either buy emission reductions or finance low carbon projects, now number around 60 valued at about $12 billion.
. Emissions' trading, developing mostly as a result of the European Union's Trading Scheme, saw 362 million tones of C02 traded in 2005 worth around seven billion Euros.
. Over the past five years, the World Bank Group and regional development banks have together invested over $17 billion in projects that lower carbon emissions in developing countries. In 2007, the World Bank increased financing for renewable energy and energy efficiency by close to 70 per cent to $1.4 billion.
. Bilateral funding through bodies such as the Danish; French and Swedish development agencies and institutions such as the German development bank KfW and the Japanese Bank for International Co-operation is becoming more active. KfW for example has earmarked $1.9 billion for renewables for 2005-2011.
. UNEP's African Rural Energy Enterprise Development programme, alongside similar initiatives in Brazil and China, has provided seed financing for 45 clean energy companies since 2000.
. The Global Environment Facility, whose implementing agencies are UNEP, UNDP and the World Bank, has funded climate mitigation projects worth $2.5 billion-one of the latest seeks to develop geothermal up Africa's Rift Valley by underwriting the risks of drilling for steam.
. UNEP, working with two Indian banks, has developed a household consumer credit market that has brought solar power to 100,000 people on the sub Continent. The initiative is now self-financing and set to be piloted elsewhere.
. Under an Italian-funded programme, UNEP has worked with banks in Morocco and Tunisia to develop lending programmes for solar water heaters with similar programmes under development for Albania, Algeria, Chile, Indonesia and Mexico.
. The decision at the last climate convention meeting in Bali to include Reduced Emissions form Deforestation and Degradation (REDD) opens the door for forests to be more widely factored into mitigation efforts.
. The Government of Norway has announced it will provide $2.7 billion over the next five years as incentives for REDD.
How are Investments in Adaptation Faring?
Investments are beginning to flow for adaptation or 'climate proofing' economies. There is now an urgent need secure and target additional funds to assist developing and least developed economies.
. The Adaptation Fund of the Kyoto Protocol is funded from a levy on the proceeds of the Clean Development Mechanism. The Fund is expected to have annual flows of between $80 million to $300 million by 2012.
. The Least Developed Countries Fund had, in late 2007, pledges of just over $160 million.
. The Special Climate Change Fund, which includes provisions for technology transfer had, at the same time, pledges of just over $70 million.
. An estimated $7 billion is spent annually on ecosystem protection. But the funds are not specifically for climate change and nearly 90 per cent is being spent in developed countries.
. Some commercial adaptation instruments are now being developed. The UN's World Food Programme have partnered with the reinsurer AXA to develop weather derivatives that pay out to Ethiopian farmers in the event of severe drought.
. Swiss Re, a member of the UNEP Finance Initiative, has launched a Climate Adaptation Development Programme to provide financial protection to up to 400,000 people in 10 countries in Africa from drought.
Accelerating the Transition through New and Forward-Looking Policy Decisions that Improve the Financial Flows and Mobilize the Necessary Capital?
A New Climate Deal in Copenhagen
. A post 2012 emissions reduction regime that cuts greenhouse gases by 25 per cent to 40 per cent is essential as it will put a higher price on carbon.
. Removing fossil fuel subsidies could reduce C02 emissions by five to six per cent annually. Currently, fossil fuel subsidies amount to up to $200 billion a year versus support for low-carbon technologies of an estimated $33 billion annually.
Research and Development
. Boosting research and development. The International Energy Agency estimates that R+D for low emission innovations such as renewables and energy savings declined by 50 per cent between 1980 and 2004.
. In order to achieve a stabilization target of 550 parts per million, support for innovation needs to rise from just over $30 billion to $90 billion by 2015 and to $160 billion by 2025 according to some experts.
. Increase global targets for energy efficiency improvements to 2.5 per cent annually.
. These should be supported by policies including stronger energy savings building codes for new and existing structures; penalties or disincentives for builders to choose the cheapest, least energy efficient designs, materials and gadgets; policies that promote mass transit especially rail and international minimum performance standards for industrial and household appliances.
. Other measures include the promotion of utility pricing that favours energy efficiency; promotes combined heat and power and improves energy savings in existing power plants and electricity transmission infrastructure.
. Policies that increase the uptake of renewables may include 'feed-in laws' that guarantee a fixed price for each unit of renewable electricity generated; regulations that boost access to the Grid; incentives for second generation biofuels and ones that address other barriers including resource mapping-UNEP/GEF's Solar and Wind Energy Resource Assessment is a good example of the latter.
. Government agencies and donors need to develop and deploy new forms of 'end-user' credit schemes to assist consumers to purchase climate mitigation technologies and systems-UNEP's solar credit loan in India is a good example.
. New approaches are needed to assist small to medium-sized enterprises innovate including enterprise development services and seed capital.
. Particular attention needs to be paid to new financial and regulatory solutions that address the lack of local currency financing in least developed economies-this is effectively shutting out such economies from low C02 emitting infrastructure developments.
. Harnessing the 'green procurement' potential of local authorities through financial incentives that stimulate voluntary low carbon investments.
. Public investments are needed to mobilize finance for adaptation given that market mechanisms are in their infancy.
. Other actions for adaptation include regulations to limit the vulnerability of new investments and infrastructure such as bans on building in flood prone areas and new, labour intensive, programme to 'climate proof' rural areas that improve resilience of local populations; address poverty; boost incomes and increase the skills base.
Notes to Editors
The 10th Special Session of UNEP's Governing Council/Global Ministerial Environment Forum will take place between 20 and 22 February in Monaco. http://www.unep.org/gc/gcss-x/ The theme is Globalization and the Environment-Mobilizing Finance to Meet the Climate Challenge.
The report upon which this press release is based can be found under Official Documents http://www.unep.org/gc/gcss-x/info_docs.asp
The meeting will be preceded on 19 February by the 9th Global Civil Society Forum http://www.unep.org/civil_society/GCSF/indexGCSF9.asp
In addition the GC/GMEF will discuss international environment governance under the current UN reform debate as well as seek to adopt decisions on a range of issues from UNEP's Medium Term Strategy to...(looking for the list of draft decisions!!!)
Monaco, the Host Country's web site is at http://www.unep2008.gouv.mc/pnue/wwwnew.nsf/HomeGb Media are welcome to attend the GC/GMEF.
Three press conferences are currently scheduled
20 February-Findings from the UNEP Year Book 2008 and Findings from Green Jobs Initiative
21 February-Launch of a new Climate Neutrality Initiative involving Countries, Corporations and Cities
22 February-Launch of a New Report on the Threats Climate Change Pose to the World's Fisheries and Oceans
Side events -Nine news-worthy and informative side-events are scheduled
1- High-level Roundtable on Climate Change and Trade (World Trade Organisation and UNEP)
2- UNEP Scientific Initiatives: Atmospheric Brown Cloud and Agricultural Assessment.
3- UNEP experience in designing financial mechanism for climate change mitigation.
1- Launch of the Global Strategy for Follow up to The Millennium Ecosystem Assessment
2- Harnessing GEF catalytic financing for advancing global environmental issues.
3- Supporting Local Authorities - combining the event "Financing for the sustainable building sector" with "The UN, regions and local authorities: a new alliance in response to Climate Change"
Friday 22 February
1- Green Jobs
2- Oceans, Coasts and Climate Change (with the UN Foundation)
3- Private - Public bank Dialogue "UNEP Finance Initiative".
For More Information Please Contact Nick Nuttall, UNEP Spokesperson and Head of Media, on Phone:+ 254-20 7623084; Mobile in Kenya: + 254 (0) 733 632755
Mobile when traveling: +41 79 596 57 37; Email: email@example.com
Mr. François Chantrait, Directeur. Centre de Presse
10 Quai Antoine 1er, 98000 - MONACO, Phone: + 377 98 98 22 08