Dealing with climate change is a bottom-line business. That fact was made significantly by the reaction by investors, both business and institutional, to the historic agreement reached over last weekend in Paris by 195 countries participating in the UN Framework Convention on Climate Change, otherwise known as COP21.
While fossil fuels will continue to play the majority role over the next several decades in generating the world’s electricity and powering our cars, ships and planes, make no mistake that the COP21 agreement marks the turning point in the inexorable path to renewable energy. And corporations like Ikea, Nike and Wal-Mart have joined universities, venture capital funds and other major investor groups in broadly touting the agreement, which sets up financing mechanisms that can channel investments toward low- and no-carbon energy technologies.
Six of the world’s largest multilateral development banks, which have together invested some $100 billion over the past four years in efforts to stem climate change, said in Paris earlier this month that they will “substantially increase” that investment to $170 billion over the next five years. Their commitment shows the agreement has given major financial players across the world the impetus to support and fund clean energy research and the big renewable energy initiatives that nations, states and cities will take on to address climate change.
As the managing partner of a major venture capital firm told The New York Times, “It’s very hard to go backward from something like this. People are boarding this train, and it’s time to hop on if you want to have a thriving, 21st-century economy.”
It should be noted that the COP21 is a nonbinding agreement. But given the fact that nearly 200 countries – including nations with strong economies, those that are developing economically and those that remain poor – agreed that action on climate change is critically needed gives the pact unprecedented breadth and significance.
The nations of the world have committed to reducing emissions to a level that will hold the ongoing increase in global temperatures to 1.5 degrees Celsius, below the maximum 2-degrees-C that virtually all of the world’s climate scientists say cannot be exceeded without irreversible environmental damages. The agreement calls on nations to update every five years their respective plans to address climate change and ensure longer-term goals are being met.
The framework allows policy makers to ratchet up their ambition as nations of the world eventually replace a fossil-fuel driven economy with one powered by renewable energy. Clean, sustainable energy like that generated by wind, solar, hydropower, geothermal, biomass and biofuels are critical solutions to meeting the challenge of reducing emissions.
Evidence of that role on a global basis was aired in Paris last year when the 1-Gigaton Coalition, a multi-national effort launched last year by the UN Environment Program (UNEP) issued an analysis of 6,000 renewable energy and energy efficiency projects implemented in developing countries between 2005 and 2012 could reduce the equivalent of 1.7 gigatons of carbon dioxide (CO2) emissions per year.
Another important benefit from the two-week summit, particularly for agricultural producers, is that it paves the way for the development of a global soil carbon program for countries to use in meeting their next round of targets. This reality is evidenced by the new Join the 4/1000 Initiative: Soils for Food Security and Climate, a voluntary initiative designed to achieve a 4/1000 annual growth rate of the soil carbon stock.
The initiative is a game-changer because it makes soil carbon central to how the world manages climate change, and advocates – including 25x’25’s sister organization, the North American Climate Smart Agricultural Alliance – say one of best opportunities to reduce emissions is through farmers sequestering more carbon in the soil through no- and low-tillage, cover crops and other land management practices.
It is unfortunate that too many in Congress insist on drawing a politically questionable line in the sand, vowing to vote against the COP21 agreement. Of course, Congress has no authority to block the nonbinding plan. Still, any symbolic vote suggests a sentiment that runs contrary to the recognition by the rest of the world that climate change must be dealt with now. Those in Congress who would stand against COP21 will soon find themselves on the wrong side of history. It can only be hoped that the rule of reason will soon overcome political posturing.