US will lose clean-tech dollars without climate plan

New York, 21 January: Countries such as the US that fail to adopt concrete climate plans risk losing the race for clean energy dollars to the emerging markets, investors said.

Developing countries such as Brazil, China and India all announced or enacted national action plans on climate or energy in the run-up to international talks on a post-2012 climate agreement in Copenhagen in December and immediately after the negotiations.

The unilateral steps taken by these countries are viewed favourably because they have “clearer, more ambitious goals than a lot of developed countries” and take substantial risk out the equation, said Bjarne Graven Larsen, chief investment officer for Danish pension fund ATP. The company will launch a climate and energy infrastructure fund for emerging markets worth €1 billion ($1.4 billion).

“The national action plan should not be underestimated,” he said.

In contrast, the US has struggled to adopt a national plan. Climate legislation passed in the US House of Representatives in June, but has stalled in the Senate, with its prospects starting to fade as Democratic leaders focus on competing priorities such as health care and financial regulatory reform.

ATP has investments in the US, but needs clearer policies before they will commit more money, Larsen said.

“Investors like us are going to invest our money in the countries that have very ambitious climate action plans on the national level ... not the US,” he said. “We can’t, as investors, wait for the politicians to act.”

Institutional investors are expected to play a key role in advancing the clean-tech sector, providing at least 85% of the trillions of dollars needed over the next 20 years to effectively address climate change, according to studies. The World Bank estimates that $140–175 billion annually is needed by 2030 to mitigate climate change, if global warming is to be limited to 2°C, and $75–100 billion is needed annually for adaptation through 2050.

“Institutional investors play a crucial role and some people even say the battle over climate change will be won almost in the hands of institutional investors,” Larsen said.

While investors are eager to close the current climate investment gap, “we need public policy changes to send the right market signals to allow us to do everything that is possible,” said Mindy Lubber, president of Boston-based Ceres and director of the Investor Network on Climate Risk.