Bringing Hope to Copenhagen

By Orville Schell

This excerpt is from an article originally published in Yale Environment 360, December 15, 2009. 

As world representatives conclude their quest in Copenhagen for ways to slow global warming, something needs to be done to kick-start the discussion into a more concrete and collaborative phase. Otherwise, the UN conference will have failed to turn what so far has been a latter-day Tower of Babel on climate change into a more focused and hopeful multilateral discussion.

An already-existing feeling of global disarray was only heightened last month at the Asia-Pacific Economic Cooperation summit in Singapore when, thanks to the U.S. Senate’s obstructionism, President Obama was forced to acknowledge that the world would not be able to reach a binding climate agreement in Copenhagen. The feeling of paralysis was compounded by the manner in which the “developed world” (especially the U.S.) and the “developing world” (most notably China, India, and Brazil) had fallen into a dysfunctional state of wrangling over who was responsible for the historical burden of CO2 emissions still in our atmosphere and who should assume what proportional role for reducing them in the future. Forward motion, much less accord, on a post-Kyoto agreement seemed far from assured.

Amid all the prevaricating and confusion, two things, at least, had become clear:

First, not all the alarmed scientists, concerned NGOers, born-again disciples of “greenness” and earnest officials in the world would ever be able to solve the climate change challenge on their own.

And second, until businesses could see a clearer way to make money reducing carbon emissions, there would be no meaningful solution.

In short, it had become increasingly evident that, unless the world could find new ways to catalyze the marketplace into action, we were figuratively — and literally — cooked!

So, is there anything that can be done quickly to help prod the marketplace into action, even before the UN’s Copenhagen conference ends?

The most promising new action plan I have recently encountered calls for the establishment of several new kinds of so-called quick-start funds for low-carbon development. Such funds are crucial because of an inescapable reality: Any attempt to bring about a more rapid transition to a low-carbon economy in developing countries quickly and inevitably runs into the unresolved question of finance.

Quick-start funds are being supported by the World Economic Forum’s Task Force on Low Carbon Prosperity, which has systematically applied itself to working on strategies for just such funding. (I am a member of the task force.) At a recent meeting in Dubai, members of the forum’s Global Agenda Council on Climate Change recognized the urgency to “design, launch, and test these new forms of public-private clean energy investment models.” The group called on wealthy nations to establish a new public/private consortium to help the developing world both reduce its carbon emissions and adapt to the effects of climate change by supporting a group of quick-start funds. These funds would draw from both public and private investment sources to create more workable alternatives to government aid handouts.

How would such funds work?

The “First Loss Equity Quick-Start Fund,” for instance, would be a for-profit fund run by managers seeking to attract private institutional investors to projects in the developing world. Modest government backing would encourage the funds to take on some of the risk that potential investors often face when considering clean energy projects in poorer countries. The fund would focus on the myriad worthy — and potentially profitable — low-carbon projects that now languish in the global pipeline. Such projects would include energy efficiency initiatives, development of renewable energy, smart energy distribution, and so-called REDD programs (Reducing Emissions from Deforestation and Forest Degradation) that pay countries not to clear their forests. Without some government support for a quick-start fund, uncertain policies often make conditions too risky for investors to move forward.

Orville Schell is the director of the Center on U.S.-China Relations at the Asia Society and an editor of "A Roadmap for U.S.-China Collaboration on Carbon Capture and Sequestration," published by the Asia Society, the Center for American Progress, and Monitor.