Where the Economy Intersects with Climate Change
Big things are happening on the climate change front, making it clearer than ever that a new low-carbon economy, one fueled by investments in sustainable energy — whether solar, wind, geothermal or something else — is emerging.
First, President Obama on Nov. 6 officially rejected the long-contentious Keystone XL Pipeline proposal, a symbolic act that comes as he continues to push the issue of climate change in the final year of his president. Ultimately, Obama declared the pipeline’s role in the economy overblown — it would neither be a boon to job creation nor a disaster to the environment. However, the rejection does clearly illuminate his commitment to developing renewable energy infrastructure, something that is on the rise in the U.S. and elsewhere
Also came the news that 2014 was the first year in 40 years that the world’s economy grew without an increase in carbon emissions as well, according to a new report by the Renewable Energy Policy Network for the 21st Century. That’s a great step forward, but the concern now is whether the world is on track to keep climate change under the projected 2 degrees Celsius. Reports suggest that we’re not meeting the milestones needed to achieve that goal, which means more drastic action is needed to get us back on course. That in turn means more investment in sustainable energy and ways to remove greenhouse gases from the atmosphere.
Funding is ultimately a problem. Governments have limited budgets, even large, powerful nations, and deciding where to allocate funds can be an all-out battle and mess of politicking and lobbying. Not only that, but individual countries are fighting against climate change on two fronts: at home and in developing nations that need outside investments to build their own green infrastructure.
At COP15, world leaders jointly committed to mobilizing a full $100 billion for that purpose by 2020. The Climate Policy Initiative estimates that funding for that purpose reached $62 billion in 2014, which is actually on track to meet the goal. However, no one in the agreement was clear on where that funding would come from, and it’s still up for debate. Nor will $100 billion solve every problem these nations face, as they’re most likely to be some of the hardest hit
The good news is that while local governments fight climate change from the bottom up and world leaders take up the mantle and press for global cooperation, help is also coming from other directions. As more businesses realize that going green and adopting a truly sustainable mode of operating yield more than just goodwill with the public, they’re becoming true leaders in the fight against climate change.
Financial institutions in particular are committing large sums, and even insurance companies are getting involved as the risks of unmitigated climate change threaten their livelihoods. The range of financial products and tools available is getting larger as well. Green bonds can help finance small municipal projects as well as large-scale projects in other countries. Either way, the point is clear: By investing their own private capital, businesses large and small, as well as consumers, can bridge the gap in funding and create their own place in the new low-carbon economy.
