What’s next after Copenhagen?
Prospects for emissions control and global climate initiatives after the global summit
12/23/2009
On December 18, delegates from 192 countries concluded two weeks of marathon talks on global climate change in Copenhagen. This historic meeting follows two years of painstaking preparations and growing expectations that action could—and would—be taken by the international community on the most important challenge facing the planet.
Unfortunately, those expectations were not met as the Copenhagen Summit failed to deliver what would have been an historic achievement: globally binding carbon emissions targets for the world’s major economies. While those major economies committed to limit the rise in global temperatures, they did not agree on specific caps on carbon emissions to make measurable progress towards that goal. The continuity of the UN process culminating in Copenhagen is now left in doubt, as many observers question its ability to produce consensus and the majority of the world’s smaller developing economies appear to have felt marginalized.
Yet significant progress was nonetheless made during these intensive and at times dramatic negotiations – progress that provides a basis for moving forward. While binding targets were not set, the political statement agreed to at the eleventh hour by the U.S., China, India, Brazil and South Africa points toward action by these parties, as well as impetus for a wider agreement on the part of others in time.
Moreover, two key developments can lend real momentum to further progress. First was the offer of $100 billion in assistance from richer to poorer countries to help support their transition to lower-carbon sources of energy as well as to address drought and other consequences of global warming that are already apparent. Second was China’s commitment—beyond the eleventh hour at the proverbial thirteenth—to agree to verification of its emissions reductions. At least on these grounds, Copenhagen succeeded by offering critical building blocks to achieve the fully global approach that Kyoto failed to achieve a dozen years ago.
However pivotal to the final outcome in Copenhagen President Obama may have been, he now faces an even tougher task: to give concrete shape and credibility to the commitments he made on behalf of the U.S. by pushing successfully for action at home. Cap-and-trade legislation, which would establish a national market for trading carbon emissions, passed the House in September. A Senate version of the bill has stalled for now, but is likely to move forward in the next session, once health care reform has been resolved.
Meanwhile the EPA has determined that carbon emissions pose a threat to the environment and public health and asserted its authority to regulate them, thus placing additional pressure on the legislative side of the equation for Congress to act in the first half of 2010. But just as the positive outcomes achieved in Copenhagen should now strengthen the case for the U.S. to act, so too, further international action will be stymied if the U.S. fails to set its own emissions reductions targets and process for achieving them.
Investors have critical interests at stake as they evaluate the willingness of companies in different sectors to address both the risks and opportunities associated with climate change. Calvert has long advocated policies to set a sustainable price of carbon that will provide certainty to investors and companies alike. We continue to believe that investments in cutting carbon emissions—whether through greater energy efficiency or use of alternative fuel sources such as renewables—will be rewarded.
While Copenhagen may not have produced that certainty, it helped to galvanize such investments by some of the largest companies in the world, as well as unprecedented support on the part of many of the same companies for the cap-and-trade legislation in the U.S. and a clear outcome of the UN process. Now we must sustain that investment and maintain support for action in the next arena that will shape further global progress—the U.S. Congress in 2010. We continue to advocate for an international agreement that sets a sustainable price on carbon. However, even without this agreement, we believe that momentum is building for alternative energy and green technology, and that investments through vehicles like the Calvert Global Alternative Energy Fund, should be well-positioned to take advantage of opportunities in this sector.
Bennett Freeman is Senior Vice President for Sustainability Research and Policy at Calvert Asset Management Company, Inc. As U.S. Deputy Assistant Secretary of State for Democracy, Human Rights and Labor in 1999-2000, he travelled twice to Uzbekistan to press the government on human rights issues.
Calvert Global Alternative Energy Fund is subject to the risk that stocks that comprise the energy sector may decline in value, and the risk that prices of energy (including traditional sources such as oil, gas or electricity) or alternative energy may decline. The stock markets in which the Fund invests may also experience periods of volatility and instability. In addition, shares of the companies involved in the energy industry have been more volatile than shares of companies operating in other, more established industries. Consequently, the Fund may tend to be more volatile than other mutual funds. Lastly, foreign investments involve greater risks than U.S. investments, including political and economic risks and the risk of currency fluctuations.
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