Climate Change Task Force

In Copenhagen, the international community failed to reach a legally-binding agreement to address the urgent challenges of climate change. In the meantime, global demand for energy will continue to grow and could more than double by 2050. Seventy-seven percent of the future energy infrastructure needed by 2030 has yet to be built, and most of it will be located in developing countries. A major transformation in the way we produce and use energy must be pursued now if we are to avoid future catastrophe.

While the cost estimates vary widely, the incremental cost of such transformation to clean energy is likely to be in the hundreds of billions of dollars, if not in the trillions. The bulk of money will have to come from private investments, which have seen a meteoric rise over the past five years to $155 billion in 2008, but will need to be scaled up significantly.

There is no shortage of capital. The challenge is how to get large-scale private investment to flow to clean energy, especially in developing countries. Essential requirements include:

• An international framework that sends clear and long-term signals about future policy direction to ensure investor certainty and confidence.

• National policies and enabling frameworks that make private investment possible in developing countries.

• Public funds from developed countries, including from auctioning of emission trading permits and levies on aviation and maritime shipping, will be instrumental in leveraging and incentivizing large-scale private investment in developing countries. This should be the main objective of the $100 billion climate change fund that is proposed in the Copenhagen Accord.

All of these requirements and more will be needed to support the transformation to clean energy in developing countries. The science is clear, we have the technology, and there is no shortage of capital. What is needed is a market structure that looks beyond the short term, and a trigger in the form of a long-term global target for greenhouse gas emissions.