Utilities and energy industry financiers concerned about the uncertainty surrounding U.S. environmental policy are taking refuge in what they see as the Copenhagen Accord’s shining achievement — China and India are discussing formal targets for limiting industrial greenhouse gas emissions.
Mike Richter, a partner at the New York-based private equity firm Environmental Capital Partners, said the accord is weak and by no means gave investors the kind of certainty they sought. “But it has done some things,” he said. “It brought China into the fold.”
Competition among major polluters to find solutions that are good for their economies is driving the process well beyond outcomes achieved at the U.N. climate conference, Richter said.
“People understand the writing’s on the wall,” he said. “The opportunity to make incredible amounts of money by developing the next battery or a more efficient solar panel, there’s a huge payback.”
In negotiations that extended through Friday and into Saturday morning, President Obama and his aides worked with the leaders of China, India, Brazil and South Africa to forge a consensus around commitments for cutting emissions and international monitoring of that process.
Some in the business community hope that goes a long way in the Senate, where the degree to which China and India are willing to participate in any global climate plan is critical to winning support for capping U.S. emissions. Industrialized countries also pledged to deliver $30 billion to $100 billion to poor countries as long as they continue to work toward a treaty.
Richard Sandor, chairman and CEO of the Chicago Climate Exchange, said in an interview that progress made by negotiators in Copenhagen nudges forward efforts in individual countries to develop market-based programs to cut emissions, particularly in the United States.
“It achieved momentum,” he said of Copenhagen. “The fact that we had developed and developing countries sitting down together and reaching an accord is important.”
Sandor sees progress
Sandor runs the largest U.S.-based exchange for trading greenhouse gas contracts. Participation in the Chicago market is voluntary, but companies that sign up commit to annual emissions reductions. Companies in the agriculture, forestry and renewable energy sectors also participate through the registration of carbon offsets, or credits earned through projects designed to cut emissions. A subsidiary, the Chicago Climate Futures Exchange, trades futures and options contracts.
Sandor said he is encouraged by the emphasis in Copenhagen on the use of market mechanisms, including cap-and-trade programs that mandate emissions caps and allow companies to trade pollution permits on an open market. He said getting the United States, China, India and Brazil to the table in the final days of the summit, a general agreement among industrialized and developing countries to limit emissions, and serious discussions about financing mitigation for poor countries are notable steps ahead. “I think we made progress,” he said.
With big policy questions remaining about Capitol Hill’s response to the Copenhagen Accord, Sandor asserted that President Obama’s participation in the meetings and a post-summit comment by Sen. John Kerry (D-Mass.) that the accord is probably a net plus for the Senate should shift the delicate political dynamic in the United States and among major nations.
“The fact that we’re seeing those kinds of remarks out of Washington, D.C., is optimistic,” Sandor said. “All in all, the message that we were going to proceed was great for the world.”
Sandor, who attended the 1992 Earth Summit in Rio de Janeiro, which paved the way for the Kyoto Protocol, said Copenhagen achieved incremental steps, but uncertainty about the details of achieving emissions targets isn’t likely to scare off capital markets as long as there are legitimate clean energy projects to finance.
‘A realistic step’ taken
John Rowe, chairman and CEO of Chicago-based utility Exelon, which has the nation’s largest fleet of nuclear power plants, urged Senate passage of climate legislation next year. “We are pleased that the five major emitting countries — the United States, China, India, South Africa and Brazil — have agreed to take the first step by voluntarily agreeing to limit their greenhouse gas emissions,” he said in a written statement.
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