Private companies want to play a major role in climate action, but they need clear signals that governments are serious about their commitments, writes Nannette Lindenberg.
Nannette Lindenberg is an economist at the German Development Institute (DIE/GDI). This opinion piece was first published on the institute’s website.
After the negotiation of the historic climate agreement in Paris last December, the memorable signing ceremony in New York and a lot of proud back-slapping, the climate community once again gathered in Bonn in recent weeks. The latest round of UNFCCC talks with approximately 1,900 government delegates, 1,500 observers and 100 media representatives started with discussions of how to translate the Paris Agreement into action. While the effort of interpreting the climate agreement and planning the implementation undertaken by the international bureaucrats is certainly an important next step, it will probably not be sufficient to prevent the transformation towards sustainability losing momentum. Between the numerous talks, now it’s important to start acting and to start implementing the intended nationally determined contributions (INDCs).
Five months from now the next climate conference will open in Marrakesh and it will be crucial that governments can show results. The achievement of the agreed climate goals will certainly be impossible without significant contributions from the private sector. And indeed, industries, private and institutional investors have followed the climate negotiations with huge interest. What is more, they have emphasised their willingness to take action, which, while surprising, is logical. The private sector above all wants to make money and if they get a strong signal for the economy to go through a transformation, it is in their own interest to adapt to the new business environment. But now is the time when governments have to demonstrate that their commitment to decarbonisation is serious and reliable. They need to convince the private and financial sector that the future will lie in green technologies and green business approaches, that global growth models will be changed and that there will be no going back for anyone.
November is approaching fast and we need to complement the current diplomatic approach of elaborating another set of global, national, regional and local plans with timely hands-on action. Back to back with the UNFCCC conference, a much smaller group of experts from many different countries have developed practical solutions and viable prototypes for increasing private climate investments. During the Practitioners’ Dialogue on Climate Investments (PDCI) that took place from 23-25 May in Bonn, PDCI fellows from the public, private and financial sector, from academia and from different hierarchical positions worked on different concrete projects. These included a prototype for recycling effluent from highly polluting industries (pharmaceutical) in Andhra Pradesh, a prototype of an energy storage system for mini-grid and off-grid electricity in Indonesia, a prototype for an sustainable finance policy for banks and financial institutions in Bangladesh, a prototype for a credit guarantee facility for climate investment projects in Pakistan, a prototype for catalysing energy efficiency-shifting technology in the Philippines and many others.
The PDCI has given a good example of how effective international conferences can be if the concept does not rely on a series of discussion rounds, dominated in many cases exclusively by grey-haired men, including the typical subtle demonstrations of power, self-promotion and efforts to allocate responsibilities. The key for fast action has been a concept of peer-coaching, of recognising that we have a lot to learn from each other – in particular from developing countries – of getting started immediately (without long discussions) and of listening to fresh, innovative and pragmatic ideas from stakeholders.
The majority of the prototypes developed will start being implemented by the end of the year and governments are called upon to irrevocably confirm their determination to stop climate change by putting their money where their mouths are. The PDCI fellows had many concrete ideas for government action, including to provide risk mitigation instruments, create and secure stable investment environments, develop standard procedures for project assessments, invest in feasibility studies and pilot projects, create small funds and bundle projects, make project-related data public, set the right regulation for pension funds and put carbon pricing on the G20 agenda.
But most importantly, governments must get started now and should not wait for the next round of plans being brought to perfection first. The private and the financial sectors need a clear signal that economic models have definitively changed after Paris.