Published: June 2, 2011
System needs to look to the future and support new industries.
Carbon finance must support more industries in fighting climate change, claims Andrew Steer, the World Bank’s special envoy on climate change.
Speaking at the Carbon Expo conference in Barcelona, attended by EMEA Finance, he said interest in developing cleaner transport systems, for example, is evident – particularly in the emerging world.
Steer noted that Nigeria approached the World Bank’s Clean Technology Fund at the end of last year and secured US$250mn to support its plan for low carbon development in its cities, which includes transport. “That is the kind of leadership that we are starting to see in the developing world,” he added.
Arturo Gonzalo, director of institutional relations and corporate responsibility at petroleum company Repsol, agrees. He believes the EU’s emissions trading scheme (ETS) has worked well to address heavy industry and the energy sector but says it misses one of the industries that will become a core area in the fight against climate change: “Transportation is going to be a key issue with 50mn new cars getting to the streets every year.”
Gonzalo calls for more creativity to enable carbon finance to address the issue and believes that while the carbon market is key to reducing greenhouse gas (GHG) emissions in business, it will not be enough until the market includes the fuel sectors.
Steer added that transport projects would be more attractive and that countries would find it easier to tackle them if they could use the carbon markets to generate funding. He also called for forestry and agriculture to benefit from the market.
Christina Figueres, executive secretary of the United Nations’ framework convention on climate change, believes that the carbon market needs to expand but its focus will be on creating access to energy for the 1.6bn people around the world living without it.
“To say that the carbon market as we see it now needs to be stretched in both directions, to cover both extremes, is a tall order,” she said.
Figueres added that the carbon markets alone cannot fund the cleaning of the fuel industry. The emission reductions achieved from projects such as electric transport often do not compensate the investment needed to implement the project, she said: “That is the challenge.”