A Copenhagen call to action

In six months, Copenhagen could be the site of sweeping international guidelines on emissions reductions that could prevent catastrophic climate change.

But today, Denmark’s capital city was the epicenter of concern that piecemeal legislation and insufficient targets will only make a dent in the forecasted rise in CO₂ emissions across the globe. The International Panel on Climate Change says those emissions need to be cut by at least 17 gigatons in order to maintain survivable temperatures.

“Add up all the proposed and likely commitments, assuming they will be met, and we get about halfway to that 17 gigatons,” said Nick Hoffman, partner at McKinsey, as part of a panel at the Cleantech Forum XXII in Copenhagen today. “The problem remains very, very urgent.”

In December, Copenhagen will be the site of the United Nations' COP-15 meeting, which will try to establish a global action plan for mitigating carbon emissions. Hoffman and other panelists speaking about the macro factors affecting cleantech praised governments that have already allocated funds to cleantech through stimulus packages and established mandates for renewable energy (see Solar takes stock after tax credit battle and Germany, U.S., Australia inject stimulus spending into cleantech).

“The regulatory frameworks are continuing to move in a positive direction—despite the banking crisis and the economic crisis and the other issues governments have had to deal with,” said Kevin Parker, global head for Deutsche Bank Asset Management (see More deals fewer dollars for cleantech in '09?).

But panelists said a workable solution requires action and financing from developed countries in order to spur activity in developing regions.

“What’s hidden behind this is the huge iceberg of business development that has to exist,” Hoffman said. “We have a pretty good idea technologically of how to reduce emissions. The cost from a societal point of view is manageable, and we can see how some of the policy mechanisms can be created to do this. On the other hand, getting a global deal to start on that path is pretty challenging.”

Part of the problem lies in the priorities of developed versus developing nations. Both recognize the need for immediate action, but neither wants to make a bigger sacrifice. Developed nations account for significantly more emissions today, but developing countries are expected to account for more than 90 percent of the projected increase in greenhouse gases over the next 20 years, said Lars Thunell, CEO of International Finance Corp.

The necessary CO2 reductions would mean just 2 to 3 tons of emissions are generated per capita, which is India’s current level, said Dmitri Zenghelis, chief economist for climate change at Cisco. The U.S. is at about 20 tons per capita, while Europe is about 10 and China is about 5. As the population grows, that would mean an 80 percent to 90 percent reductions in CO2 from 1990 levels—drastically more than any government has proposed, Zenghelis said.

“[Cleantech] is a completely synthetic and fabricated market because it relies on policy makers. It’s free to emit greenhouse gases,” Zenghelis said. “The real question is: How can the public sector leverage public resources to provide as much capital as possible? It requires coordinated, early agreements instead of piecemeal responses.”

Hoffman calculated that developed nations would have to invest between €65 billion and €100 billion each year between 2010 and 2020 in order to realize their portion of the 17 gigatons of reductions. About €20 billion to €30 billion could be funded by a carbon offset market, while €7 billion could be paid for by clean technologies that reduce the cost of doing business, such as efficiency. The expenditure sounds high but is equivalent to about 1 percent to 2 percent of the GDP of the developed nations.

Parker said those numbers illustrate the minimal impact today’s policies will have.

“The [Energy Information Administration] estimates $45 trillion is needed to mitigate carbon emissions by 2050,” Parker said. “Whether or not that number is right, it gives a sense of magnitude. We’re deploying a lot less than that on an annual basis.”

Part of what needs to happen is awareness among consumers of the rapidly mounting problem, he said. To that end, Deutsche Bank plans to unveil a 70-foot sign displaying a real-time tally of carbon in the atmosphere across the street from Madison Square Garden in New York City on June 18.

“Anyone who’s ever seen the running deficit sign certainly can never forget it,” he said. “This cost quite a bit of money, but we think it starts with awareness.”

More than 450 investors, entrepreneurs, policy makers and others have gathered in Copenhagen this week for Cleantech Forum XXII.

Cleantech developments making news in the past 24 hours

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• A quest for CO2 and O2 optimal management with biofuel from algae

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