Fomenting the Green Industrial Revolution

As governments plough in $3 trillion to stimulate growth, 52 major companies, international bodies, and leading climate change experts say what the world needs now are policies to promote low carbon technology.

This is an edited version of an open letter to the heads of the G20 governments meeting in London this week, from the newly-formed Task Force on Low-Carbon Economic Prosperity.

Business-Expert Task Force on Low-Carbon Economic Prosperity: An Open Letter to G20 Leaders

We believe this is a crucial year for two reasons. The international community faces the twin challenges of dealing with the most serious global economic crisis since the 1930s and negotiating an ambitious agreement on climate change.

We suggest that the two agendas can, and should be, designed to be mutually reinforcing.

Global economic growth and the prospects for the achievement of a UN climate agreement in Copenhagen later this year can be strengthened by placing low-carbon growth strategies at the heart of economic stimulus measures now being implemented in many countries.

Many leaders in business, policy and economics are convinced of the growth potential of the low-carbon economy. Last summer, as part of their recommendations to leaders attending the G8 Summit, over 100 chief executives of leading companies from every industrial sector and region stated, “Climate change is not only a challenge, it is also an opportunity. A paradigm shift to a low-carbon economy has the potential to drive forward the next chapter of technological innovation. It will require a third - this time green -industrial revolution. To realise this potential, the new framework must harness the power of the market to deliver on the environmental objective.”

These CEOs also stressed the potential for low-carbon growth and investment in developing countries, “Designed properly, the new framework could have a greater degree of impact than any other sustainable development initiative in history. This is because a well-designed, market-based framework...can also help catalyse the required flows of private capital and clean energy technology to developing nations in the most innovative, entrepreneurial and cost-effective way.”

These points are also underscored in the Global Green New Deal policy brief of the United Nations Environment Programme (UNEP), published earlier this month in consultation with over 20 UN agencies, the OECD, the World Bank and IMF.

The twin challenges of economic recovery and addressing climate change have placed us at an extraordinary moment in history.

We wish to indicate our readiness to participate in the proposal for a public-private task force over the next several months.

As suggested, the purpose of this task force will be to provide policy-makers with specific guidance on how to link designs for economic stimulus measures with the post-Kyoto climate regime to maximize the opportunity for business investment in low-carbon prosperity.

The number of new jobs, technologies, practices, services and products that will be required to shift to a low-carbon economy is vast.

Much needs to be delivered by the private sector. The coordinated global recovery package to be discussed at the London Summit 2009 presents an opportunity for the international community to begin to develop the necessary practical incentives that will stimulate private sector decision-making in this direction - helping to surmount the uncertainty in the markets created by the impending expiration of the first Kyoto Protocol commitment period.  

The task force will focus on areas with the greatest potential for scaled private sector and public-private activities in developed and developing countries, such as:

Market mechanisms (carbon prices): guidance on the first steps required to build an international market for carbon, including specific recommendations on how to address issues such as price reliability, linkage and harmonisation, raising and allocation of revenues, attracting additional low-carbon business investment and the relationship between carbon markets and other price instruments such as carbon-related taxes.

Universal standards and metrics: practical proposals for product, technology and supply-chain standards to further drive energy efficiency and lower emissions, including common carbon accounting standards, supply-chain emissions calculation methodologies and disclosure processes.

Energy efficiency: practical international/sector-based programmes to improve greatly energy supply efficiencies, generate new incentive systems and remove systemic barriers to end-use efficiency, as well as specific project proposals for a series of smart grid demonstration projects.

Incentives for accelerated investment in low-carbon technologies: including specific innovations to scale up project financing for renewable energies and fuels, carbon capture and storage, and nuclear power, to accelerate low-carbon technology development and deployment, and to level the playing field for low-carbon market opportunities, capitalize new public-private research, development, demonstration and deployment funds.

Accelerate the availability of low-carbon finance and technology for developing countries.

Avoid deforestation and land use change: practical proposals for innovative forest investment mechanisms and an exploration of wider issues such as the trading of credits for avoiding deforestation in carbon markets.

Adaptation: specific innovations and proposals for the promotion of more resilient business, agricultural and natural resource management strategies in a more difficult climate, within the wider context of sustainable development.

This concrete, bottom-up discussion would be organised to take advantage of key meetings on the international calendar [during this year]. By autumn, we anticipate producing a set of between 10 and 20 recommendations of “game changing” policy initiatives or public-private collaborations that stand the best chance of catalysing substantially increased business investment in low-carbon solutions, which can be initiated within the next 18 months.

Business leaders and experts from around the world have already stated their desire to work with governments to do this.

We invite world leaders gathered at the London Summit to consider these preliminary recommendations and, in particular, to direct relevant economic and environmental officials of their governments to engage in the proposed public-private process of dialogue and analysis during 2009.”