You wouldn’t expect to read the latest OEDC report on the heavy consequences of inaction on climate change and feel optimistic. Yet, that’s exactly how I felt last week at the Bloomberg New Energy Finance Summit in New York. The road to climate recovery will not be easy, but a very honest (and sometimes very sad) panel discussion at the conference revealed some interesting ideas that can actually help avoid the devastating consequences of inaction described in the OECD outlook.
The participants in the panel, which was moderated by Michael Liebreich, Founder & CEO of Bloomberg New Energy Finance, included Gilbert E. Metcalf, Deputy Assistant Secretary for Environment and Energy, U.S. Department of the Treasury, Jeff Holzschuh, Vice Chairman, Morgan Stanley, Aspásia de Camargo, State House Representative for Rio de Janeiro State, Ambassador Carlos Pascual, Special Envoy and Coordinator for International Energy Affairs, U.S. Department of State, and Simon Upton, Director, OECD Environment Directorate.
If you think policy makers in Washington and investors in Wall Street were shocked or surprised by the OECD report, you’ve got it all wrong. They all know the risks presented in it quite well and as most of the panelists admitted, it is joining a growing number of similar reports on their desks.
Metcalf from Treasury confessed that policy makers are not doing everything they can do to mitigate climate change, citing the lack of carbon pricing as an example. There’s certainly a need to educate policy makers, he added. Pascual from the State Department also made it clear that right now there is no political consensus in the U.S. when it comes to climate change, but also pointed out that it doesn’t mean we can’t do anything in the meantime. We should look to create more markets for clean energy, finding the places where there is a case for commercially viable solutions, he said.
Pascual represented a very realistic point of view, saying that the political climate to get things done is just not there, but if we wait until we reach political consensus, then we’re in trouble. Still, there’s a lot of work we can do right now, for example, in developing countries, where it is less about taxing carbon and more about building the capacity for clean energy. This was something all participants agreed on. Another point they seemed to agree on was that the problem is politics, not the policy. As you can guess, the participants didn’t see this problem solved anytime soon, although as we’ll see later they do believe it’s solvable if the public will demand action.
When it comes to Wall Street the problem is the spreadsheets, not the investors. Holzschuh of Morgan Stanley explained that the report doesn’t change anything in their routine work. As Liebreich, the moderator, put it, it’s coming down to spreadsheets and there the report has no impact on factors like IRR or NPV. If it sounds strange given the report’s grim forecasts, think for a second about the importance of long-term considerations for investors. Now, the absence of the report from the spreadsheets makes more sense, right?
In any event, Holzschuh added that looking to Wall Street for solutions is impractical. He explained that it is unrealistic to think that the financial community will lead the debate and added that Wall Street was already burned once when it created an infrastructure to trade in carbon, looking ahead for a cap and trade regulation just to see it eventually not happening. So we’re back to square one, policy, sorry, the politicians. So how we get them into action?
There was a consensus in the panel that in order to change the politics of climate change, you need to change the public perception of climate change. To do that you need to reframe the problem – start talking about issues that people actually care about and find the way to ensure that taking action doesn’t put them in disadvantage. Upton of the OECD said that health, for example, is a more potent trigger than climate. Such a reframing has implications not only on the way climate change is presented to the public, but also on the solutions. For example, Upton said, we need to internalize not only carbon costs into the price of fossil fuel, but also health impacts, to ensure transition from coal to renewable energy and not to natural gas.
So why was I optimistic after this panel? Because it concluded with two important positive messages – first, there’s a lot to do right now, especially in the developing world, which actually is the key to solving global warming. Second, we have a marketing problem. If we change the message, we might change the perception and then get something done. So all we need now is someone as talented as Don Draper and we’re good.
[Image credit: BNEF Summit and TPACK-Productions]
Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Department of Business Administration, CUNY and the New School, teaching courses in green business and new product development.