COP21: Global Financiers Hop Aboard the Zero-Carbon Bandwagon

Outside the conference hall where the Paris climate negotiations are taking place, a large crowd gathered in the bright sun on Friday morning, chanting for an end to government subsidies for fossil fuels.  Yards away, a meeting of financiers and bankers got under way in which a central demand was for, well, much the same thing.

Something strange has happened here.  The masters of the financial universe are out in force insisting that, though they may not be waving placards or chanting slogans, they are part of the solution.  Free markets — and an end to those pesky subsidies — could deliver a zero-carbon world, they say. 

At the apex of capitalism's assault on the Paris talks is the charismatic governor of the Bank of England, Mark Carney.  He flew in to announce that the Financial Stability Board — a body he chairs that coordinates central banks and financial regulators around the world — was setting up a task force to develop a carbon-disclosure system that could force companies to reveal how heavily their businesses are invested in fossil fuels.  He said he expected it would become standard business practice throughout the world — carbon footprinting for financiers. 

Climate change, Carney said, was a "systemic risk" to the global financial system.  The world was, he contended, destined for a "transition to a net-zero world," meaning zero greenhouse gas emissions.  And his job is to make sure the process doesn’t crash capitalism. 

Rather, he wants fully functioning capitalism to speed the process.  And that requires investors to be able to judge which companies are likely to be winners during the transition, with plans for low-carbon energy, and which are set to be losers, stuck with "stranded assets" such as coal mines and power plants whose market value will collapse as limits on carbon emissions are introduced.
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Carbon pricing makes no sense, however, while governments — even those whose ministers happily sing the praises of a low-carbon economy in sessions here — continue to subsidize fossil fuels to the tune of an estimated half-a-trillion dollars a year.  "We still spend more on subsidizing fossil fuels than on building the new energy future," noted Martin Skancke, of Principle for Responsible Investment, an initiative of the U.N. Environment Programme. 

That aside, the crack troops of capitalism have come to Paris to fight climate change, talking up the prospect of investing trillions of dollars in a "net-zero" future.  Many believe that, in this area at least, a climate agreement here is close to irrelevant.  A tipping point has been crossed, they contend.  The low-carbon money will flow anyway now. 

But government money still matters.  Especially for the poor relation of climate finance — funds for adapting impoverished and vulnerable societies to the life-threatening reality of climate change.  And amid the optimism about a likely deal, this is the main cloud on the horizon for the final stages of the talks. 

Mohamed Adow, of Christian Aid, one of the most active NGOs here, said that the current draft of the final conference text "doesn't include a clear commitment to provide finance to help vulnerable countries adapt to climate change.  The uncertainty around that is eroding the trust that will be needed when ministers take over the negotiations on Monday."  Don't write off the chances of negotiators snatching defeat from the jaws of victory.

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