Transcript Powerpoint Presentation for "London Accord Overview"

The London Accord
Making Investment Work for the Climate
Professor Michael Mainelli
Executive Chairman, Z/Yen Group &
Principal Advisor, London Accord
Friday, 9 October 2009
“Towards better policies through shared investment research”
Paying Attention
“…while climate change may have
reached a tipping-point of sorts in 2006 as
far as perceptions of the problem are
concerned, the same cannot be said for
perceptions of the solution.”
- Center on International Cooperation & River Path
Associates, “The State of the Debate”
“Towards better policies through shared investment research”
Cash In, Carbon Out
The London Accord shows investors
and policy-makers where and how to
make investment work for the
climate by applying financial analysis
to climate change investment.
“Towards better policies through shared investment research”
“Towards better policies through shared investment research”
The Road To London
2008
ESG growth
19 December 2007
Landmark report
2006
Recruitment
2009
Index-linked
carbon bonds
2008
Policy impact
2007
Launch
2005
Concept
“Towards better policies through shared investment research”
Why Is The London Accord
Unique?
Private sector investment is crucial to climate change
investment (86% of capital investment according to
UNFCCC)
Pension funds and asset managers rely on analysis by the
financial services sector for their decision making
Global accord to share ‘open source’ ESG research
Financial services are engaged – over 20 of the world’s
leading investment firms co-operate in the London Accord
valued at approximately £10M and growing at about £3M pa
“Towards better policies through shared investment research”
www.london-accord.co.uk
“Towards better policies through shared investment research”
Picking Winners and Losers
Climate change is a global problem and the temptation is
to look for a single global solution, or a few global solutions
Cap-and-trade
schemes provide
market-driven solutions
to identify efficient sets
of solutions that will
evolve
“Towards better policies through shared investment research”
Winning Portfolios?
Successful model portfolios exist – though concentrated at
$30 to $60 per tonne, and based upon IPCC/UNFCC data
A mix of sectors and
technologies is
essential; no single
technology suffices
Abatement potential
up to about 15 Gt is
available
“Towards better policies through shared investment research”
Solar important in
smaller, successful
portfolios at the
efficient frontier.
Forestry is crucial for
large abatement
portfolios, but
uncertain.
Abatement
Energy investment is
riskier technological
change, higher &
volatile fossil fuel
prices, rising
emissions costs.
“Towards better policies through shared investment research”
Policy Implications
• Focus on the Carbon Market - business investment
follows the carbon price
• Support More Research:
– Quantify the Impact of Forestry
– Assess Carbon Capture and Sequestration
• Avoid Carbon-Dumping Wars – duties on carbon ‘at the
borders’ could be worse than anti-dumping trade wars
• Set International Standards – product level, carbon
intensity, carbon offsets
• Set Higher Policy Standards to Realise Existing Positive
Abatement Opportunities - lower consumption, and
increase efficiency of existing energy
“Towards better policies through shared investment research”
Watch – reductions &
coverage
Carbon Reduction Scenarios
140
120
100
EU/ETS
US 2020 peak carbon
80
IPCC Category 1 15%
60
IPCC Category II
IPCC Category I 25%
40
20
0
2000
2010
2020
2030
2040
2050
2060
“Towards better policies through shared investment research”
Costs
Impact of Emissions Trading on Energy Demand
Average prices 2000-2010 Incremental Price
2015
Electricity
€ 97
€ 25
Elasticity
-0.1
Change from Carbon Pricing
26%
Change in demand
-2.6%
Gasoline
€ 1.01
Elasticity
-0.7
Change from Carbon Pricing
Change in demand
Diesel
€ 0.90
Elasticity
-0.7
Change from Carbon Pricing
Change in demand
Jet fuel
0.678
Elasticity
-0.6
Change from Carbon Pricing
Change in demand
2020
€ 31
2025
€ 28
2030
€ 18
32%
-3.2%
29%
-2.9%
19%
-1.9%
2015
€ 0.10
2020
€ 0.13
2025
€ 0.11
2030
€ 0.07
10%
-7.2%
13%
-8.9%
11%
-7.9%
7%
-5.2%
2015
€ 0.13
2020
€ 0.15
2025
€ 0.14
2030
€ 0.09
14%
-9.8%
17%
-12.0%
15%
-10.8%
10%
-7.0%
2015
€ 0.12
2020
€ 0.15
2025
€ 0.13
2030
€ 0.08
17%
-10.5%
22%
-12.9%
19%
-11.5%
13%
-7.5%
Scenario: IPCC Cat 1 15% Elasticity -0.8
Efficiency: 1.50%
“Towards better policies through shared investment research”
Next Steps
• Wider social & ethical issues
• Financial industry community that can
communicate with policy-makers and NGOs
• New reports
• New members
“Towards better policies through shared investment research”
More Information…
Professor Michael Mainelli, Principal Advisor to the London Accord
Z/Yen Group Limited
5-7 St Helen’s Place
London EC3A 6AU
United Kingdom
+44 (0) 207-562-9562
[email protected]
Home - www.london-accord.co.uk
“Towards better policies through shared investment research”