Investor Summit on Climate Risk
Special Envoy for Climate Change
It is very good to be here today. In particular, I want to thank Mindy and Ceres, Tim and the United Nations Foundation, and the United Nations Office for Partnerships, the Investor Summit on Climate Risk for hosting the 4th Investor Summit on Climate Risk and inviting me to speak today. Jeremy accused me of getting ready to lecture you about what happened in Kyoto and I want to put you at ease.
This is the first time I have given a public talk since the Copenhagen conference, and I am pleased to be here before an audience that knows as well as this one that we can only meet the climate challenge if we are able to generate sustained, large-scale investment in the clean energy economy.
This is something that the Obama administration has taken to heart. Investment in clean energy is an investment in the future of our economy, the future of our security, and, of course, the future of our environment. President Obama demonstrated his commitment from the outset by dedicating $80 billion dollars of our economic stimulus package to green investments and initiatives.
This was an historic down payment on our clean energy transformation, and in the course of 2009 the administration bolstered this investment with a suite of new initiatives, including establishing unprecedented fuel economy standards and forging an agreement at the Pittsburgh G20 summit for all G20 nations to phase out their fossil fuel subsidies and to work with other developing countries to do the same.
There was also important progress on Capitol Hill. The Waxman-Markey energy and climate bill that passed the House last year reflected an understanding of the need for scaled up financing to meet the climate challenge. Of particular note is its use of both international carbon markets and offsets, which can help achieve mitigation reduction goals at the lowest cost and catalyze investment in developing countries to help put them on a low carbon pathway. It is squarely in our national interest to help ensure that all countries -- not simply the ones that already have the necessary infrastructure and resources at their disposal -- pursue a clean development pathway.
In the context of international negotiations, I have said from the outset that financing would be one of the critical pillars any new international agreement, and the experience of Copenhagen and the Accord that was negotiated there demonstrated this truth.
What I’d like to talk about today, however, is not just how financing factored into the Copenhagen Accord, but my perspective on how we arrived at the Accord, what its significance is, and the path we are on now. This is not just an exercise in recent history; what we just went through inevitably holds important lessons for the future.
Looking back, it may be easy to forget how dangerously close to failure we came in Denmark. As late as the evening of Wednesday, December 16 – with the conference due to conclude two days later on Friday the 18th – all efforts led by the Danes to start a process capable of producing a compromise agreement had been blocked.
Now is it that we came to find ourselves there within a hair’s breadth of failure?
In spite of a great deal of hard work, throughout the year the formal negotiating process simply had not made significant progress on the key issues of mitigation, financial and technology assistance to poor countries, and so-called MRV – the measurement, reporting and verification of efforts to cut emissions.
Consequently, by the Fall the Danes had reached a conclusion that many people shared, however reluctantly: a full-blown legal agreement was highly unlikely by December. The Danes set forth an alternative, scaled-back vision: a short, operational accord with political and moral force, though not legally binding.
As the Copenhagen meeting approached, the Danes saw no way that the parties were going to get to common ground left to their own devices. As President of the COP, the Danes appropriately saw it as their role to offer suggestions about how to reach a successful outcome. In a few meetings held during the run-up to Copenhagen, initially with developed countries, then on December 1st and 2nd with a group of 30 to 40 developed and developing countries, the Danes offered potential compromise language for discussion.
This seemed a perfectly reasonable course of action to many of us. Indeed, it was the only course of action that seemed likely to move the world forward in our efforts to combat climate change. Our commitment to the negotiation process already underway never wavered, but we also believed that moving part of the way toward that goal through an operational accord made sense. This is what drove our support for the Danish concept.
There was concern among some developing countries, however, that the Danish approach would impose some measure of obligation on at least the major developing countries. Such an approach cut against the grain of the Kyoto Protocol, which enshrined a regime of binding obligations for developed countries and none for developing ones, regardless of their level of carbon emissions. They feared the Danish approach would erode that firewall.
Concerns like these led to the leaking of a Danish draft text early in the first week of Copenhagen, which incited accusations from some quarters that a secret agreement had been developed without consultation with the developing world. Of course, most of the major developing countries and others had spent two days the week before in detailed discussion with the Danes and developed countries. Nonetheless, the leak and the reaction to it struck a blow to the Dane’s credibility.
In the days following, the Danes made several efforts to convene a representative group of 20 to 30 countries to seek common ground on the key points, but these efforts were blocked at every turn. Without such a small group process, unfortunately, the negotiations were stuck.
On Thursday morning, December 17, with the situation in disarray and no clear way forward, Secretary Clinton arrived, followed the next morning by President Obama. The 36 hours between the time the Secretary entered the conference center and the time she and the President left were truly extraordinary, with leaders personally negotiating text, refusing to let the process fail, and producing, in the end, the Copenhagen Accord.
Secretary Clinton shifted the prevailing dynamic by announcing on the morning of her arrival that the United States was prepared – in the context of a strong Accord with meaningful mitigation actions and transparency -- to be part of a financial commitment to combat climate change amounting to $100 billion annually by 2020. It will come as no surprise to people in this room that this news had an immediate impact, especially among vulnerable countries in Africa, the island states, Asia and Latin America, whose stake in getting a deal rose markedly.
At 11:30 pm on Thursday night, after a formal dinner of leaders with the Queen, the Danes pulled together a leader level Friends of the Chair group comprised of approximately 30 developed and developing countries from the developed and the developing world, including representatives of key negotiating blocs and Clinton, Brown, Sarkozy, Merkel, Rudd, Calderon, Zuma, Lula and Meles.
This was a remarkable session and a remarkable tableau, with Leaders around a table negotiating in a highly free form, unstructured manner, where the results were anything but certain. The leaders refused to accept failure. After comments by all, they broke at 2:30 am and their representatives were to work through the night on a text so that they would have something to review when they reconvened at 8 am.
Unfortunately, progress in the Leader’s Rep session was blocked, so when the Leaders returned they rolled up their sleeves and started to plow into the Danish text on their own, with notable leadership by President Obama, Secretary Clinton, Prime Minister Merkel, President Sarkozy, Prime Minister Rudd, Prime Minister Brown, President Nasheed of the Maldives.
President Obama arrived that morning, and began an extremely effective intervention, pressing in particular on the issue of transparency and verification. The day culminated in a dramatic meeting among President Obama – assisted by the Secretary of State – and Chinese Premier Wen Jiabao, Indian Prime Minister Singh, Brazilian President Lula, and South African President Zuma, resulting in agreement on transparency and verification.
However, the agreement still needed to be taken back into the Plenary session of the full COP with its 192 member countries. Given that decisions in this body are made by consensus, the objections of five countries prevented the Accord from being adopted. However, the all night session culminated with a formal recognition of the Accord by the COP in the morning of Saturday the 19th, which was an important achievement.
This brings us to the Accord itself. There have been very different reviews, ranging from a complete failure to a breakthrough. From our perspective, it achieves several important goals that are critical to meeting the climate change.
First, on the science, countries have agreed to enhanced action in light of the scientific view that global temperature increase should be kept to no more than 2 degrees above pre-industrial levels. This provides an important data point that will help to orient and encourage our global efforts to act quickly and aggressively.
Second, in terms of mitigation, the Accord breaches the firewall that has existed in climate negotiations between developed and developing countries. For the first time, the major developing countries have agreed to list the specific actions they will take to limit their emissions. This is critical: developing countries are projected to cause 95% of the growth in global emissions goring forward, with China alone responsible for nearly 50%. There is simply no way to meet the climate challenge without the meaningful participation of the major developing countries.
Third, important progress was made on transparency. The implementation of the inscribed actions will be subject to international review. This matters because, first of all, because we need to have confidence that other countries are doing what they said they would; and, second, the world needs to be able to assess how our overall efforts to control emissions are going. It also will help to give investors increased knowledge of – and, I hope, greater confidence in -- the clean energy investment environment of countries around the world.
Finally, and of particular relevance to this audience, the Copenhagen Accord demonstrates an unprecedented financial commitment to help countries adapt to and mitigate climate change, particularly the least-developed and most vulnerable ones. The Accord includes a commitment both for prompt start financing approaching $30 billion over the next three years and, in the context of meaningful implementation of the accord, a goal of mobilizing jointly $100 billion a year by 2020 through a range of sources: public and private, bilateral and multilateral. It also established a new Technology Mechanism to accelerate the technology development and dissemination that the world needs to meet this challenge.
Moreover, a new global fund -- the Copenhagen Green Climate Fund – was agreed to, as well as a High Level Panel to explore issues pertaining to financing and its mobilization.
Let me pause for a moment to note: We need a better understanding of the best ways to leverage public funding. Often the perception is that 10B dollars of public money equals 10B dollars of invested. It shouldn’t. But it is not easy to articulate sound leveraging mechanisms. I would like to hear more of your thoughts on this.
For all of these reasons, as well as others, I believe that the Copenhagen Accord was a valuable and important step in the right direction. However, in order to achieve the environmental and financial benefits the Accord can deliver, we have to get it off the ground. In the first instance, as Secretary General Ban Ki-moon has urged, this requires that developed and major developing countries must inscribe their actions by January 31st and other countries need to associate themselves with it as soon as possible by simply notifying the UNFCCC secretariat of their support. There is real funding on the table in the Copenhagen Accord, and it would make sense for most developing countries, especially the most vulnerable, to want to be a part of the Accord.
As we look at the year ahead, I see two main areas of focus, which by rights should merge together. First, there is the substantial business of implementing the Copenhagen Accord – putting together the funding, technology, fores, MRV, and other guidelines etc. It is crucial that we move forward on this. Second, negotiations will move forward towards and effort to reach a new treaty, and the progress we make in implementing the Copenhagen Accord should support and facilitate the treaty discussions.
In closing, let me make a somewhat broader, more general point. We will have to think hard about how to develop an effective and enduring international regime that is capable of addressing the enormity of the climate challenge. We must break out of the world of rhetoric and ideology. To often last year, solving the problem took a backseat to arguments about whether a given proposal was consistent with someone’s reading of article x, y, or z of the Bali Action Plan, the Kyoto Protocol or the Framework Convention. And too often parties insisted upon extravagant positions that may have played to the crowd but contributed nothing to the search for real solutions. We cannot go on like this. We must work to build a global regime whose one and only purpose is to help solve the climate crisis and move us toward a sustainable, low-carbon global economy.
The United States looks forward to helping to lead the process of implementing the Copenhagen Accord and to building on the momentum that it can create as we prepare for the upcoming COP in Mexico at the end of this year. Our goal remains to develop a global regime designed to help solve our common problem. I believe that the lessons, achievements, and, yes, shortcomings of the past year will prove invaluable in helping us to work toward that goal in the days, weeks, and months to come.
Thanks very much. I look forward to answering your questions.