On Saturday November 28, I took the train to Paris to add my voice to the discussion and demand strong action to combat climate change. Over the next two weeks, representatives from over 190 countries will convene in Paris for COP 21, the Paris Climate Summit, with the aim of reaching a post-2020 climate deal to safeguard the planet from irreversible climatic changes.

I am a banker and investor in projects that help facilitate positive change in society. Together with many others, we work on the transition to a green economy. We invest in solar, wind and other renewable energy power generation, as well as projects that bring energy efficiency or innovations. I want the representatives of the governments attending COP 21 to get a result that will accelerate the transition to a green economy. After multiple deceptions from climate conventions in the past, what can we expect from the talks that will be held in Paris beginning today?

Shared optimism

Jacco Minnaar, Director of Energy and Climate
Jacco Minnaar, Director of Energy and Climate

There is reason for some optimism, as many things have changed.

Take the climate change debate. Is there still a debate on climate change? The media likes to debate, but science is more certain than ever. Ninety-seven per cent of climate scientists agree that climate change is real and man-made. The debate shouldn’t therefore be about whether it exists, but rather what we can do about it.

Another reason for optimism: support is coming from all sides of the globe. The IMF, the White House, the Vatican, executives of large oil companies and multiple NGOs are all bringing the issue forward. They all advocate for charging those who emit carbon dioxide for their emissions, putting a price on carbon. The variety of advocates and the atypical alliances show that overall momentum is gathering, which is encouraging.

Financial markets are starting to pay attention to carbon risk. ‘Stranded assets’ and ‘carbon bubble’ are becoming a part of our vocabulary. What is meant is that coal and hydrocarbon assets might devalue and even have to be written off if they stay underground and are not burned as a result of stricter regulation and cheaper renewable alternatives. NGOs and activists are no longer the only ones spreading the message. The governor of the Bank of England, Goldman Sachs and other financial sector players are making the headlines with their actions against climate change. According to the largest investment firm in the world BlackRock, ‘Climate Change has arrived as an investment issue.’ Large institutional investors are starting to divest (among the examples a recent announcement by two large Dutch pension funds).

Furthermore, more than 160 countries have made individual voluntary pledges to reduce CO2 emissions (so called INCDs). If you add up the individual pledges, this leads to a 2.7 degree increase in temperature (as assessed by the UN Framework Convention on Climate Change), and thus a slight improvement over the impact that no additional action will have, which would lead to a four degree plus increase. Scientists are in agreement that an excess of 2 degrees will lead to a negative global climate change. However, today there is evidence that two degrees of warming can already have dangerous consequences. Despite the pledges, stronger action is still required. And so, there is still work to be done in Paris.

COP 21 in Paris can accelerate the transition to a low carbon economy

Where do we go from here?

The question is not do we have to change nor will we change? The question is how fast will we change? And will it be fast enough to limit global warming to no more than 2 degrees. The faster we change, the lower the overall costs to society, both from a social, environmental and from a financial point of view.

This makes COP 21 in Paris important and potentially a pivotal moment in history. Many are already working on the change and the change will happen. However, with the right political framework and the right business enabling environment, the transition to a low carbon economy will be accelerated. That is what COP 21 can and is aiming to achieve.

The other question we should ask is what is the desired outcome from COP21? There is no silver bullet, but through effective interventions, politicians can put a price on carbon. This will hopefully lead to the closure of the most polluting assets (e.g. coal-fired plants) and a massive inflow in investments in renewable energy.

There is no silver bullet, but the most effective intervention politicians can make is to put a price on carbon

Renewable energy

Triodos Bank has been financing renewable energy for more than 25 years and is a partner of first choice for a relative large amount of developers and investors in the renewable energy sector. Triodos Bank considers energy to be a basic human need and therefore something that we need to ensure is being generated and used on a sustainable basis for future generations.
For an overview of our activities in energy and climate, please visit the Energy and Climate investment strategy page.