When most of the exhausted delegates at Copenhagen's Bella Centre finally witnessed a deal, it predictably called for huge investment in clean energy technologies to stop climate change. But the text didn't specify exactly how that money would be raised - and some at the talks say it did little new to encourage private investment.
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THE COPENHAGEN ACCORD
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The biggest step Copenhagen could have taken to stimulate the green economy would have been to send a strong signal that the price of carbon dioxide pollution will rise. But the deal that emerged in the early hours of Saturday included no national carbon dioxide caps. It laid down an ambition to keep global temperature rise to within 2C of pre-industrial levels, but left emission reduction declarations to the end of January - and even then they won't be legally binding. It means investors are left guessing at the likely future price of carbon. Airlines and power companies, for example, don't yet know whether upgrading to cleaner technology will be economically worthwhile. But the signals from Copenhagen have led many to expect caps at the lower end of the range being discussed before the conference and the lack of any reference to a future legally binding framework leads some to question the level of commitment. "Copenhagen was a big setback for investors who wanted clear and credible policy signals," encouraging investment, says Nick Robins from HSBC. Carbon markets As well as being vague on emission caps, Copenhagen left a question mark over the future of carbon markets. There is one reference to markets in the accord: We decide to pursue various approaches, including opportunities to use markets, to enhance the cost-effectiveness of, and to promote mitigation actions.
The 1997 Kyoto treaty established the global carbon market, allowing credits from clean energy in the developing world to be sold to offset emissions in the West. But the targets set by the treaty are due to expire in 2012 - and Copenhagen did not renew them. It means investors don't know whether or how they will be able to sell "credits" from clean energy projects in the future. Investment from carbon markets to developing countries is already falling - and may continue to. One thing Copenhagen did was to mobilise support for the idea of channelling an annual $100bn of funding to the developing world, for adaptation and mitigation, by 2020 - and about half of this, it has been suggested, would be distributed via markets. But again, how this objective will be achieved, was not specified. Incentives There was also little indication of what other incentives there will be for clean energy. Investment in clean energy has already been falling due to recession - by 15% last year. The EU retains a renewable energy target of 20% of all electricity generation by 2020 - but incentives for renewable energy elsewhere are less clear. Whilst the talks are stalled "capital will be deployed, but it will be deployed to the high-carbon economy", says Abyd Karmali, President of the International Carbon Markets association. In other words, business as usual. Some doubted if a treaty at Copenhagen could ever have provided the money needed. Analysts Bloomberg New Energy Finance estimate that $500bn has to be spent on clean energy every year to stabilise greenhouse gases in the atmosphere by 2020. Many clean technologies need a very high carbon price to be economic. "These technologies really won't see a breakthrough carbon price until 2025 or later - but the investments need to happen today," says Tom Kerr from the International Energy Agency. National policies Catherine Bremner, Head of international development at the Carbon Trust claims the encouraging news is outside the talks. China and India have both launched policies to encourage clean energy investment and the US allocated one hundred billion in its recent stimulus bill towards clean technologies. Within the EU, even meeting existing targets will still require major investment. Separate to its emissions target the EU has an overall renewable energy target of 20. "We need to be putting two wind turbines down a day for the next 10 years," in the UK alone, to meet EU targets, says Ms Bremner. National and regional schemes often offer direct subsidies of the kind that is hard to agree on at international level. "People can take stuff that is real at a national or regional level to the bank." Says Michael Liebreich, CEO of Bloomberg New Energy Finance. His organisation say 700 pieces of new legislation have been passed around the world promoting clean energy - partly thanks to the Copenhagen process. The US is set to pass its key legislation in the next year. With the destination of the UN process now unknown a lot depends on it.
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