There are five good reasons for Ireland to be cheerful about COP21, whatever the outcome of the Paris climate change summit.
12th December 2015, Stephen Nolan, Analysis, Irish Independent
The result of the summit is currently unknown, but the direction of travel is clear.
Countries across the globe have put together plans to tackle their emissions, many of which include renewable-energy generation targets.
Strong policy signals about the transition to a low-carbon economy are already reverberating across the globe.
The prospect of success at the Paris summit has been boosted because the two biggest emitting countries in the world, the US and China, have started taking decisive action on climate change.
Ireland is playing its part, but the chances of success are beginning to feel real as the big players come on board.
China has said its emissions will peak by 2030 as it looks to combat the smog blighting some of its cities and show leadership on climate change.
The US has released a Clean Power Plan to radically overhaul and decarbonise its power sector. It is estimated that the rule will cut power-sector emissions 32pc below the 2005 levels by 2030.
The G7 nations agreed to phase out fossil fuels altogether by the end of the century and for emissions to be cut by between 40pc and 70pc by 2050, compared with 2010 levels.
So that’s the good news and the indications are that Ireland and other nations will benefit from a legally binding agreement before delegates leave Paris. Here are five reasons why we can all be positive about the prospects for a sustainable future:
- Carbon pricing
Regional carbon-trading schemes are being created as governments look to put a price on emissions. China is set to create what is expected to be the biggest scheme in the world in 2017.
The EU’s emissions-trading system is on the mend after politicians stepped in to tackle an oversupply of allowances.
In North America, schemes in California and on the east coast are gaining traction, and it is thought that the Clean Power Plan could pave the way for other states to initiate carbon trading.
Not only are governments beginning to take decisive action against climate change, but businesses are now also leading the way.
Many have now recognised that climate change is a material issue for them.
Companies such as Apple and IKEA are sourcing their own power from renewables.
Apple’s investment in a new Data Centre in Athenry and the Docklands21 initiative to build a Sustainable Energy Community (SEC) in the IFSC and Silicon Docks are hugely positive steps.
The global environmental disclosure organisation, the Carbon Disclosure Project (CDP), recently said the number of companies with emissions targets has doubled since 2010. In Ireland, 28 of Ireland’s leading corporates report under the CDP Climate Change programme, including Kingspan, which recently achieved an A grade.
Investors are increasingly realising that environmental, social and governance (ESG) factors are material. Some 1,380 firms representing a combined $59 trillion of assets have signed the UN Principles for Responsible Investment, which sees them commit to incorporate ESG factors into their investment decisions.
Sonen Capital, a US-based impact investment management firm, is the latest ESG focused fund to domicile here. In Ireland, some $36bn is already deployed into Irish-led sustainability projects and enterprises, funds managed or domiciled.
- Stranded assets
Some investors are increasingly taking seriously the risk that fossil fuel investments could be devalued or rendered ‘stranded’ as policies are brought in to discourage the burning of fossil fuels.
BlackRock, the world’s biggest asset manager, recently warned of the risks of stranded assets, adding that “climate change has arrived as an investment issue”. It says sustainable investing is not a fad.
- Green bonds
The green bond market has emerged as an increasingly popular tool in recent years for investors to channel resources into investments with an environmental theme. Since 2007, the market has grown rapidly and is thought to have seen $40bn of issues so far this year.
Green bonds have the potential to help fund the transition to a low-carbon economy and countries such as India and China are actively encouraging the issuance of green bonds. A Europe-wide ‘Green bond’ seminar will be hosted by the ISI Centre in Dublin in January.
Ireland is emerging as a hub for environmental finance by attracting a greater share of green assets, either under management or domiciled. BlackRock Renewable Power, Greencoat Capital, Brookfield Renewable and Kleinwort Benson Investors are amongst an emerging investment cluster.
The country’s businesses are looking overseas where their expertise is helping to finance, develop and construct sustainability related projects across the globe.
The sector, a cluster of over 600 firms, is creating innovative, world-beating solutions with firms like Glen Dimplex, Cylon, OpenHydro, FenestraPro, SELC, OxyMem and Climote to the fore. Such firms are creating jobs and winning global investment.
Opportunities for Ireland – founded on our financial expertise, innovative and entrepreneurial abilities – are emerging, holding the potential of sustainable growth and economic prosperity as the world transitions to a low carbon model.
Stephen Nolan is CEO of the International Sustainability and Investment Centre, Ireland’s partner to ClimateKIC, Europe’s largest public-private innovation partnership focused on climate change.