7 Dec 09

There is a real excitement in the air, with some 20 thousand people turning up from every corner of the world and a party atmosphere in the streets. The talk, however, is all climate:

1. Nick Stern in a speech a couple of nights ago talked of the stark choice we face between acting fast or sliding into disaster, and thus how important this Conference was to the future of the planet. Lord Giddens talked of the Copenhagen Conference being, with the sense of pressure for a global agreement and over 100 heads of States turning up, the first real gathering for global governance: an historic event.

2. More practically, Q-Cells, one of the world's largest photovoltaic solar companies, claims that solar cells have reached grid price parity in key markets, such as Italy and Germany. That means that solar cells are price comparable with fossil fuel energy (gas in Italy's case) coal and gas for Germany. Big news! Why would you still build coal, let alone high-emission-potency gas?

3. According to the International Energy Authority, 77% of the energy infrastructure that will exist in the world 2050 has not been built. So we have an extraordinary chance to make sure it's infrastructure for a low-carbon, not a high-carbon, economy.

4. Denmark's ATP pension fund, one of the largest in the world, announced that they're setting up ATP will set up a € 1 billion 'Institutional Investor Climate Change Action Fund for Emerging Economies'. The aim is for the Fund to become a joint initiative involving several like-minded institutional investors. The Fund will operate on private sector conditions and only invest in projects that are expected to deliver relevant risk-adjusted rewards.

Sun 6 December | Report from COP15

I've just come from a sobering presentation in Copenhagen by Yuki Tanaka of the Japanese Institution of Transport Policy Studies. They have done detailed modeling of global transport emissions and how we can reduce them by 2050.

They've done different scenarios, and have settled on pushing for keeping emissions at 2000 levels because they believe the lower scenarios are not likely to be achieved. I started off sceptically, thinking "we'll need to figure out how to do better than that". But by the end of the presentation, overwhelmed by the robustness of their research, I can see why they made that decision.
Bear in mind this is in the context of rapidly growing economies in Asia and Latin America.

Key points:

To keep emissions just at 2000 levels will require:

- Cars: an enormous 60% shift of passenger traffic from cars to rail and bus. In cities 80% of remaining cars and 40% of light trucks will be electric by 2050.
- Aviation: half of all sub-1600km trips shift to high-speed rail systems, plus 20-30% fuel saving technology improvements in aviation. They do also include some shifting to technologies like video-conferencing.
- Shipping: 30% reduction in emissions, largely through large scale engine replacement around 2020, when a disproportionate portion of the world's fleet comes up for renewal
- Bikes: for short-distance trips there'll be a substantial increase in non-vehicle transport - e.g. bicycles - helped by congestion charges and other traffic control techniques in all major cities.
- Rail: large scale electrification of railways and various substantial improvements in rail efficiency. There will be a doubling (yes!) of kms of rail lines in the world by 2050.
They have also assumed that the power grid shifts largely to clean energy during this period.

The net extra investment needed above "business as usual investment" already expected is just under US$12 trillion, 54% in developing countries. And this just to keep at 2000 level emissions!
On the optimistic side, if we can ensure, with some tough government planning decisions that help ensure these investments pay a good return for pension funds, then it's a huge financing opportunity.