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The Davos Climate/Energy brief


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A presentation held by Mr Allan Larsson at the seminar on the Swedish Embassy in Berlin on the 17th of January.

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The Davos Climate/Energy brief

  1. 1. Potsdam Institute and Global Utmaning , Swedish Embassy in Berlin, January 17, 2011 A post-Cancún agenda to break the political deadlock on climate investment - The Davos Climate/Energy Brief
  2. 2. The Davos Climate/Energy Brief <ul><li>The Theme of the World Economic Forum in Davos, 26-30 January 2011: </li></ul><ul><li>” Shared norms for the New Reality” </li></ul><ul><li>Our Brief focuses on the New Reality in Climate negotiations </li></ul>
  3. 3. The New Reality: 1. T he political deadlock in the UN-process <ul><li>Copenhagen, Cancún, Durban </li></ul><ul><li>no global treaty in sight in spite of twenty years of climate negotiations </li></ul>
  4. 4. The New Reality: 2. The Investors Dilemma <ul><li>Copenhagen and Cancun left the business community ”confused about…the wider…economic implications” </li></ul><ul><li>-”a stable global carbon price is neccessary to form the cornerstone of any successful policy in the longer term” (IEA) </li></ul><ul><li>- still, no global CO2-price in sight </li></ul>
  5. 5. The New Reality: 3. ”The Green Race” 3. ” - The EU presently the leader in clean tech export - Asian countries determined to win the race
  6. 6. The New Reality: Emerging consensus on energy *) Climate: an energy revolution is needed to tackle climate change Energy Security: reduced global pressure on oil is needed The Economy: a low carbon future is a powerful tool for economic modernization *) International Energy Agency, World Bank, EU Commission, Major Economies Forum, World Business Council for Sustainable Development, European Climate Foundation
  7. 7. Investing in a low carbon future - the hard choice: <ul><li>Two main avenues </li></ul><ul><li>to level the playing field for climate investments </li></ul><ul><li>- more subsidies? </li></ul><ul><li>or a CO2 price? </li></ul>
  8. 8. Our contribution to a post-Cancun Agenda: Three elements <ul><li>Focus on investment and technology, ”sharing opportunities”! </li></ul><ul><li>Agree on the principle of a technology neutral carbon price! </li></ul><ul><li>Introduce a bottom up approach, building an International Climate Investment Community, as a complement to the UNFCCC-efforts to get 192 countries to agree on a global deal! </li></ul>
  9. 9. A technology neutral CO2 price <ul><li>The aim: levelling the playing field between fossil technologies and low carbon technologies The level: - the present CO2 price 15 € a ton is ”subsidised” by 25 €/ton, at least 40 Euro/ton is needed by 2020 The effect: ”Pricing carbon .. is the optimal way of both generating carbon-finance resources and directing those resources to efficient opportunities” (The World Bank) </li></ul>
  10. 10. A technology neutral carbon price - how <ul><li>A price trajectory to 2020 </li></ul><ul><li>A mix of national policies </li></ul><ul><li>Using cap-and-trade and CO2- taxation </li></ul><ul><li>” less on what we earn, more on what we burn” </li></ul>
  11. 11. Three reasons for a technology neutral CO2 price <ul><li>- business and consumers, not governments, will choose technologies - will create predictability for sustainable energy investment - will bring revenues for the greening of the tax systems </li></ul>
  12. 12. An International Climate Investment Community <ul><li>a European initiative </li></ul><ul><li>inviting like minded countries to agree on the basic principles </li></ul><ul><li>growing step by step to an International Community (as the WTO and as the EU did) </li></ul>
  13. 13. <ul><li>a complementary approach </li></ul><ul><li>to the UNFCCC-process, not an alternative one </li></ul><ul><li>- more flexible, more ambitious </li></ul><ul><li>- some key issues addressed, not all - similar initiatives exist, could be integrated </li></ul>A concept – not a blueprint
  14. 14. The Davos Brief: <ul><li>to be discussed in Berlin, Washington and New York this week as an input to the Davos meeting </li></ul><ul><li>- Input to discussions after Cancun among European and likeminded countries </li></ul><ul><li>Next step: An Indepdendent Commission on Climate Investments? </li></ul>
  15. 16. Subsidising or pricing to level the playing field? - att all nödvändig teknik blir lönsam
  16. 17. A price trajectory to guide investors
  17. 18. Development of the Swedish CO 2 tax general level and industry level from 2008 industry outside EU Emissions Trading Scheme (EU ETS) General level for 2010 level in figure