By most accounts, climate change is described as a threat—a risk to business-as-usual. Nearly 90% of Global 100 Index companies have indicated climate change as a current or future risk to business performance, and investors are increasingly interested in how companies plan to manage climate risk. On October 24, 2017, at the KU Leuven Campus in Brussels, Belgium, Jos Delbeke director-general of DG Climate Action and chief negotiator for the EU at many UN Climate conferences, presented a view that is often neglected: climate change as a business opportunity.
Though it may sound contrary, the results of this business opportunity are already becoming evident globally. The pressure of climate risk has encouraged astounding levels of innovation in renewable energy sources, efficiency breakthroughs, and global cooperation toward addressing the issue. Studies show that 21 countries, including the United States and many European countries, have already begun to decouple their economic growth from carbon emissions.
In his keynote speech, Mr. Delbeke presented an overview on climate science and findings, global governance programs, and the EU 2030 Climate Policy which have catalyzed activities in both public and private sector organizations to tackle climate change. It was stressed throughout, that the momentum of the Paris Climate Accord has not been hampered by the decision of the U.S. to withdraw. Quite the opposite has happened, as other countries strive to fill in for the greenhouse gas (GHG) reductions necessary to achieve the 2-degree Celsius warming threshold (compared to pre-industrial levels) set out by the IPCC 2013 5th Assessment Report.
For example, it was noted that China’s ambition in this domain not only remains unwavering, but is in fact advancing even deeper. Mr. Delbeke introduced to the group the term, ‘ecological civilization’, used by the Chinese as a new take on sustainable development, indicating the country’s intention to truly imbed sustainability and environmental responsibility into the values of the culture. Though China’s GHG emissions were allowed to peak by 2030, as outlined in the Paris Agreement, the country wants to expedite that, now even towards 2022 perhaps.
“For Europe, yes we are on plan towards 2020, but much more effort will be needed for 2030 targets and 2050” ~ Jos Delbeke
Mr. Delbeke went on to discuss the 3 pillars of the EU 2030 Climate Policy, and the role these will play in helping reach global climate targets. The 2030 Policy mandates a 43% reduction in carbon, a 27% increase in renewable energy sources, as well as an improvement of 27% for energy efficiency measures compared to 2005.
Though low carbon prices in the EU (some 7 eur/ton now) have been criticized for not being aggressive enough to incentivize renewable uptake, Mr. Delbeke notes that 2020 quotas are still on track to be delivered across member states. But, in order to achieve 2030 carbon reduction goals and beyond, more needs to be done.
“The EU power sector needs to be fully decarbonized by 2050”, asserted Mr. Delbeke, “for EU industry, breakthrough technologies will help to realize carbon reduction”
Global investments in renewable energy (hydro, wind, solar, etc.) and infrastructure (grids, transmission) paired with reduced costs for new energy opportunities will indeed enable the energy transition. The question, however, is whether these will be enough to avoid the worst effects of climate change, predicted to occur beyond the 2 degree warming threshold. Though these questions remain, it is clear that recognition of the business case for climate action will be key in pushing climate progress to the top of corporate agendas.