By Michael R. Bloomberg
Economies are growing rapidly across the developing world, which is producing a dramatic increase in energy demand. A central challenge facing leaders at COP27 this week is how to meet that growing demand – and deliver electricity to the nearly 1 billion people who still lack it – while also phasing out the power source that is a primary driver of climate change and a major cause of sickness and disease: coal plants.
Meeting the challenge will require enormous amounts of new public and private capital to finance clean energy projects. If we hope to win the fight against climate change, the best estimates indicate that by 2030, which will arrive before we know it, global investment in clean energy must be at least four times investment in fossil fuels and gradually take over, with much of that investment directed to the developing world. Right now, we’re nowhere near that level.
But there’s reason to be hopeful, because businesses and investors increasingly recognize the risks of inaction – and the opportunities that the clean-energy transition presents. For instance: Through the Glasgow Financial Alliance for Net Zero, more than 550 firms in some 50 countries have committed to cutting emissions across their portfolios to net zero. But they often don’t have the data they need to fulfill those commitments. And their will to invest in developing countries often runs up against perceived risks, antiquated policies and lack of investment-ready projects.
These problems are largely fixable, and this week Bloomberg LP and Bloomberg Philanthropies are contributing, in different ways, to three steps that can yield important progress, all of them centered on an idea at the heart of managing nearly any problem: data transparency.
First, with a collection of partners that includes Mark Gallogly’s Three Cairns Group, we launched a new effort to standardize and strengthen voluntary carbon markets, which are beset with issues. Right now, companies that wish to offset their fossil fuel use can buy carbon credits from organizations that promise to reduce emissions through new clean power installations, reforestation or other projects.
But the buying and selling of these credits takes place in the shadows. Prices aren’t standardized. Projects often don’t deliver what they promise. Buyers can’t be sure what they’re getting is real, and sellers can’t be held accountable.
A legitimate, credible and efficient market for carbon offsets would be a powerful way to drive more capital to projects that cut emissions or prevent them from happening – and so we are bringing together a global group of leaders across government, business, academia and nonprofits to create it. Through an oversight body we’ll launch, called the Global Carbon Trust, contracts will be standardized, commitments will be monitored, bad actors will be flagged, and data will be publicly accessible. All of this will help to bring more transparency and accountability to carbon markets, attracting more capital to projects that cut emissions.
A second major initiative we helped launch at COP27 will use the same building blocks – transparency, data and standardization – to bring more investment to green infrastructure projects. We’ll help lead implementation of a labeling system for infrastructure projects, like the LEED ratings for buildings, that will allow investors to see whether they meet sustainability criteria. The labeling system will encompass all kinds of essential infrastructure, from electricity transmission grids to wastewater treatment and management facilities to transportation networks and data centers.
The labeling system can help speed up global progress on climate change by driving more capital to green infrastructure projects. Along with partners at the Global Infrastructure Basel Foundation, we will help design the criteria for the system and collect the data on different infrastructure projects and assets, so that investors can easily compare them.
A third step forward we took at COP was to announce, in partnership with French President Emmanuel Macron, recommendations for a new data portal that will bring together corporate climate data in one place, and make it comparable and consistent. Right now, we have very little data about how much emissions individual companies are responsible for, and what data we do have is not publicly accessible. The data portal, which we are working with governments and data service providers to create, will help fix that, empowering investors to make informed decisions, giving them leverage to push companies to act faster, and allowing the public and policymakers to hold companies accountable for fulfilling the promises they’ve made.
These three data transparency initiatives will help accelerate private investment in clean energy, especially in the developing world, where hundreds of coal plants are still on the drawing boards. We know that it’s possible to phase out coal by expanding access to clean, affordable power. In the U.S., the Sierra Club campaign we have strongly supported, called Beyond Coal, has helped to close 68% of coal plants over the last decade and put more than half of Europe’s on course for retirement, too.
At COP27, we announced plans to build on this work and expand it to more countries across Africa, Asia and Latin America. As part of that effort, we’ll help governments and business work closely together to change policies that favor fossil fuels, identify potential clean energy projects, and make them attractive to investors.
Bringing clean energy to scale at the speed we need is the battle of our time. With the right data, and close partnerships across society, we can win.
Michael R. Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News, U.N. Special Envoy on Climate Ambition and Solutions, and chair of the Defense Innovation Board.
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