Paulson: U.S. Companies Must Lead on Climate Change


Former U.S. Treasury Secretary Henry Paulson talks about climate change and a report from the Risky Business Project that urged businesses to curb carbon emissions. Paulson, former New York Mayor and Bloomberg LP majority owner Michael Bloomberg, and billionaire investor Tom Steyer spearheaded the report. He speaks with Erik Schatzker on Bloomberg Television’s “Market Makers.”

EU Leaders to Set 2030 Carbon Principles, Delbeke Says

By Ewa Krukowska – Jun 13, 2014

European Union heads of state will seek to agree on general principles on 2030 climate and energy policies at their summit in October, according to Jos Delbeke, director general for climate at the European Commission.

Detailed measures on how to implement post-2020 strategy will be proposed by the EU’s regulatory arm after leaders reach a political deal, he said in an interview in Luxembourg yesterday. The commission proposed the 28-nation bloc deepen its emission-reduction target to 40 percent by 2030 compared with the current goal of cutting greenhouse gases by 20 percent by 2020 from 1990 levels.

Delbeke comments:


“We are now preparing for the European Council in June, where we will present a progress report. It will be done on the basis of information from the meetings of environment and energy ministers this month and on the basis of informal consultations with the capitals.”


“EU heads of state decided in March that a decision on the 2030 should be taken in October. There’s a bit of nervousness, but this is not leading to changing the deadline. I think we’re going to have a decision in October.”

“We also have the issue of energy security, which is related to the 2030 strategy. It makes sense to decide about those two at the same time.”


“The European Council in October will give orientation on the main elements of the package. That will guide the legal work that the commission will then need to take forward. A legal proposal made by the commission will go to member states and to the European Parliament.”

“The decision at the summit will be about headline targets and will not cover all technical details. Heads of state will list a number of principles on climate, energy efficiency and renewables with the necessary guidance on effort sharing and on financing investment. We also continue to be attentive to carbon leakage.”

“One of the issues to be discussed with member states is also how to stimulate modernization of the power sector. Nobody wants the lights to go out. We want to innovate.”

ON 2020 and 2030 TARGETS:

“The proposal by the commission is to reduce emissions by 40 percent by 2030, leaving the target for 2020 at 20 percent. The target for 2020 is unlikely to be changed. Technically that could be done but politically we made a decision to focus on 2030. Given that climate change requires planning for the long term the 2030 decision is more important than 2020.”


“Member states want us to provide more detail of the results of our impact assessment at the national level. We’re preparing that now and in the next couple of weeks we should be able to come forward with it.”

“In non-ETS sectors all member states know their emission-reduction figures for 2020. We have said that compared to the same base year the figure needs to be upgraded on average by another 21 percent for 2030.”

“In the ETS sector, the Commission proposed that the reduction should be 43 percent. That compares with 21 percent in 2020 from 2005.”

To contact the reporter on this story: Ewa Krukowska in Luxembourg at

To contact the editors responsible for this story: Lars Paulsson at Jones Hayden


SAM predicts rapid growth in clean tech private equity


GLOBAL – Clean tech private equity has grown to 9% of global private equity investments and is expected to continue its rapid growth in the years to come, according to Swiss-based asset manager SAM.

In its 2010 report ‘Clean Tech Private Equity: past, present and future’ SAM estimates that clean energy investments capture about 70-80% of the total clean tech market and asset finance is the largest clean tech segment with around 57% of total clean energy financing.

Increasing demand for clean tech solutions will be buoyed by rapid global population growth and ageing infrastructure; increasing demand for energy and other natural resources; rising CO2 levels; water scarcity as well as government regulation aimed at security of energy supply; protection of environment and development of advanced technologies.

The report says: “To meet the growing demand for energy, the [International Energy Agency] IEA predicts that until 2030, $26trn (€21.1trn) is needed in investments. That is over $1trn a year or a bit more than $3bn a day. Part of this money will be used to replace or modernise existing power plants and infrastructure, but the greater part is needed to extend energy supply. Securing enough energy supply for everyone will be a big challenge.”

It further states that venture capital investments – which have totalled nearly $22bn in 2312 deals since 2000 – are mainly dominated by North America and are one of the largest segments of global venture investing.

Development capital and buyout investments are pegged at about $29bn in 485 deals since 2000. They are mainly of North American and Western European origin and have seen the fastest growth with a compound annual growth rate (CAGR) of 90% between 2000 and 2008.

Asset investments, which are a forte of Western Europe and the rest of the world, have amounted to approximately $379bn in 4388 deals since 2000. This segment has a CAGR of 64% between 2000 and 2008.

Earlier this year, Marcel Gerritsen, managing director/global head at Dutch-based Rabobank, whose subsidiary Robeco has formed a strategic alliance with SAM, told IPE that investments need to come from a variety of sources to allow the renewable energy sector to continue its growth.

“Investments in energy efficiency have the shortest pay-back time and there have been a lot of energy efficiency related developments in the real estate sector,” said Gerritsen. “But to address the problem of a widening gap in energy supply and demand you need to attack it from several angles and all of those need to be launched together.”

Global cleantech investment soars by 63% in first half

GLOBAL – Clean technology venture investment worldwide has soared by 65% in the first half of 2010 compared with the same period last year.

According to preliminary results by the Cleantech Group, in collaboration with financial service provider Deloitte, cleantech venture investments came to more than $2bn (€1.6bn) across 140 companies in North America, Europe, China and India in the second quarter.

The number is roughly equivalent to that reported in the first quarter – $2.04bn, up 43% from the same period a year ago.

Richard Youngman, head of global research at the Cleantech Group, said: “In spite of the persistence of wider concerns about the strength and sustainability of the global recovery, the strong flow of investment dollars to cleantech growth companies has continued in the second quarter, with cleantech venture investment in the first half edging slightly ahead of the record total recorded during the first half of 2008.

“Key to this has been the resurgence of solar and a high volume of follow-on rounds, including many blockbuster deals, which are, in part, a response to the lacklustre and unpredictable state of the cleantech IPO market.”

However, while fundraising in the cleantech sector has improved compared with 2009, the current climate is still difficult, according to Andrew Musters, global head of private equity at Robeco and SAM.

“The environment is either very good or very bad for funds, with nothing in the middle,” Musters told IPE.

Robeco and SAM now have more than $1bn invested in cleantech and have expanded their private equity team from five to eight members, with their latest fund witnessing a move toward secondary investments.

The first $200m closing of the third-generation Clean Tech Private Equity fund was made up entirely of UK and Dutch pension funds, but Musters said he expected more German and Nordic institutions to follow.

Robeco has also started fundraising in Asia.

Musters added: “We have a bullish outlook for the future and expect a high growth rate by actively investing in private equity.

“However, private equity has to reinvent itself – it needs to get its act together and focus on integrating environmental, social and governance aspects, creating value and outperforming other markets, which is impossible if it continues to focus only on financial engineering.”

Beyond Obama: A Climate Plan with Teeth

Cutting power plant emissions is helpful, but the magnitude of the climate problem warrants a carbon tax

Jun 3, 2014 |By David G. Victor

Climate is back. On Monday Pres. Obama rolled out a plan to cut carbon emissions from power plants by 2030 to an average of 30 percent less than 2005 levels. His timing is in tune with public opinion. Now that the economy is recovering from the global financial crisis, new polls show that public concern is once again rising. Alarm bells from the scientific community are getting louder as well. The latest reports from the U.N. Intergovernmental Panel on Climate Change show that even though the science is getting stronger governments have done practically nothing to check emissions. In May, a massive U.S. government study that mobilized the best of American science showed how rising seas, stronger storms, longer droughts and other dangers will harm the country. Similar studies in many other countries, including China and India, carry similar warnings.

What should be done now that voters are refocused on the dangers of climate change? So far, the answer has mainly been regulation that tinkers at the margins. New energy-efficiency standards and regulations on power plants, such as the ones announced today, will play a role in slowing the growth in emissions. But regulation can only go so far. What’s really needed is a new emissions tax—often called a “carbon tax” because the biggest cause of warming is atmospheric emission of carbon dioxide.

The case for a carbon tax begins with economic logic. Nobody knows which technologies will be most cost-effective when it comes to cutting emissions. Direct regulation almost guarantees that regulators will force the use of many technologies that will prove unwise. The new regulations allow for some flexibility, which is important, but they apply just to the electric power sector. New legislation that would create an economy-wide market-based strategy, like a tax, gives firms in all sectors the flexibility to choose and adjust.

Taxes aren’t the only way to harness the power of the market. Another strategy is “cap and trade”—a scheme that involves setting limits on emissions and then letting firms trade the right to pollute. Because cap and trade uses markets, it’s better than regulation. But in the real world cap-and-trade systems haven’t aligned well with how real firms and governments make economic decisions. When emission quantities are capped, prices must float as markets equilibrate. That’s why the European Union’s cap-and-trade system, the world’s largest, has seen prices that gyrate from $42 in 2006 to just about $7 today. Volatile prices have encouraged policy makers to craft endless schemes to manipulate the quantities of emission credits on the market—and thus prices. Those efforts, although well intentioned, send signals that policy decisions are not reliable. Carbon taxes, by contrast, fix the price and send much more credible signals to firms about just how much effort they should make to control emissions.

Practical policy, of course, doesn’t always flow directly from wonky economic logic—politics is paramount. On this front the standard view has been that carbon taxes—because they are taxes—are political suicide for politicians seeking reelection. Regulation, by contrast, is better because it lets policy makers hide the cost of action. That logic needs to be taken seriously, but its wrong and shortsighted for two reasons:

One political advantage of taxes is that they generate huge revenues.  Smart politicians know how to redirect those monies to build political coalitions. That’s what Australian politicians did when they targeted more than half the revenues from the country’s carbon tax to offset higher energy costs for low- and middle-income households, along with some of the funds for climate-specific research and development schemes. The Australian experience also reveals that even with the best political engineering it is still hard to sustain political support for costly policies—a problem that bedevils climate policy of all types. Smart political engineering to “recycle” the revenues of carbon taxes could be used here in U.S. by linking carbon taxes to popular tax reforms. The last major overhaul of the federal tax code was in 1986, and a growing array of politicians know that a new reform is overdue.

A second political advantage of carbon taxes is that their economic performance improves with scale. Direct regulation, because it is prone to error, almost guarantees a political backlash as policy becomes more aggressive and noticeable. Shortsighted politicians like direct regulation because its costs are hidden at first. Serious strategies for cutting emissions must think about the long term. As a carbon tax scales so does the revenue—expanding the opportunities for political engineering and making government more dependent on the income and less able to reverse course.

A fresh look at carbon taxes makes sense not just for national policy but also in America’s engagement with the rest of the world. Less than one fifth of world emissions come from the U.S.; no strategy for stopping global warming will work without global engagement. In recent years, with gridlock in Washington, D.C., the rest of the world has come to doubt whether the U.S. can make credible commitments to solve global problems. A carbon tax, rooted in hard-nosed economic and political realities, can boost the country’s credibility. That, in turn, can make it easier to put pressure on other big emitters such as China to do their parts as well.


David G. Victor is a professor of international relations at the University of California, San Diego, and director of its Laboratory on International Law and Regulation.

Christine Lagarde told an international conference that a mechanism is needed to reflect the cost of emissions and encourage less consumption

June 9, 2014
by Ross Marowits, The Canadian Press

MONTREAL—Energy powerhouses like Canada need a proactive approach to protect the environment and not simply wait for a deal to replace the Kyoto Protocol, the head of the International Monetary Fund said June 9.

Christine Lagarde told an international economic conference that whether it’s a carbon tax or a cap-and-trade system, a mechanism is needed to reflect the cost of emissions and encourage less consumption.
She said countries cannot continue ignoring environmental cost factors in the use of fossil fuels, including air pollution and waste water.
“Free markets yes, but (at) the right price,” she told more than 1,200 delegates after receiving an honorary doctorate from the University of Montreal.
Among those attending the opening Economic Forum of the Americas luncheon speech were Quebec Premier Philippe Couillard, former Liberal premier Jean Charest, and former Canadian prime ministers Jean Chretien and Joe Clark.
Lagarde said British Columbia has successfully implemented a carbon tax that both increases revenues and is helpful environmentally. But she said it’s not the only way to proceed.
“I’m sure that there are some good cap-and-trade (systems),” she said, pointing to Quebec’s partnership on the issue with California.
“We cannot just continue ignoring those cost factors.”
Asked if Canada currently takes full account of these “externalities,” she replied with a smile, “I hope it does.”
Prime Minister Stephen Harper said in Ottawa on June 9 that all countries want to take action on climate change, but not at the expense of their own economies.
Couillard later told reporters that most economists agree that some price has to be attached to carbon. And, while political support is lacking in the U.S. to tax carbon, President Barack Obama last week announced regulations to chop carbon emissions from U.S. power plants by 30 per cent by 2030.
“With what I’ve heard from the U.S. and northeast U.S. in recent weeks, I’m quite hopeful we can draw more partners in that carbon exchange (with California),” Couillard said.
Meanwhile, Lagarde applauded Canada’s efforts to unleash its energy sector, supporting efforts to expand infrastructure that will boost exports to Asia and Europe.
Some estimates say full access to Canada’s energy products could raise its GDP by two per cent over a decade.
“Of course that needs to happen with due respect to the environment and it cannot be to the detriment of the environment,” she said.
Lagarde added that the economic benefits of growth in the energy sector must be widely shared by attracting people with skills not only to oil-producing areas but also by increasing jobs among those living in other areas.
Although she says the global recovery is “turning the corner” on the recession, the recovery remains fragile and faces “the twin enemies of complacency and fatigue.”
She expects Canada’s economy will grow by 2.25 per cent this year, helped by improvements in the U.S.
Lagarde said austerity and growth aren’t mutually exclusive and called on political leaders to be “courageous” in making tough decisions, applauding Couillard’s restraint plans in Quebec.