Financial institutions need to follow World Bank lead and cut investments in fossil fuels says WWF’s Samantha Smith
For the last two decades, the global environmental movement has focused on an international climate agreement and emissions targets as the main way to avoid dangerous climate change.
Though there have been successes along the way, the UN climate negotiations are stuck: they are not delivering the change we need at anything like the speed at which we need it. Meanwhile, emissions continue to rise and the impacts of climate change continue to mount.
Clearly, we need a new approach. And WWF gave deep consideration to a new approach as we prepared to launch Seize Your Power, our global campaign on renewable energy in June this year.
Together with many other civil society organizations, we considered two things in finding a new approach to tackling climate change. First, we asked what we could do that would give the biggest change in emissions in the shortest period of time?
And second, we asked how could we break up this narrative of deadlock and frozen national and international politics, and engage people more directly in positive change?
We decided to focus on renewable energy, for the following reasons. Energy is key to development and to powering the lives people aspire to live. But over the last few years, the energy sector has emerged as the main culprit – as well as the main solution – for global climate change.
Most climate-changing pollution now comes from burning fossil fuels. Extraction of fossil fuels is also increasingly a driver for direct loss of biodiversity. At the same time, renewable energy provides a straightforward, proven and increasingly affordable solution, with far fewer direct impacts.
Getting a future where our economies are powered by renewable energy is within reach.
A world shift to renewable energy is more possible now than it was just five years ago. New renewable energy electricity investments surpassed oil, coal and gas for the first time in history.
Solar power is quickly becoming competitive with coal in parts of India, while new wind power is cheaper than coal in Australia. Economies around the world have committed to 100% renewable energy.
However, time is very short.
Large amounts of money are being invested in energy now, and those investments will be with us for twenty to fifty years. If those investments go to renewable energy, we can avoid dangerous climate change. If they go to fossil fuels, we are cooked.
To ensure that enough money goes to renewable energy, and not to fossil fuels, all analysts agree that institutional investors and international finance institutions are key. Their investments attract and drive much bigger amounts from other smaller and shorter-term investors.
So the news from the World Bank this week that they have adopted a policy that will limit funding of coal power plants to “only rare circumstances” begins to define the new approach we believe is necessary to combat runaway climate change.
As Justin Guay, leader of the Sierra Club’s international climate programme told ClimateWire this week, the World Bank move “starts an inevitable process of closing the door for good on coal finance from international public sources”.
We believe that this approach should immediately become the norm for all international financial institutions. In our campaign, Seize Your Power, we call on financial institutions to significantly increase their funding of renewable energy and cut funding to fossil fuels.
We are challenging government and financial institutions to commit to an additional US$40 billion for renewable energy by 2017 and not to invest in fossil fuels, particularly coal.
Many other NGOs, movements and coalitions are also calling for divestment from fossil fuels.
The approach has been defined. Now the action must start.
Samantha Smith is head of WWF’s Global Climate & Energy Initiative