It’s time for the world’s leading nations, especially the U.S., to step up their efforts to finance the fight against global warming.
A mid-November meeting in Germany of the Green Climate Fund will provide an important benchmark for how well the money is flowing. The Fund will accept pledges for what promise to be transformative programs to reduce greenhouse gas emissions in developing countries. Its goal is to raise an initial $10 billion, which, if properly leveraged through the private sector, can produce noteworthy progress against the scourge of climate change.
But the money has to actually arrive. To that end, President Obama is expected early next year to ask Congress to appropriate billions of dollars for the fund. But new federal dollars are always hard to find and opposition could be stiff, especially in next year’s more-Republican Congress.
The George W. Bush administration in its waning years gave $2 billion to a similar “green” fund and the Obama administration should pledge at least that amount. Failing to pledge and then deliver at least $2 billion would represent a lost opportunity for the U.S. and the world. The Green Climate Fund plans to leverage its seed money tenfold through banks and private sector developers. Using loans, lines of credit, equity investments and other ground-breaking financial tools like price-stabilization accounts, the Fund hopes to incentivize businesses in developing countries to reduce their carbon output.
A push of this kind could significantly reduce air pollution. Cutting-edge technologies will finally get the chance they need to move into the mainstream. Economies that are now dependent on fossil fuels can begin to rely on renewable energy instead, and produce profits for the technologies’ manufacturers for a change. That’s a win-win strategy the U.S. should embrace.
By making transformative technologies cost-effective, the Fund can bolster industries that do well by doing good. This would especially benefit the many U.S. companies that are leaders in energy efficient technologies. Pollution abatement in this way wouldn’t eliminate jobs, it would create them. The phrase “environmental entrepreneur” won’t any longer be considered a contradiction in terms.
Rooftop windmills and solar panels, now largely out of reach for most people in developing countries, could become more affordable, which would give a real shot to living off the grid for millions around the world. Unlike in the U.S. where wires were strung to electrify communities, these technologies would allow electrical self-generation, which would rely on renewable energy to a much greater extent.
In addition, Mechanical Biological Treatment methods, which turn waste into useful compost and other marketable products, would reduce the number of landfills that release dangerous amounts of methane gas. Geothermal energy would become a positive byproduct of areas that have volcanic activity.
The list of likely advances goes on and on. By financing carbon-pollution-reducing activities and technologies, the Fund will help the U.S. and other countries avoid some of the catastrophic risks that climate change poses. A strong pledge by the U.S. will also inspire developing nations to make more-ambitious commitments to reduce greenhouse gases. That, in turn, will help preserve stability and security in some of the world’s most fragile regions that also happen to be strategically important to the U.S.
The scale of breakthroughs would also grow if the Fund is infused with capital. To date, experiments in technologies that both reduce pollution and increase profits have been underwritten with relatively small amounts of money. In contrast, assistance from the Fund would be much larger -- $40 million or even $500 million per project, which, in turn, would be leveraged many times over. The projects with the highest leverage will tend to get the most dollars.
The Fund now has about $3 billion. It needs to hit its $10 billion goal next year to get its legs. U.S. leadership will be a vital component to spark that momentum.
Obama will face an even more hostile Congress next year. But a couple billion dollars would spur hundreds of profit-making, job-creating companies around the world that not only can sustain themselves, but would help to create a more sustainable world. The money would also help communities gird themselves against the storms and floods that global warming will inevitably bring. Everyone would reap the benefits.
Helme is president of the Center for Clean Air Policy.