Analysis: Could an “Age of Green Economics” Be on the Horizon?
In a remarkable step into the worlds of high finance and climate politics, United Nations Secretary-General Ban Ki-moon was in Chicago last week to encourage U.S. business leaders to help reshape the world’s economic future by investing in low-carbon markets.
In a February 7 speech to the Economic Club of Chicago, Secretary-General Ban asked his audience to enter an “age of green economics,” with the United Nations as a partner.
Echoing the conclusions of the recent report State of the World 2008, published by the Worldwatch Institute last month, Ban said, “Done right, our war against climate change is an economic opportunity, not a cost.”
Ban quoted U.N. Environment Programme estimates that global investment in “zero-greenhouse energy” will reach $1.9 trillion by 2020—what he termed “seed money for a wholesale reconfiguration of global industry.”
Ban’s prediction reflects the growing trend among venture capitalists and private equity investors who are banking on the clean energy sector. According to State of the World 2008, an estimated $52 billion was invested in renewable energy worldwide in 2006, up 33 percent from 2005.
Overall, socially responsible investments are growing in popularity. The investments, which promote sustainable economic growth through socially responsible or green enterprises, reached $2.29 trillion in the United States in 2005, more than tripling since 1995, according to the Social Investment Forum. Many of these investments are paying off. Wind, solar, and bioenergy are taking off as their costs become more competitive with fossil fuels.
Chicago is home to the Chicago Climate Exchange (CCX), the world’s first voluntary carbon credit market. Similar to the European Union’s Emission Trading Scheme (EU ETS), the exchange trades the right to emit greenhouse gases among industries who pollute and those who support carbon sequestration or clean energy. The exchange, run by its members who keep their standards private, has traded nearly 4 million tons of carbon since its 2003 opening. The market announced its busiest month of trading one day after Ban’s speech.
But the CCX is still a voluntary market. To reach the United Nations’ carbon-cutting goals, the United States and developing countries such as China and India must establish greater incentives or more stringent regulations that encourage sustained growth among the world’s green-collar industries, while energy efficiency and carbon sequestration must improve as well. The Chicago speech is a clear indication of Secretary-General Ban’s willingness to forge a strong post-Kyoto climate agreement that includes the United States and China, the world’s two largest emitters.
Intern Ben Block, an observer of the world's environmental challenges, has traveled from Nicaragua's rural pharmacies to Brazil's mahogany plantations to the Jordan River's drying shores. Ben recently graduated from the University of Maryland – College Park with degrees in journalism and environmental science.