If there was ever an issue (many call it a crisis) which required the cooperation between the public and private sectors – this is it! As a global community, we’ve got a lot of work to do in order to successfully migrate to a low carbon economy while ensuring that energy supplies are reliable and the lights stay on. Limiting GHG emissions to a point where most scientists feel that catastrophic climate change can be abated, is going to require lots of capital.
We’ll need to spend an approximate $500BB more per year in the clean energy sector alone over the next 20 years to keep the global climate from rising too much! We've got a long way to go. New Energy Finance estimates that we’ll spend about $110BB this year. That’s a substantial amount of new capital which must enter the arena. The figures are daunting and even more so given the recessionary environment.
How do we attract the capital? First and foremost, the rules need to be set. Policy must crystallize. The public sector needs to come together, enact prudent legislation and set the groundrules. Otherwise, the private sector can’t make sound investment decisions and we’ll barely scratch the surface in building our low carbon infrastructure. No easy task - especially in a global setting (we’re one global human race after all) – but it can be done.
Thus, Copenhagen becomes critical. Global leaders must come together and pave the way. If policy is set and the rules are transparent, the private sector will deploy capital alongside any initial “kickstarting” subsidies made available by the public sector. (A good overview of this public/private tension can be found in the FT this week (http://www.ft.com/cms/s/0/4bbb9600-e03d-11de-8494-00144feab49a.html?nclick_check=1)
The mountain is too high for either the public sector or private sector to climb alone. However, with proper collaboration and appropriate risk/reward sharing between government and the private taxpayer, we can get there!