Funding the Global Warming Ceiling: An Urgent Call for Sustainable Finance

Keeping the global 21st-century temperature rise under 2 degrees Celsius will require massive sustainable investments from the public and private sectors

A new report released by the Stockholm Environment Institute (SEI) argues that a massive scale-up of low-carbon technologies are required to meet the 2°C temperature increase threshhold set by the United Nations to avoid the worst effects of anthropogenic climate change.

The independent international scientific research organization headquartered in Stockholm says that to achieve that goal, significant sustainable investments must be made by both the public and private sectors within a shared development agenda (SDA).

"Finance and investment must be urgently mobilized, directed and governed," argue the report's authors. "Public funding should be set up so that it can be matched with private sector capital, and international funds to be matched by national."


The multi-tiered report, Energy for a Shared Development Agenda, features energy scenarios through the year 2050, case studies of current energy access and various efforts to move to low-carbon systems as well as a review of the technological changes, sustainable investments and governmental policies that are required to answer the call put forth by U.N. Secretary-General Ban Ki-Moon’s initiative "Sustainable Energy for All" (SE4ALL).

The report comes at the right time: The U.N General Assembly declared 2012 the International Year of Sustainable Energy for All, recognizing that "access to modern affordable energy services in developing countries is essential for the achievement of the internationally agreed development goals, including the Millennium Development Goals, and sustainable development, which would help to reduce poverty and to improve the conditions and standard of living for the majority of the world’s population."

"Sustainable energy is not a question of North versus South," said MÃ¥ns Nilsson, deputy director of SEI and lead author of the report, giving credence to the growing awareness of transnational progressivism, which views the "us-and-them" view of the world across national borders as not only antiquated, but ultimately self-defeating. "Enhancing our energy systems is a truly shared development agenda that goes to the core of our social and economic development aspirations," he said.


The report examines two alternate energy scenarios. The first centers on the most basic conditions for energy access to meet individual household requirements for heat, lighting and cooking, which the report notes is "widely regarded as a prerequisite to successfully fight poverty and improve human well-being." The other explores a shared development agenda (SDA) and the implications for sustainable energy systems if the world's nations achieve a minimum annual per capita income of USD 10,000 (at 2005 rates for purchasing power parity).

The various scenarios were modeled by LEAP (Long Range Energy Alternatives Planning), a software system that has been used in almost 200 countries by governments, NGOs, academic researchers and the private sector to analyze energy policies and assess climate change mitigation strategies.

"This is one of the first global energy assessments to be entirely open-source," said Charlie Heaps, director of SEI's U.S. Centre and the developer of LEAP. "We hope that others will build on our work to continue to explore these important issues."


One of the case studies in the report is an initiative by The Energy and Resources Institute (TERI), a not-for-profit policy research organization working in the fields of energy, environment and sustainable development, with headquarters in Delhi. The program involves setting up solar micro-grids to extend the energy reach of central grids to remote rural area to address the demand/supply gap in poor Indian villages, where tight-knit communities can work together on electricity management.

"The micro-grids run on an entrepreneurial model, in which a local entrepreneur invests in the installation of the system and consumers pay for the energy they receive," said Ibrahim Hafeezur Rehman of TERI. "A subsidy is provided to the entrepreneur, making the operational costs for generating electricity for lighting comparable to using kerosene and diesel. Thus, with some amount of capital subsidy, local entrepreneurs are willing to take this forward, and the users are willing to pay for higher levels of illumination and a cleaner environment. Up-scaling and promoting this endeavour would serve two purposes: i) to provide access to quality lighting in rural areas, and ii) to enhance income for both the entrepreneurs and end-users."


However, effective social enterprise initiatives and sustainable finance isn't enough. Climate finance corruption is an ever-present threat and systems must be put into place to fight it. "Effective assessment frameworks, as well as monitoring and evaluation systems and mechanisms for transparency and accountability, are needed to ensure that strategies are coherent with overall development goals," said Ã…sa Persson, SEI research fellow and lead author of the report's governance analysis.

Persson's focus was on "key governance measures," including the scale-up of basic energy access, energy efficiency and public and private sustainable investments in clean, renewable energy; reductions in subsidies to the fossil fuel industries; and public investment in R&D to reduce costs in and aid implementation of technology.

"Transparency is vital to ensure that funds are not diverted from other development priorities, when and if climate finance and ODA investments support sustainable energy for all," the report states. "More open decision-making in the energy sector is also crucial, and requires effective mechanisms for transparency and accountability."


The report also underscores the fact that meeting these objectives will not be achieved by "incremental changes in energy supply and demand" and recommends "strong early action towards a massive transformation of socio-technical systems and rapid turnovers of infrastructure and technologies on both the supply and demand side."

"A focus on sustainable energy goals and commitments could also help to break the gridlock in the global climate negotiations," said Nilsson. "If we don't pursue a shared development agenda, countries will continue on a development path based on fossil fuels."

Nilsson's remarks echo the call to action that climate activist and founder Bill McKibben recently sounded in his keynote address at the New Economics Institute "Strategies for a New Economy" conference at Bard College in upstate New York: "Either we're going to do something that harms business model, or we’re going to harm the planet irreparably."



MÃ¥ns Nillson, et. al. Energy for a Shared Development Agenda: Global Scenarios and Governance Implications. Stockholm Environment Institute. June 2012. Accessed June 23, 2012.
United Nations Foundation. Sustainable Energy for All - About Us. April 25, 2012. Accessed June 23, 2012.
Stockholm Environment Institute. Major new energy assessment says strong leadership, investment needed to bring sustainable energy to all. June 20, 2012. Accessed June 22, 2012.
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New Economics Institute. Conference "Storify". June 8-10, 2012. Accessed June 22, 2012.

image: The first female Barefoot Solar Engineers of Mauritania are installing solar panels in their villages. These African women trained for six months at the Barefoot College of Tilonia in Rajasthan, India. They will earn an income paid by the people in their village for maintaining the solar-powered lighting systems that they install for each house in the village. (credit: Barefoot Photographers of Tilonia, Flickr Creative Commons)