Data can unlock massive new green investments
Meeting the challenge will require huge amounts of new public and private capital to finance clean energy projects. If we hope to win the fight against climate change, the best estimates indicate that by 2030, which will arrive before we know it, global investment in clean energy must be at least four times greater than investment in fossil fuels and gradually take over, with much of this investment directed to the developing world. At the moment, we are far from this level.
But there are reasons for hope, as companies and investors increasingly recognize the risks of inaction – and the opportunities that the clean energy transition presents. For example: Through the Glasgow Financial Alliance for Net Zero, more than 550 companies in some 50 countries have pledged to reduce emissions from their portfolios to net zero. But often they don’t have the data they need to fulfill those commitments. And their willingness to invest in developing countries often comes up against perceived risks, outdated policies and a lack of investment-ready projects.
These problems are largely fixable, and this week, Bloomberg LP and Bloomberg Philanthropies are contributing, in different ways, to three steps that can bring significant progress, all centered on one idea at the heart of managing almost any problem: the data transparency.
First, with a set of partners that includes Mark Gallogly’s Three Cairns Group, we’ve launched a new effort to normalize and strengthen problem-ridden voluntary carbon markets. Currently, companies that want to offset their fossil fuel consumption can buy carbon credits from organizations that promise to reduce emissions through new, clean power installations, reforestation, or other projects.
But the buying and selling of these credits is done in the shadows. Prices are not standardized. Often projects do not deliver what they promise. Buyers cannot be sure what they are getting is real and sellers cannot be held responsible.
A legitimate, credible and efficient market for carbon offsets would be a powerful way to attract more capital to projects that reduce emissions or prevent them from happening – and so we are bringing together a global group of leaders from government, business, universities and non-profit organizations to create it. Through a watchdog we will launch, called the Global Carbon Trust, contracts will be standardized, commitments will be monitored, bad actors will be flagged, and data will be publicly available. All of this will help bring more transparency and accountability to carbon markets, attracting more capital to projects that reduce emissions.
A second major initiative we helped launch at COP27 will use the same building blocks – transparency, data and standardization – to bring more investment to green infrastructure projects. We will help lead the implementation of a labeling system for infrastructure projects, such as LEED for Buildings ratings, that will allow investors to see if they meet sustainability criteria. The labeling system will encompass all types of essential infrastructure, from electricity transmission networks to wastewater treatment and management facilities, including transport networks and data centres.
The labeling system can help accelerate global progress on climate change by attracting more capital to green infrastructure projects. Together with partners from the Global Infrastructure Basel Foundation, we will help design the system criteria and collect the data on different infrastructure projects and assets, so that investors can easily compare them.
A third step we took at the COP was to announce, in partnership with French President Emmanuel Macron, recommendations for a new data portal that will bring companies’ climate data together in one place, and will make them comparable and consistent. At present, we have very little data on how much emissions individual companies are responsible for, and the data we do have is not publicly available. The Data Portal, which we are working with governments and data service providers to create, will help solve this problem, empowering investors to make informed decisions, giving them leverage to push companies to act. faster and enabling the public and policy makers to hold companies accountable for delivering on the promises they have made.
These three data transparency initiatives will help accelerate private investment in clean energy, especially in developing countries, where hundreds of coal-fired power plants are still under consideration. We know that phasing out coal is possible by expanding access to clean, affordable energy. In the United States, the Sierra Club campaign that we have strongly supported, called Beyond Coal, has helped close 68% of coal-fired power plants over the past decade and has also put more than half of Europeans on the path to retirement.
At COP27, we announced our intention to build on this work and expand it to other countries in Africa, Asia and Latin America. As part of this effort, we will help governments and businesses work closely together to change policies that favor fossil fuels, identify potential clean energy projects, and make them attractive to investors.
Scaling clean energy at the speed we need is the battle of our time. With the right data and strong partnerships across society, we can win.
Michael R. Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News, the United Nations Special Envoy for Ambition and Climate Solutions, and Chairman of the Defense Innovation Board.
More stories like this are available at bloomberg.com/opinion