Climate Change Offers Opportunity for Investors
Deutsche Bank Group Tells Public Good Choices for Capital
Oct 29, 2009
The DB Climate Change Advisors released Global Climate Change Policy Tracker: An Investor’s Assessment October 2009. Analysts have determined which countries represent the lowest risk for investors based on policies on climate change. The report was written by Mark Fulton and his team.
According to the report, several countries would have to invest more capital to achieve the climate change goals policymakers have set.
- Emissions would have to be cut to the current annual amount of the U.S. economy, meaning companies with technology cutting emissions would prosper.
- Action by government is necessary to attract more capital.
- Investors go to countries and regions with comprehensive integrated government plans that are supported by strong incentives. Offer the tax incentives and the investors will put their money to helping the environment.
- Governments have to have the policies to attract the capital, or the investors will go elsewhere.
- Presently, investors pick the countries with mandates or tax breaks.
Australia Remains Solid Climate Change Investment Choice
Australia is a country with little risk for investment. Brazil, China, France, Germany and Japan also pose virtually no risk to capital investors. They offer strong incentives and a consistent approach. They also have mandates that will drive capital flows, according to the report.
Based on the research, United States, Canada, India, Indonesia, Mexico, Russia, South Africa, South Korea and the United Kingdom pose a moderate risk for capital investment. While they support market approaches to achieving emission targets, the countries have been strong in pouring in dollars to the cause over the last decade. The large size of their capital and energy markets overall also have helped investors. United States and Canada national governments have encouraged incentives from states and provinces, which also has pushed investment.
Italy is listed as a high risk investment, the report said. Italy can’t seem to develop policies that will achieve its ambitious targets, the team said.
Climate Change Policies Must Be Fair
In the report, the authors cautioned investors to analyze policies before making an investment choice. Not all policies are treated the same. Policies must be transparent, long-term and exhibit certainty through consistent, secure and predictable payment mechanisms. Incentives offered should decrease over time as technologies move toward market competitiveness.
Policies must eliminate noneconomic barriers, such as access to grids or administrative obstacles. These can kill an investor’s desire to cough up the money. Distribution channels should be open and fair to all. All policies should have an enforcement arm behind them. Policies, mandates and incentives are a good start for investors trying to determine which country is to get their money.
Promoting energy efficiency is another way to invest in climate change. About 60% of the climate change solution will come from efficient products and energy-efficient power plants, the report concluded.
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