Governments may have signalled an end to the fossil fuel era, with massive consequences for industry, global security, financial markets and public health, Al Gore and other business leaders have said.
“This universal and ambitious agreement sends a clear signal to governments, businesses, and investors everywhere: the transformation of our global economy from one fuelled by dirty energy to one fuelled by sustainable economic growth is now firmly and inevitably under way,” the former senator said in a statement.
“No agreement is perfect, and this one must be strengthened over time, but groups across every sector of society will now begin to reduce dangerous carbon pollution through the framework of this agreement,” said Gore.
Gore was joined by Paul Polman, Unilever’s chief executive, who said investors would now have more confidence to address the risks of having fossil fuel assets on their books.
“The consequences of this agreement go far beyond the actions of governments. They will be felt in banks, stock exchanges, boardrooms and research centres as the world absorbs the fact that it is embarking on an unprecedented project to decarbonise the global economy.
“This realisation will unlock billions of dollars. It establishes a clear path to decarbonise the global economy within the lifetimes of many people alive today, reaping the benefits of cleaner air, greater security and avoiding the worst effects of climate change.”
The International Investors Group on Climate Change, a network managing €13tn of assets, said the decision would “help trigger a shift away from fossil fuels and encourage greater investments in renewable energy”.
Economist Jeffrey Sachs, director of Columbia University’s Earth Institute, encouraged capital market leaders to act boldly. “Capital markets will be the main driver of the transformation and we will be on the right track when stock markets say ‘shame on you’, punishing those who continue to add stranded assets to their portfolios.”
Earlier last week, 26 public and private financial institutions with more than $11tn in assets, as well as stock exchanges across the world, met to agree ways to combat climate change.
“It is crucial to ensure that all new investment contributes to more effective climate action. As the world’s largest lender for climate-related investment the European Investment Bank is pleased to share experience with financial institutions from around the world,” said Jonathan Taylor, European Investment Bank vice-president.
Philippe Joubert, chair of the Prince of Wales’s Corporate Leaders Group, which represents 23 global businesses including BT and France’s EDF, said: “Business leaders and investors now have a clear direction of travel. The Paris agreement will accelerate the shift to a new sustainable, equitable and decarbonised world.”
Pressure is also expected to grow for a tax on major oil, gas and coal companies for the carbon contained in the fuel they sell. According to the German Heinrich Böll Foundation, 90 fossil fuel companies are responsible for 63% of CO2 emissions from human activities. They include Chevron, ExxonMobil, Saudi Aramco, BP, Gazprom and Shell.
The foundation is urging governments to impose a carbon levy on all fossil fuel extraction and mining, with the proceeds going to help pay poorer countries for adapting to climate change and meeting the costs of its impacts. The levy would be applied to both the exploitation and the burning of fossil fuels, said a spokesman.
The global fossil fuel divestment campaign, which claims to have persuaded universities, pension funds, foundations and others to drop more than $1tnof assets, can expect to see many more companies sell off their shares in fossil fuel companies.
