Deutsche Bank's Kevin Parker says consistent global regulation and establishment of a global carbon price are essential to transform our carbon-based economy
Parker to speak at the World Future Energy Summit (WFES09) Today in Abu Dhabi
Deutsche Bank’s Kevin Parker today will tell attendees at the largest meeting of influential figures within the renewable energy industry that comprehensive global government regulation is needed in order to attract the massive amount of capital investment required to switch from a carbon-based economy to a more sustainable model based on renewable energy. Parker, Global Head of Deutsche Bank’s Asset Management division (DeAM) and a member of the Bank’s Group Executive Committee, is speaking in a plenary session at the World Future Energy Summit in Abu Dhabi.
Parker will today argue that the science of climate change is irrefutable. “Evidence from Antarctic ice-cores has clearly shown that the concentration of carbon in the Earth’s atmosphere has reached an 800,000 year high, with most of that increase having taken place in the last two or three hundred years.”
“We are close to a tipping point where average global temperatures will rise more than 2 degrees C, potentially leading to catastrophic, and certainly very expensive, macro-climatic shifts,” says Parker. “The global community must take swift action.”
Parker adds, “Comprehensive - and global - government regulation is the only way to create the investment conditions to attract the $45 trillion that the International Energy Agency (IEA) believes is required over the next few decades to transition to a more sustainable energy model.”
“Regulation on this scale is a tall order. A decade and a half after the Kyoto Agreement, regulation to encourage private investment in climate change industries is fragmented and inadequate. There is little international cooperation, the largest carbon-emitting countries such as the US, China, Russia and India, have done little to introduce regulation, and the US has not even signed up to the Kyoto protocol. This chaos must not happen again with the new international agreement being negotiated in Copenhagen in December 2009.
“However, as the Montreal Protocol limiting ozone depleting gasses proves - international agreement on regulation is possible,” Parker argues. “A growing hole in the Ozone layer was identified as dangerous in the mid-1980s and an international treaty limiting CFC emission was signed in 1987. The result has been that the concentrations of CFCs in the atmosphere has been declining since the early 1990s.
“Regulation limiting carbon must not only happen fast; it must also be comprehensive and global. This will level the playing field for investors around the world. Above all, it is critical to establish a global price for carbon, to enable the cost of pollution to be priced into the burning of fossil fuels. Only by pricing in those externalities can we establish a realistic price comparison between fossil fuels and renewable energy. Whether the carbon price is created by a cap-and-trade system or a tax system, the important thing is that the carbon price becomes as well understood and closely watched by people as, say, the oil price.”
Three years ago, DeAM identified climate change as one of the mega-trends that would drive the global asset management business for the next generation and beyond. It saw that the rapidly growing level of carbon in the atmosphere meant that the world had to take action now, and that this would require massive capital investment over several decades. That in turn would produce exciting new investment opportunities from which its clients could benefit. DeAM launched its first climate change mutual fund in 2006, and in 2007 became the first asset manager to launch a climate change mutual fund in the US.
DeAM is now one of the leading climate change investors in the world, with approximately $7 billion, as of September 2008, under management and with fund managers who have a proven track record. With a world-class in-house research team focusing on this theme, DeAM is an investment industry thought-leader on a broad range of climate change dynamics.
DeAM recently created DB Climate Change Advisors, an institutional and alternatives investment management business, to manage assets of institutional investors and high net worth individuals.
The World Future Energy Summit (WFES09) will take place January 19-21, 2009. With over 15,000 delegates expected to attend in 2009, the summit will be the largest meeting of influential figures within the renewable energy industry. Presented by The Masdar Initiative, established by His Highness Sheikh Mohammed bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi, the summit is a logical development of the Emirate’s long-standing commitment to a sound environmental strategy and continuing economic diversification.
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About Deutsche Bank
Deutsche Bank is a leading global investment bank with a strong and profitable private clients franchise. A leader in Germany and Europe, the bank is continuously growing in North America, Asia and key emerging markets. With 81,308 employees in 75 countries, Deutsche Bank offers unparalleled financial services throughout the world. The bank competes to be the leading global provider of financial solutions for demanding clients creating exceptional value for its shareholders and people.
About Deutsche Asset Management
With approximately Euro 510 billion in assets under management globally (as of 30 September 2008), Deutsche Bank’s Asset Management division is one of the world's leading investment management organizations, not just in size, but in quality and breadth of investment products, performance and client service. The Asset Management division provides a broad range of investment management products across the risk/return spectrum.