Institutional investors and money managers representing more than €19 trillion ($21.3 trillion) in assets have written to energy ministers across the European Union encouraging them to agree to a framework that includes a long-term decarbonization goal for 2050.
The letter has been published ahead of an upcoming Energy Council meeting, to be held June 26 in Luxembourg. It urges energy ministers to adopt the framework, which includes objectives aligned with the Paris agreement — a 2015 global pact on climate change.
“Following President Trump's decision to withdraw the U.S. from the Paris agreement on climate change, we are encouraged to see the EU continuing and indeed stepping up its longstanding leadership and commitment to climate action by getting on with the task of implementing one of the most historic and important multilateral accords of recent years,” said the letter.
The letter goes on the outline a number of measures that the investors want ministers to support. These include a long-term decarbonization objective embedded into Clean Energy Package legislation. The letter said this should be aligned with the Paris agreement and contain an investment strategy “including the role of private finance.”
Another measure is to have an at least 30% energy efficiency target, which would be binding at an EU level, “to send a clear and positive signal to investors, banks and companies, and to allow member states to decarbonize swiftly enough to ensure a smooth transition to a low carbon economy.” The letter said concerns over cost-effectiveness of this measure can be reassured by noting that 30% “is already overly conservative because it assumes unrealistically high investment costs through the use of a single, 10% discount rate rather than a more realistic, nuanced cost and benefit analysis.”
Other measures include identifying green and energy efficiency investment, and measuring actual energy performance.
The letter is signed on behalf of the almost 140 members of the Institutional Investors Group on Climate Change, including pension funds and money managers. Members include the $323.9 billion California Public Employees' Retirement System, Sacramento; and £19 billion ($24.6 billion) Strathclyde Pension Fund, Glasgow, Scotland.
Stephanie Pfeifer, CEO of IIGCC, said in a news release accompanying the letter: “We are concerned about the potential disagreement at council on the unresolved matter of EU ambition in the revised Energy Efficiency Directive ... In the light of the recent U.S. decision to withdraw from the Paris Agreement, it is vital the EU steps up to deliver global leadership on climate action.”
The letter is available for download on the IIGCC website.