Fund chief testifies on Energy Independence and Global Warming

The head of one of Europe's largest money managers, Alain Grisay, Chief Executive of F&C Asset Management, is today set to testify before the US Congressional Committee on Energy Independence and Global Warming in Washington DC.

Mr. Grisay, whose company manages in excess of $200 billion of assets, has been invited to testify because of his firm's involvement in the Corporate Leaders Group on Climate Change.

Mr. Grisay will deliver a blunt message: "business and investors can only play their part in tackling climate change if government takes decisive action to make this possible. The costs of moving forward today, in a planned and deliberate way, are modest and will even yield profitable business opportunities for many innovative companies along the way. These costs are dwarfed by the costs of inaction, when one considers the human, natural and economic consequences of a business-as-usual approach. In short, we simply cannot put our head in the sand."

He will ask the Committee "as legislators in this most important economy" to play a "historic part" in tackling climate change arguing that "voluntary targets won't do" . Mr. Grisay will state that business can play a vital role in marshalling the capital to finance the innovative technologies required to tackle climate change but that it needs government to set clear long-term standards.

There are three steps that investors need the US government to take, according to Mr. Grisay. These are:

To define climate change policy as a top national priority and to set binding national targets that will be translated into clear, long-term rules, regulations and standards.

To play a global leadership role in engaging other governments to establishing binding targets and standards.

To introduce policy instruments, including 'cap-and-trade' mechanisms, fiscal measures and regulatory standards that will result in a viable carbon price to enable capital investment in innovative low-carbon technologies.

F&C said it supports binding global targets on reductions in carbon emissions and the development of national and international policy frameworks that map the next 30 years or more as well as the emergence of a US cap-and-trade system consistent with the EU Emissions Trading Scheme.

It also strongly favours the introduction fiscal measures and regulations that will stimulate the development of low-carbon energy sources, including biofuels. However, F&C cautions that while biofuels have great potential, especially for transport, care needs to be exercised in ensuring they are derived from sustainable sources. F&C argues that the long-term answer lies in technologies that can use non-food crops grown on non-forested, non-cultivated land, as well as agricultural waste. In particular, F&C believes that national subsidies favouring domestic sources of biofuels over imported ones, such have been favoured by many in the US, can undermine efforts to achieve significant cuts in carbon emissions.