It is the mission of the Carbon War Room to redirect capital flows from fossil-based energy generation and conventional industry into sustainable low-carbon technologies that can generate and preserve wealth in the long term. These technologies offer higher returns to investors and society.

Redirecting investment to low-carbon technologies is critical to achieving CO₂e stabilization targets that require avoiding the projected 16 billion ton annual increase in emissions by 2020.

Investment and insurance decisions are made based on risk-reward trade-offs. Existing asset classes are valued largely based on historical performance, which is problematic when systemic shifts affect the future risk profile. Conventional energy and technology assets are being overvalued based on inaccurate assessment of four key factors: (1) energy prices, (2) volatility of fuel prices, (3) security risk, and (4) climate change risk.


Market-based Approaches
Three key areas of development are needed to affect change in the finance and insurance industries:

• New risk evaluation. Out of these new partnerships need to come new approaches to assessing risk to take account of both the immediate risks, in terms of increasing energy demand and fuel price volatility, and the long-term massive portfolio risk under business-as-usual approaches that result in catastrophic climate change.
  
  
• New partnerships. New partnerships – both formal and informal – between finance experts and entrepreneurs, technologists, and scientists in order to update the understanding of low-carbon technologies and the risks associated with these technologies as well as conventional high-carbon technologies. The entrepreneurs, technologists, and scientists have critical information and insights regarding this new market that has not yet penetrated the financial world.
  
  
• Demonstrations projects. Deployment examples for new and emerging technologies are critical to attract institutional investors. Many will require government support.
  
  There is also an important regulatory role for government to play. As the economics of low-carbon technologies are proven across sectors, low-carbon technology standards should be introduced in order to accelerate scale up. These technology standards mandate emissions below a certain level, based on available cost-effective technologies.