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Mine giant signs $315m deal to build wind farms

Date

Lenore Taylor in Rio De Janeiro

AUSTRALIAN renewable energy company Pacific Hydro has signed a $315 million joint venture with Brazilian mining giant Vale to build two wind farms in the country's north-east.

The deal with the iron ore and nickel miner - Brazil's second largest energy user - was due to be announced by the Prime Minister, Julia Gillard, on the sidelines of the Rio Earth Summit meeting.

With the formal sustainable development agreement struck at the summit this week widely viewed as disappointingly weak, lobbyists are increasingly focussing on the private sector rather than waiting in vain for governments to strike an effective agreement for change.

Greenpeace head Kumi Naidoo said government negotiators had failed at Rio and his organisation would target the financial sector, seeking to cut off capital to destructive industries and influence investment decisions.

Some institutional investors are already changing how they make decisions. Investors managing more than $32 trillion will meet at a separate gathering in Rio de Janeiro next week, having signed the UN-backed Principles for Responsible Investment.

PRI chairman Wolfgang Engshuber told the Herald his members would not be put off investing in Australia by the new carbon tax because ''we want social and environmental costs to become part of investment decisions … it shows us companies are equipped to deal with carbon in the medium and long term''.

The business director at Australian think tank The Climate Institute, Julian Poulter, wants to push investors to change faster. ''All we got out of this conference is more good intentions, and we've had good intentions for a very long time. What we need is real world economics,'' he said.

He will lobby investors to calculate the proportion of their portfolio invested in assets exposed to climate change, expecting change will flow when they see the results, which are typically between 55 and 60 per cent. ''Governments are bodies with a lifespan of three to five years … institutional investors are the only people with an incentive to manage the long term financial risks of unsustainable investments.''

Separately, 37 banks including the National Australia Bank, signed a declaration at Rio promising to find ways to include social and environmental costs in their decision making on loans, investments and insurance policies.

Ms Gillard said world leaders introducing carbon pricing schemes had ''quite frequently'' raised Australia's carbon tax in meetings on the sidelines of the summit, including the presidents of Colombia and South Korea.

Tony Abbott has said the Rio meeting would leave Australia's carbon price as an ''international orphan'', but Ms Gillard pointed out that it was not a climate change negotiation and said the Coalition leader must have forgotten the 850 million people covered by a carbon pricing scheme around the world, including the entire European Union.

The Prime Minister has a meeting with the US Secretary of State, Hillary Clinton, and a business conference before she leaves Rio this morning Australian time to return home for the final week of Parliament and the introduction of the carbon tax.

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