(TimesOnLine.co.uk)
--- Business people are not
scientists or politicians. But they are paid to evaluate risk and to recognise
opportunity. That’s why business has a strong interest in a successful
conclusion to next month’s climate change conference in Copenhagen.
Either the world moves together in an orderly fashion to
reduce greenhouse gas emissions by way of the legally binding obligations of an
international treaty, or it risks a disorderly transition, with countries
moving at their own pace and making their own arrangements. At the extreme lies
the risk of belated — and therefore very costly — reactions to sudden shifts in
climate conditions around the world.
Globally co-ordinated actions are important for businesses
based in Britain. The EU is committed to ambitious targets for reducing
greenhouse gas emissions by 2020, and to making polluters pay. If other regions
do not follow, European industry would be at a serious competitive
disadvantage, and manufacturers of commodities such as steel or cement would
shift production elsewhere, risking many thousands of jobs. We would still need
lots of cement in this country: shipping it in from distant ports would not
help the planet.
The opportunity for business lies in the immense new markets
opening up for low-carbon goods and services. The potential is measured in
trillions of dollars, and countries such as China and Korea are now moving
aggressively to build capacity in the green economy. UK businesses aspire to be
leaders in this new world, and want a clear regulatory framework on which to
base investment plans. Sectors where the UK could build a competitive advantage
and create jobs include offshore wind, low-carbon vehicles, carbon finance and
clean coal.
So the big question for business is: what will success next
month look like? We will not get a fully fledged treaty: there is too much
unfinished business to complete the job. But the meeting can produce positive
results, provided it hits five prime targets.
First, the momentum of negotiations must be maintained. That
means presidents and prime ministers must attend in person and deliver a firm
political agreement that will be the stepping stone to a treaty as soon as
possible next year. Worthy declarations of intent will not be enough to drive
investment in research and technology on the enormous scale required to build a
new kind of economy.
So Barack Obama must, as a minimum, commit to delivering the
provisions of the Waxman-Markey climate change Bill, and leaders from the
developed and developing world must guarantee the promises they have already,
or will shortly, make to mitigate greenhouse gas emissions.
The numbers will have to be clear: global emissions should
peak around the year 2020, then decline steadily to a point where, by 2050,
they are less than half today’s levels. Change on this scale will require
carrots and sticks, best achieved by putting a price on emissions that rewards
efficiency and punishes profligacy.
So the second big challenge will be to lay the foundations
for a global market for carbon, by developing schemes that cap emissions and
create a market for trading in carbon permits, suchas the EU’s Emission Trading
System. The value of a global carbon market could be well over $2 trillion by
2020.
Next, Copenhagen must reach outline agreement about the
scale of the resources that rich countries will pass to the developing
economies to ease their transition. China is setting its financial demands too
high, and the US has yet to put a realistic offer on the table. They will
probably need to converge on about €100 billion a year by 2020, with roughly
half of that coming from the proceeds of emissions trading. Negotiating how
this bill will be carved up among the rich countries will be one of the
trickiest tasks of the conference.
Technology resources will have to be transferred to the
poorer countries, as well as cash. But businesses would strongly object if
governments from the developed countries agreed simply to hand over
intellectual property, which is not theirs to give away.
Establishing a cross-border regime to curb emissions from
aviation and shipping is target No 4. A way will have to be found to include
them in a global cap and trading scheme to provide incentives for fuel
efficiency.
Challenge No 5 is particularly important for businesses in
the UK. The EU has undertaken to cut emissions by 20 per cent by 2020, or 30
per cent in the event of a successful global agreement. The higher figure would
encourage others to be more ambitious, and would provide powerful incentives to
develop new technologies and to drive energy efficiency.
But the big worry is that the higher target — coming on top
of the EU’s costly renewable policies — could drive carbon-intensive industries
out of Europe. So other countries would have to make strong commitments to
contain emissions before British business agreed that this extra step was
justified.
All this adds up to a very complex set of negotiations next
month, and will call for political leadership of the highest order. Businesses
in Britain are clear about the risks of failure and the rewards of success, and
are developing products and services that will enable consumers everywhere to
make the choices that will lead to a sustainable and rewarding future. Muddling
through is not an option.
By: Richard Lambert
SOURCE: www.timesonline.co.uk