Much has been hyped about the upcoming climate talks in Copenhagen. There is an air of anticipation and expectation will be difficult to live up to. So, what exactly do the talks involve?
Put most simply, the process is about defining a new framework to replace the Kyoto protocol which ends in 2012. It is the final in a series of scheduled climate change negotiation meetings, including sessions in Bali and Poznan, with ongoing meetings with the various negotiating teams happening in between.1
At this stage commentators are saying that the best likely outcome would be an agreed framework which would be politically, rather than legally binding. There are concerns that the year-old Obama Administration has not had sufficient time to garner support domestically, and that without commitment from the US we are unlikely to see commitment from China. Indeed as two of the world’s largest emitters much will hinge on whether or not these two nations can reach an agreement. Separate discussion have been held during the year but are yet to yield an agreement, most recently in late November.
Another major sticking point is likely to be the level of financial support available to help developing nations achieve low emission economic growth. This would recognise the relatively small role these countries have contributed to the problem in the first place. Another is the amount to be contributed to adaptation funds to help build resilience against the changes that are already built into the system.
Add to this the treatment of forestry, the role of other developing countries like India and Brazil and the legacy of the US and Australia negotiating the Kyoto deal and then expressing reluctance to ratify.
Against this back drop, is the science which tells us that the window to stabilising carbon emissions at levels that would avoid dramatic change is quickly closing and you can see why many are starting to lose hope.2
Progress since Kyoto
The good news is that many countries have introduced a range of emissions reduction policy measures, including long-term targets. Regardless of whether an outcome is reached in the Copenhagen negotiations these actions will continue.
Most recently, a range of ‘green’ investment measures have been included in national stimulus packages as governments look to lessen the impact of the economic downturn.
A research report by HSBC deduced that 430 billion US dollars, approximately 15% of recent stimulus packages, could be considered to have climate change related themes. These include rail networks and upgrades, water infrastructure, energy grid expansion, building efficiency. Only the United States included significant investment in renewables, although this may be due to a lack of investment activity in this area previously whilst other countries have pre-existing renewable policies.
In dollar terms the largest investments were made by China and the United States; proportionally green stimulus measures accounted for almost 40% of China’s stimulus packages, compared to almost 60% in the European Union.
These build on existing activities in each of the major economies and high per capita polluters around the world.
For instance, in 2007 China published a National Climate Change Programme focused on energy efficiency. It includes a plan to cut energy use per unit of GDP by 20% and a more flexible energy grid to cut transmission line losses. China is already expected to be the world’s largest market for wind power in 2009 and stimulus packages announced during the year include the single largest contribution to green investment in the world.
Germany currently has the largest share in the global market for environmental goods and services and plans to cut emissions by 40% by 2020 and 80% by 2050. Reductions to date have been driven by a policy of Ecological Tax Reform intended to internalise environmental costs supported by a strong renewable energy policy with generous feed in tariffs for renewable energy.
The United Kingdom has committed to reduce its emissions by 80% by 2050 and 26% by 2020. This will require significant investment in renewables, primarily wind and biogas. Against this pre-existing policy background stimulus related spending has concentrated on building efficiency, public transport and low carbon vehicles.
The European Union more broadly has agreed a 20:20:20 plan to cut greenhouse gas emissions by 20%, achieve 20% of primary energy reduction from renewables and improve energy efficiency by 20%. Features of the European Economic Recovery Plan include a green car initiative, energy efficient buildings actions and funds for ‘factories of the future’.
Large per capita emitter, Australia, was late to ratify Kyoto following the election of the Rudd Labour Government in 2007. Since then a 2050 reduction target of 60% and 2020 target of between 5 and 15% has been introduced. An emissions trading scheme is currently before parliament and a renewables target of 20% by 2020 has been agreed.
The election of the Obama Administration in the US has also seen a dramatic shift in climate change policy. A cap and trade system has been proposed, together with targets of 80% by 2050 and a return to 1990 emission levels by 2020. Recent stimulus packages have had a strong focus on green jobs with research indicating that there are more long-term employment benefits from the creation of green collar jobs than from those created by more traditional tax cuts and infrastructure spend.3
What happens if we don’t get an agreement?
We would expect these policy actions to continue, the question is whether they would be as binding. It certainly won’t be the end of discussion with commentators already looking towards further discussions during 2010. As the impacts of climate change becoming more prevalent we would hope that the urge to act will become greater.
Another important consideration is the impact it will have on the individual actions of households and businesses. In the absence of a global framework will it inspire collective action or leave people feeling despondent and powerless?
Role for business
Firstly, carbon footprint reduction within an organisation’s direct operations should be top of the list for individual actions for companies. The Carbon Disclosure Project (CDP), an organisation which undertakes an annual investment survey of companies internationally, undertook a review based on the published reduction targets of companies participating in their 2008 survey. Whilst 84% of respondents had targets in place up to 2012, the targets that were in place would see us on a trajectory 39 years too late to avoid dangerous climate change.4
This reinforces the need for action across an organisation’s entire value chain to place pressure on all parts of the economic system to improve their performance. In particular, is the carbon created by consumers when using the product or service, and the carbon intensity of inputs and the overall performance of suppliers.
There are also a number of opportunities for companies to voice support for action in the lead up to the Copenhagen negotiations. Already 750 companies have supported the Copenhagen Communique , an initiative of The Prince of Wales’s Corporate Leaders’ Group on Climate Change. The Communique is a two page statement from the business community outlining the business case for “an ambitious, robust, effective and equitable UN climate framework”. It highlights the risks to business if a credible deal is not reached.5
Similar themes are expressed by the Institutional Investors Group on Climate Change in a statement launched in September by 181 investors managing more than $13 trillion in assets.6
In addition, is the UN Global Compact’s Seal the Deal campaign . The campaign provides a number of ways for companies to become involved. It encourages participating companies to submit a 100 word testimonial to be displayed on a campaign website. The testimonials were shared with the world’s Heads of State and Government gathering at the high level summit on climate change at the UN Headquarters during September.
Companies can use the Seal the Deal! Logo on press releases, letterheads and product packaging to help spread the word. The campaign encourages companies to lobby governments within their areas of operations to reach an agreement and includes an online petition for promotion amongst employees and customers.7
Finally, and probably most importantly, is the need to recruit and train people with the necessary skills to help your organisation plan for the impacts of climate change. This can be to help understand the impacts of a carbon price, or understanding the future product needs of your customers, through to supply chain risk and business continuity and adaptation planning for the physical impacts of climate change.
Regardless of the outcomes of the negotiations in Copenhagen the world will change as a result of our action or inaction or climate change and organisations need to prepare themselves.
References:
- Act on CO2PENHAGEN, the UK government's ambition for a global deal on climate change.
- “Copenhagen climate talks: Time to change, no time to waste”, David Adam, environment correspondent, guardian.co.uk, 10 November 2009.
- Robins, N., Clover, R., Singh, C., 2009, HSBC, “A Climate for Recovery: The colour of stimulus goes green”
- Carbon Disclosure Project reports.
- The Copenhagen Communique on Climate Change, University of Cambridge Programme for Sustainability Leadership and The Prince of Wales's Corporate Leaders Group on Climate Change.
- "Largest group ever of world investors calls for strong global climate change treaty", The Institutional Investors Group on Climate Change statement, 16 September 2009.
- Copenhagen Seal the Deal!, The UN Worldwide Campaign on Climate Change website.
© Article 13 - November 2009
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