What's Needed From Climate Change Talks

Posted by: Mark Scott on August 12, 2009

We’re half-way through a week of negotiations for a post-Kyoto agreement on curbing global greenhouse gases. The United Nation’s top climate change official warns the world is running out of time. Policymakers from the U.S. to China say a deal must be done. And the result? So far, no agreement — with politicians, environmentalists, and business groups all blaming each other for the impasse.

It’s easy to get bogged down in the detail of summits like the one currently underway in Bonn, Germany. All sides use different data to prove their points. Western countries say emerging economies must do more to cut pollution. The so-called G77 of developing states retort the U.S. and Europe emit more CO2 per person. Everyone is right, but few are willing to compromise ahead of the main post-Kyoto talks in Copenhagen later this year.

For me, there are two main points.

Western countries must accept responsibility for major CO2 cuts. Industrialized nations -- noticeably except the U.S. -- are planning between a 15% and 21% reduction by 2020. That's good, but is still less than the up to 40% figure many scientists (somewhat naively) reckon is needed to slow global warming.

By signing up to these carbon cuts, the West might be doing itself a favor. Sure, CO2 caps may push up electricity prices, but the economic benefits from investing in eco-friendly upgrades (such as more energy-efficient manufacturing plants) could counter competition from foreign rivals. The financial incentives from cap-and-trade schemes (including companies forking out billions of dollars for renewables in emerging economies to offset emissions) may entice the likes of China and India to reduce their CO2 footprints.

And that's the other key factor. Developing countries -- particularly the largest emitters -- must also agree to carbon limits. China, for instance, may have a small greenhouse gas output per capita. But it now has overtaken the U.S. as the world's biggest polluter. Any post-Kyoto agreement that doesn't include emerging economies won't deal with the most pressing climate change issue: the fast-rising pollution figures from expanding developing economies.

How to bring them on board is hotly contested. For some -- particularly U.S. politicians -- some sort of carbon import tax could be a stick to bring emerging polluters around. That would slap a tariff on foreign goods from countries that don't sign up to CO2 reductions. The other proposal is paying developing countries to cut carbon footprints -- a lucrative carrot many emerging states (understandably) favor. Now, focus has shifted towards paying countries to protect forests. In preparation, India even has put aside $2.5 billion (and a further $1 billion per year going forward) to manage its forests.

Of course, both sides are waiting for the other to blink first. And the current brinkmanship means the upcoming Copenhagen talks look likely to be a stepping-stone -- not the sometimes hyped game-changing event -- in fighting climate change. But with less than four months before world leaders descend on Denmark, compromise from everyone involved is sorely needed.

 

About

BusinessWeek correspondents John Carey and Mark Scott, cover the green scene, keeping on top of the business aspects of energy, the environment and climate change, as well as the technologies, policies, markets and people that are shaping how the earth's resources will be used in the century ahead.

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