SUSTAINABLE EUROPE

Autumn 2009

by Björn Stigson

Governments around the world have been signing up to emissions cuts in the years ahead, but few if any have a practical plan for achieving them, says Björn Stigson, who heads the World Business Council for Sustainable Development

We’ve got our eye on the wrong ball; the world is paying too much attention to climate change’s headline numbers like the various pledges to cut emissions, and not nearly enough attention to the practices and policies needed to achieve them. That’s why the international companies grouped in the World Business Council for Sustainable Development has identified five critical areas where the gap between what is pledged and what is practised needs to be narrowed and eventually closed.

At last year’s G8 meeting on the Japanese island of Hokkaido, the world’s largest developed economies reached a hallmark accord on the long-term target of halving emissions by 2050. This year, at the G8 in Italy it further committed to limiting temperature rises to 2°C and developing countries also undertook to make meaningful emissions cuts. It was the sort of North-South pact that is crucial to a successful outcome to the United Nations Framework Convention on Climate Change (UNFCCC) talks in Copenhagen in early December.

MATTERS OF OPINION Climate change "serious, but not unstoppable"  Over two-thirds of Europeans believe that climate change is a very serious problem, according to a survey conducted in early 2009. But opinions vary widely between EU member states. In Greece and Cyprus, over 90% of people say global warming is a very serious problem, while in the UK and Estonia only around half of people hold this view. When asked whether they think that climate change is an unstoppable process, 62% of Europeans say that they don’t believe this is the case, while 31% think it is. Interestingly, the three countries (Estonia, UK, Latvia) where fewest people think climate change is very serious are also those where the largest proportion of the population believes the process is unstoppable. Eurobarometer  So much for our political leaders’ ambitious pledges. But the reality is that no country that has signed up to these long-term goals has a clear plan on how to get there. A successful outcome by 2050 won’t be remotely possible without a plan, and so far these countries’ previous efforts to meet carbon much less ambitious emissions goals have been, to say the least, underwhelming. Only three countries that committed to the Kyoto Protocol have fulfilled its targets, and each of these successes was due more to a major structural shift in the local economy than to smart climate policies: Russia, because of a protracted downturn in industrial activity after the collapse of communism; Germany because of the reunification of east and west; and the UK, because of its shift from reliance on coal to North Sea gas. Equally worrying is the fact that few countries have yet committed to targets covering the next decade, even though the medium-term targets up to 2020 are important indicators as to their ability to achieve long-haul success. Japan, the European Union, and recently Australia have now stepped forward, but even in these countries it is arguable whether the mid-range targets are ambitious enough to guarantee success by 2050. The third problem is that the U.S. and China are looked to for the drive that will be needed for a bold and wide-ranging climate agreement in Copenhagen, but as matters stand, the U.S. will not be prepared to sign up to the necessary emissions cuts until China signs up too. And as America’s ability to act on climate change depends on the status of its own domestic climate legislation, it will clearly be difficult for it to act in the global arena unless this is in place. The U.S. and China in fact took an important step in July when they signed a Memorandum of Understanding on energy and climate initiatives, but the funding for these plans is still lacking, and the fine print has yet to be finalised. The fourth concern is the yawning gap between the consumers’ behaviour and the way they vote as citizens. As voters, stewardship of the environment is widely seen to be paramount. But as consumers they do not want to pay extra for energy efficiency and other green aspects of the products they buy, from refrigerators to home insulation. And lastly there’s the very difficult question of how to reconcile our climate-related policies with the drive to improve living standards for the world’s under-privileged. The focus in developing countries is on poverty alleviation, not climate change. About 1.6bn people still don’t have electricity and 2.5bn have no access to hygienic sanitation, and the situation is so grave that every year several million people die from unsafe drinking water or poor sanitation. Providing clean water, sanitation and power to the world’s poor is essential, but it is hard to see how this can be achieved without increasing energy demand and greenhouse gas emissions.

Advertisement All these five areas will need to be addressed if we are to reach workable solutions to the climate change challenge. A battery of sound and better-funded policies, and greener practices will be needed, and if we are to meet our 2050 goals, they must be put into widespread use without delay. The policies that can make the greatest and most immediate difference cover a range of things, but begin with energy efficiency. Part and parcel of every national climate change plan should be a well thought-out strategy to boost and finance energy efficiency, because it alone can bring the world halfway to its 2050 target of a 50% cut in emissions. These measures must address the demand side of the equation, meaning not only industry, buildings and transport but also household goods. Better product labelling and stricter standards are needed if consumers are to buy products that are not just cheaper off the shelf but cheaper over their lifetime once energy consumption is factored in. Key amongst these measures should be a plan to increase the energy efficiency of buildings. They consume 50% of the world’s energy, yet it is wholly feasible to reduce that energy use by 50% by 2050, as the Peterson Institute for International Economics says in a study based on the World Business Council for Sustainable Development’s Energy Efficiency in Buildings project. It’s obvious that technology is going to play a vital part in tackling these problems, but the gap between national plans to combat climate change and the extra financing they will require has become one of the major challenges facing business. A range of low-carbon technologies already exists, of course, but to meet the full scope of the climate challenge will require technologies as yet undeveloped. It has been estimated that 30% of the emissions reductions needed by 2050 will require the discovery and development of cutting-edge technologies, we can’t even guess at. That means national action plans must incorporate new financial mechanisms and incentives designed to promote closer international cooperation and prompt an upsurge in research and development on promising technologies. Instead, though, public spending on energy R&D has unfortunately been in slow decline for years, even if some recent government stimulus plans have begun to reverse that decline a bit. The message is that we will need to put in place policies and incentives that foster investment in energy innovation if we hope to find the breakthrough technologies essential for a shift to a low-carbon economy. Turning to the developing world, a special effort is going to be needed here. On some estimates there is a shortfall of about 50% in the amount of funding needed to provide energy access in the developing countries with low-carbon technologies. As private sector business represents some 85% of the investment flows into these countries, it is easy to see why this is such an important issue. It is unlikely that developing countries will be able to pay in full for these technologies without assistance, and the financing requirements for just clean electricity will be unprecedentedly huge. Carbon markets offer one a way to direct investments to the developing world and unleash funds for low-carbon projects there. And because a global carbon market is going to be essential, we need worldwide carbon price as a necessary market signal to develop and deploy clean technology. If we are to step up the diffusion of new technologies to combat climate change, more countries will need to craft policies conducive to business investment, lower their barriers to trade and foreign investment and train up more technically qualified workforces. International cooperation on a massive scale is going to be needed on large demonstration projects, such as carbon capture and storage technology, and that’s likely to mean sea-change in national priorities. New kinds of partnerships between governments and business will also be needed, so researchers, suppliers and technology users can fund and deploy cutting-edge technologies. Nowhere will tie-ups between public and private sector actors be more necessary than in the diffusion of existing technologies, to ensure that even the poorest citizens on the planet have access to clean and affordable energy. The pressures for change are enormous, and will continue to grow whether or not a deal is reached in Copenhagen. Population and power shifts around us will significantly reshape our world, and by 2050 the vast majority of the world’s 9bn people will be city dwellers. How our planet will cope remains to be seen. In the words of one Chicago’s urban planner Daniel Burnham, when building cities we should make no small plans. The same thing should be said about addressing the challenges of climate change.