Carbon Constrained World Reality

In my monthly reading review for February, I raised some issues about climate change. The key points of this I now restate in summary:

A conference, in Dec 2009 in Copenhagen of around 170  countries as parties of the United Nations Framework Convention on Climate Change ((UNFCCC), , will meet for the last time on government level, before a climate agreement is to be renewed. Early agreement is needed there so countries can get the treaty through their domestic legislation in time for 2013 start.

To resolve obstacles to understanding further what this conference is all about, I did some more research and sought opinion of people with expertise in this area. One such specialist, Stian Reklev at the Point Carbon subscriber service, gave PerformanceController some very useful information. It especially clarified not only the issues that will be dealt with at Copenhagen, but in fact what it is all about.

Mr. Reklev had a very clear understanding of the main discussion points for Copenhagen. He also said “these are proving terribly difficult to get consensus on”

The points are:

1. Emission caps.

 Under Kyoto, only countries defined as developed countries have actual targets. 30-something countries have emission obligations in the 2008-2012 period they must stick to: 26 of the EU countries, plus Japan, Canada (who’ll miss theirs and they don’t care), Australia, NZ, Norway, Switzerland, Russia and Ukraine. Plus Monaco and San Marino. Belarus is trying to get into this group.

When Kyoto was negotiated in 1997 it was agreed that it would be unfair to restrict the development of poor countries by slapping emission caps on them. However, some of them have developed a lot since then and are now huge emitters. China, India, South Korea, Mexico, Brazil and South Africa in particular. Developing countries now emit more than half the world’s greenhouse gases (although in historical context they are still not responsible for the climate change crisis itself, and counted per capita they are still small emitters compared to rich countries).

So for now, rich countries want poor countries to take on mandatory emission obligations. Not as strict as their own targets, but mandatory ones in some way. Obviously, China, India etc are still reluctant to risk their economic growth by doing so, and argue that they should not take on mandatory caps as long as rich countries struggle to comply with their Kyoto targets.

For the US and Australia, for example, it seems difficult to take on stringent targets while their biggest competitors (especially. China) can continued increasing their emissions unabated. (Australia has now ratified Kyoto, but they have an extremely easy target).

Meanwhile, knowing that the targets under Kyoto is not at all enough to stop climate change, poor countries say rich countries must take on much stronger targets. The US emits more than 20 tonnes CO2 equivalent per capita. The corresponding number for China is 5, for India 1.5. They keep pointing their fingers at the west, demanding more action.

2. Who picks up the bill?

 Everyone knows that if the world is to avoid climate change, developing countries must achieve sustainable growth. A huge amount of clean technology must be transferred from rich to poor countries. Many, but not all, agree that it is reasonable that rich countries pay for a significant amount of this (considering they made the mess in the first place, plus they can afford it).

What they’re trying to do now is find a technology transfer mechanism that everyone is pleased with. That is very difficult: everyone wants to pay as little as possible.

3. Adaptation.

While mitigation continues to be a hugely important issue, most scientists agree that some climate change will occur regardless. Africa and Asia are predicted to suffer the most of this (Vietnam will be absolutely devastated). You probably know about the sinking pacific islands.

So what developing countries are trying to do now is to raise more money for adaptation measures. Again, as soon as money is involved, things get very complicated.

So that is what the big discussions is to be about in Copenhagen this year.

And as I eluded to in my earlier post, The US President Obama will play a completely different role than Bush. That of course does not ensure a success. The issue of concern is they will manage to agree on something, but will it be anything really good.

In the meantime, developed countries will increasingly cap emissions at home. Most of them are prepared to pledge deeper emission cuts if a good international treaty is in place, but even without one they will go ahead and do something.

The EU has an emissions trading scheme (ETS) in place, and keeps lowering caps for the 12,500 participants. Australia will get one next year, NZ has plans (that are under review by parliament now).

The US is expected to pass an ETS bill some time the next two years. In the meantime, ten northeastern states have already launched a regional ETS. Similar programs are being developed among western states and in the Midwest.

So the carbon-constrained world is coming, even though some countries may choose to slack up a little during the recession. The question is if there is enough guts out there to make regulations that are meaningful.

For us Aussies we need to consider if the Australian government’s target (5-15 per cent cut in emissions from 2000 levels by 2020) all a bit useless. It will cost a fair bit but is significantly below what scientists say is necessary to avoid climate change. So what’s the point in putting in place legislation that isn’t going to do the job?

To be continued…

4 thoughts on “Carbon Constrained World Reality

  1. Hi Rauil,

    Thank you for your comments. We are very pleased to know you find our resource of value.

    Our posts go to all countries and we try to focus on generic issues of interest to all business anywhere regardless of language or culture.

    Where practical we write about real cases or real experience from our business worlds.

    For us we find it easier to write that way as it is about something we do.

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    best wishes
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  2. Hello!
    Very Interesting post! Thank you for such interesting resource!
    PS: Sorry for my bad english, I’v just started to learn this language 😉
    See you!
    Your, Raiul Baztepo

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