David King, The Observer 13 Jul 08;
As governments haver over the best ways to tackle global warming, private enterprise is forging ahead - and making money
Last week, I shared dinner with some of the most powerful men and women in the world. It was a gathering of chairmen and CEOs of major European and global companies, titans from the energy, mining and retail sectors, all there to discuss the greatest challenge facing civilisation - climate change. Almost as one, they spoke of the need for governments to take action to reverse global warming and for the carbon to be taken out of the world economy.
For most people faced with images of oil sands being dug up in Canada or reserves in the Arctic being exploited, this might seem remarkable. We are used to hearing groups such as Greenpeace berate big energy, yet the truth is that it's now governments who are lagging behind both public and business opinion. Examples of good corporate behaviour are everywhere. Once derided as 'socially responsible', measures to run cleaner businesses are leading to improved profit margins.
You can see why the titans like it when you check the bottom lines. BP introduced a system some years ago which led to cutbacks in energy consumption that now save the company an estimated $230m a year. DuPont, once labelled by Greenpeace as 'number one polluter', initially responded by stating its aspiration to reduce greenhouse-gas emissions by 5 per cent, a target it then failed to meet for three successive years. So it introduced a system of awards and rewards within the company. The result was a 72 per cent reduction in emissions over 15 years. The system is now fully embedded in its operation. Big business has reached a tipping point. What was clear from the dinner is that rising oil, gas and coal prices will accelerate such changes and will help, if you'll excuse the phrase, to 'decarbonise the economy'.
Meanwhile what have governments been doing? At the G8 summit in Japan last week, the most powerful heads of state agreed to reduce CO2 emissions by 50 per cent by 2050, a date noticeably far in the future, though that is something, at least. Since the UK government first placed climate change at the top of the G8 agenda, in Gleneagles in 2005, there have been continuous battles in the negotiation of agreed statements, with the US consistently putting red lines through any realistic commitment on future emissions. Now, the US President has made a promise. At the very least, a signal to negotiators working behind the scenes towards the all-important successor to Kyoto in Copenhagen in December 2009 is clear.
Beyond that, the evidence of government action is less heartening. Stung by the concerns of voters about petrol, governments around the world have argued for an increase in fossil fuel supplies. In Britain, calls for another runway at Heathrow have received a positive response from the government, despite the opposition of every mayoral candidate in the recent election. In effect, Labour ministers have been working in opposition to what is necessary for the public good, while eschewing obvious levers available to them to reduce the demand for fossil fuels.
Where are the imaginative ideas for improved rail and public road transport, the implementation of energy-efficiency measures for homes and buildings? Better still, the government, and the agencies it supports, should be taking the lead. What about, for example, capping CO2 emissions for those very departments, with their achievements published on an annual basis? Rather than sending civil servants all over the country, and other countries, the government could increase the use of teleconferencing facilities, cutting the cost of travel both to us, the taxpayers, and the world around us.
The biggest test of governments' commitment to reducing carbon will come with the economic downturn. There will be huge pressure to nurse our economies back to good health. That is not only proper, but essential to manage the growing impact of climate change. As the world's population climbs from 6.8 billion today to nine billion by mid-century, energy demand will rise by around 50 per cent, much of it from rapidly emerging powers such as China, India, Brazil, Mexico and South Africa. Rising sea levels, changing rainfall patterns, competitive demands for scarce resources with a growing global population and rising temperatures will all require investment to manage the risks. Our obligation to countries unable to manage these impacts will create further demands.
We need to work with businesses committed to changing. We need to put a price on emitting carbon dioxide which is high enough to make alternative technologies economic for business, not only for energy production and transmission, but also for energy efficiencies in transport, in buildings, in urban design, in food production, in fresh-water production, in mining, in recycling and in manufacture.
There are ways to do this, but it isn't a single global tax on carbon. Who would be the global tax collector? No, we must accept differing trajectories for carbon emissions by different nations. For advanced economies, emissions must fall by 70 to 80 per cent by 2050, while for developing economies, such as India, the trajectory could be allowed to rise first and then fall. Alongside this, trading in carbon emissions must be encouraged between nations, mimicking what happens among companies. That would be a long-term commitment that would give confidence to the market. We already do this in the EU. The market is worth about €55bn. A tonne of carbon dioxide is now €28. Make this €50 and suddenly changes will transform the continent.
The lesson is that businesses see a market opening up. There are opportunities here for innovation and wealth creation. The pollution that occurred in major cities throughout the world has been controlled by progressive regulations. At first there was fury. Then industry responded by producing the efficient catalyst and trap-exhaust systems that have transformed our cities and our health, while also creating cash for the innovators. With the consumer demanding cleaner goods and the private sector and scientific community innovating solutions, all that's needed is legislators to drive it along.
Here's another idea. Despite their difficulties, all the major banks understand the opportunity presented by this new tradable commodity. Perhaps the government needs to ask Mervyn King, governor of the Bank of England, to commit to reducing CO2 emissions, just as he is responsible for controlling inflation. The Bank would be more capable of achieving this than the Committee on Climate Change being set up in Parliament.
We need to foster a greater sense of political leadership. There is a widespread hope for better environmental leadership from the US, but this is also true of the rapidly emerging economies. The impacts of climate change on the people of the more vulnerable states is likely to be disastrous over the second half of this century. The governments of China, Brazil and South Africa seem to recognise this.
We in the advanced economies are largely responsible for the extent of the problem. Leadership from all countries in the negotiations leading up to Copenhagen is essential. For it will be in Copenhagen that a workable plan must be delivered to meet the biggest challenge civilisation has ever faced.
· Sir David King, formerly chief scientific adviser to the government, is director of the Smith School of Enterprise and the Environment at Oxford University and senior science adviser to UBS
