Evidence smacks down scaremongering on climate policies

WWF 3 Dec 08;

Poznan, Poland: Fears that companies will simply relocate to “pollution havens” in the face of tougher climate policies and damage the international competitiveness of countries have little support from the evidence, a WWF survey presented this morning to the Poznan climate conference has shown.

”When discussing targets for emission reductions in Poznan today, industrialized countries should leave their competitiveness fears at the door,” said Kim Carstensen, leader of the WWF Global Climate Initiative.

“Deep cuts in CO2 will neither drive industries abroad nor ruin national economies. They protect nations from future climate damage, give them the competitive edge of an early mover, and create millions of green jobs.”

Industry scaremongering and the painting of doom and gloom scenarios about the impact of climate policies on competitiveness continue to be a significant restraint on policy in the developed world, with fierce domestic lobbying for unambitious emissions reductions targets delaying a planned Australian government announcement on targets this week.

The Australian announcement had originally been intended to coincide with the UN Framework Convention on Climate Change summit in Poznan. The summit needs to prepare much of the architecture in order for a post-Kyoto international agreement, to be concluded next year, to be considered a success.

WWF's survey of studies on impacts on competitiveness finds little support from economists for impacts on national competitiveness and, while relocation is a possibility for some energy intensive industries, “practice appears much more complex than theory”.

A decade long study of “leakage effects” from environmental taxation in Europe found very small and sometimes negative leakage effects due to technology improvement spurred by the regulatory initiatives.

The report also notes that the creation of new and expanded markets, for instance in energy efficiency and alternative energy, is ofter greater than any competitive losses especially for “early movers” in emerging markets.

“On the other hand, lax standards in vehicle fuel efficiency are widely known to have had an adverse impact General Motors' international competitiveness, as the demand for fuel-efficient cars increases throughout the world,” the report notes.

With another study finding that the relationship between climate policy and relocation being “statistically weak and insufficient for policy-making”, the survey goes on to note that actual increases in production costs from climate policies are often moderate and “international trade is more complex than that depicted by corporate lobbyists”.

“To find solutions for the few manufacturing activities that are potentially exposed to competitiveness and leakage concerns, further detailed studies are required to assess the various trade barriers that determine
their ability to pass on costs, and the determinants of location of new investments,” the study says
“Economic studies suggest that industrial competitiveness is a manageable issue that requires technical solutions, not a blurry political debate.”

WWF is urging developed countries to commit at Poznan to emissions cuts of 25 to 40 per cent from 1990 levels by 2020, with developing countries also needing to significantly reduce emissions.