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 October 23, 2009
Can Copenhagen Deliver a New Industrial Revolution?

 By David Vigar, Climate Change Adviser, Tomorrow’s Company

GLOBE-Net - As December’s Copenhagen climate summit approaches, new evidence is emerging of the massive scale of the action needed to avert the risk of runaway global warming. At the same time, contradictory signals emerging from the pre-summit discussions don’t inspire confidence that such action is likely to be taken.

The scale of the task is underlined in a new report, Climate Solutions 2, produced for WWF by Climate Risk, a company that advises insurers and others on climate-related issues. Their modelling takes into account targets for stabilising greenhouse gases, available low-carbon technologies and the speed at which industries can grow in a market economy, given physical and financial constraints.

The report’s bottom line is that world’s governments, businesses and investors have five years to shift low-carbon industries into a high growth phase to avoid runaway warming. The industries of energy efficiency, clean energy and sustainable forestry need to grow around 25% a year from 2010. The total investment needed to 2050 is about $17 trillion, or 15% of the funds now managed by institutional investors.

The upside is that, under this scenario, by 2013 companies and investors will start to see benefits as green energy begins to outperform fossil fuels. However, warn Climate Risk, this can’t be achieved solely through a carbon price, because carbon trading stimulates the cheapest measures first, then more expensive ones as carbon prices rise.

 

This triggers sequential deployment of technologies, when what is needed is simultaneous deployment of all the major green innovations - whether cheap or costly. So extra government intervention will be needed - such as mandates to gear up clean power and fuel, subsidy and direct investment in research.

 

The vision is a five-year green industrial revolution on an unprecedented scale. It’s a future not unlike that envisaged in the work being done by Bill Becker, formerly of the Presidential Climate Action Project, to craft a more tangible picture of the future with the project The Future We Want. Tomorrow’s Company has explored the possibilities under the heading of Tomorrow’s Green Economy.

 

Will it happen? That depends on Copenhagen - or at least on the process of which Copenhagen is part. The global deal needs to set all the necessary cogs in motion - unlocking investors’ funds, defining the technologies to be scaled up and ensuring individual countries’ plans match up. They must also fix the thorny issue of how to transfer funds, technology and know-how from developed to emerging economies. Who puts up the money? How are transfers made? How is intellectual property both shared and protected?

 

At present there is no clear sign that such an agreement will come about. In the last few days, the UN’s chief negotiator Yvo de Boer has said there will not be a "fully fledged treaty" and the US’s representative has been forced to admit that President Obama may not attend at all. The slow progress of the US’s own climate bill is a major drag on the process. The central issue of fund transfers appears to be unsolved and there is talk of the outcome being no more than a political declaration headlined by the developed countries’ pledge to cut emissions 80% by 2050, a commitment that was made by the G8 over a year ago.

 

What do we do while we’re alive?

 

It seems the overall global goal of a 50% cut by mid-century may be dropped. One negotiator has been quoted as saying that talks about 2050 have eaten up time that could have been better spent deciding "what we do while we’re alive". There may be a better system to monitor, verify and report greenhouse gas emissions - but that’s arguably something the world should have created 20 years ago. One can only hope that a lot falls into place in the next month.

Implications for Business of Copenhagen - GLOBE 2010 (March 24-26, 2010) will provide leading-edge insights on the changes taking place in the global corporate sustainability shift arising from the outcomes of the December meetings in Copenhagen.This may all be a gigantic exercise in lowering expectations so that a relatively modest agreement comes out looking like a breakthrough. Both the UK’s Environment Minister Ed Miliband and the Chinese Vice Premier Li Keqiang were at least sounding optimistic at the recent Major Emitters Forum in London.

One piece of good newsis that the world’s carbon dioxide emissions are expected to fall 3% this year, partly due to recession, but also to efficiency and substitution of coal by gas, wind and solar power in the US. The danger is that this will be seen as a peak, rather than the temporary dip it may turn out to be, and take the pressure off the politicians.

As the summit shapes up, businesses are in a holding pattern. They can make their views clear, but the power now lies with the policy-makers. If there is a gulf between what is needed and what is possible, then what questions does that pose for companies?

 

First, in their planning and modelling, do companies take seriously the kind of rapid industrial transformation that Climate Risk propose? As we point out in Tomorrow’s Company’s report Tomorrow’s Climate, it matters because a change on this scale would have a huge impact on near term investments, particularly large scale capital stock such as power stations and manufacturing plants.

 

Second, if there are such massive gains to be made in the low-carbon industries through a re-industrialisation such as that proposed, why don’t the companies who stand to benefit get together with the likes of Climate Risk and WWF to keep that specific idea in the spotlight over the coming months?. A report by itself can’t change the world, but if its message starts to underpin a wider movement, then it may start to become reality.

 

And third, can those business leaders who really want a deal do any more to help make it happen?

 

I’ll be looking at the business role in Copenhagen before the summit takes place. Any thoughts are welcome.

 

authored Tomorrow’s Company’s report on global warming and business, Tomorrow’s Climate: Beyond Peak Carbon. It is available at forceforgood.com here. To find out more about Tomorrow’s Company please visit their corporate site, www.tomorrowscompany.com, or their interactive web platform, www.forceforgood.com.

For More Information: WWF