Business needed to crack climate stalemate

CANCUN, Mexico Mon Dec 13, 2010 9:40am GMT

Activists demonstrate inside the venue of climate change talks, in Cancun December 10, 2010. REUTERS/Gerardo Garcia

Activists demonstrate inside the venue of climate change talks, in Cancun December 10, 2010.

Credit: Reuters/Gerardo Garcia

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CANCUN, Mexico (Reuters) - Evidence of green business profits and more direct industry engagement may be needed to push U.N. climate talks out of stale rich-poor rivalries to a global agreement.

Negotiations like the just-finished 190-nation U.N. climate talks in the Mexican resort of Cancun do not give businesses or investors a formal role, consigning them instead to hold side events in hotels far from the conference centre.

More business engagement was the key to unlocking real progress, said Yvo de Boer, who stood down as the U.N.'s climate chief earlier this year saying it was a missing pillar.

Clean technology profits could illustrate the opportunities from a global climate deal, and convince negotiators from China and the United States, the world's top two emitters, to cooperate.

"We're trying to get away from a zero-sum logic," World Bank President Robert Zoellick told Reuters.

"From my own experience in trade negotiations, if you see it as one guy wins the other guy loses you're going to have a hard time getting a deal frankly because nobody wants to go home the loser."

Zoellick referred to World Bank-backed projects from solar power in North Africa to energy efficiency in Mexico -- "Each of those builds experience on the ground ... help the diplomacy by showing the different parties that there are win-win actions."

The November 29-December 10 talks in Cancun were hobbled by familiar fault lines between developing and developed countries over sharing the burden of cuts in greenhouse gas emissions after 2012, when the present round of the Kyoto Protocol expires.

Kyoto binds the emissions of nearly 40 industrialised countries which now want a wider pact also regulating the United States, which did not ratify Kyoto, and big emerging economies.

"Meeting representatives of business in the past 10 days, I've been asking them to step up to the plate and invest in low-carbon technologies," said Christiana Figueres, the head of the U.N.'s climate secretariat.

"We know the theory on sustainable development, what we need is very concrete examples that we can point to and say this is the way it is done. Currently we do not have a single country that can say this is a successful model because we only have examples in specific sectors in specific countries."

THEORY

De Boer, now climate adviser to consultancy KPMG, said previous business engagement had been too vague. "Part of the problem is it's not at the level of detail and precision that's relevant to people involved in the negotiating process."

"It's slowly beginning to happen, we need to go to that next level of precision," he told Reuters, saying that business was trying to speak the same language as negotiators.

Business has issued four "communiques" to U.N. climate conferences over the past three years, calling for a global deal which helps put a price on damaging carbon emissions, and so tilt competitiveness in favour of low-carbon energy.

"It's been said ad nauseum. It's about a carbon price," said David Russell, co-head of responsible investment at Britain's Universities Superannuation Scheme USS.L.

The USS pension fund devotes nearly 1 percent of its 29 billion pounds in assets to low-carbon technologies including renewable energy. Governments must be more explicit about supporting clean technologies "if allocations are ever to get to the levels that we hear are required", said Russell.

FORUM

Meanwhile, the focus for business lobbying and engagement was shifting, to reflect the rising global status of emerging economies such as China, the world's biggest carbon emitter.

G20 summits of the world's leading economies were increasingly important, although unlikely to replace the United Nations as the place to write global policy.

"Those are two very high level engagements," said economist Nick Stern, referring to two recent business conferences on the fringes of the South Korean G20 summit and the Cancun talks.

"This is about clarity of government policy particularly nationally but also internationally," he told Reuters.

"The G20 and the U.N. are both good places. The G20 is integrated into the bigger economic choices of the day, but the U.N. is making the policy on climate change."

"Business is just getting on with it. They see high-carbon strategies as risky and getting riskier and low-carbon strategies as risky and getting less risky."

In one concrete example of global business engagement, the European Union was commissioning pilot power plants to demonstrate a technology called carbon capture and storage CCS.L, which traps carbon emissions from smokestacks, following an initiative by the G20.

"What it demonstrates is that large-scale public-private partnerships can make a difference," said David Hone, climate change adviser at the oil major Royal Dutch Shell.

"The EU demonstrations programme is partly in response to the G20 calling for a certain number of demonstration of CCS during this decade. It's not about lobbying the G20 but showing that these large-scale endeavours can come together and work."

Industry has to convince policymakers that they want change, said Juan Costa Climent, a former Spanish minister and now Ernst & Young's head of climate change and sustainability.

"In my experiences as a former policymaker when you have the support of the business community you are much more proactive, you become more forward," he said.

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