OSLO (Reuters) - An economic slowdown is sapping enthusiasm for a costly drive to fight climate change but persistently high oil prices are a lifeline for a “green revolution” of renewable energy technology, experts say.
U.N. talks on a new climate treaty to be agreed in Copenhagen at the end of 2009 resume in Ghana from August 21-27 — overshadowed by worries about flagging growth and in an atmosphere soured by the collapse of world trade talks.
Weaker growth “will probably reduce the intensity of the negotiations,” said Cameron Hepburn, an Australian environmental economist at Oxford University.
“But ought it to? The answer is a fairly clear ‘No’.”
Many climate experts say the cost of measures to curb greenhouse gas emissions from burning fossil fuels would be far less than the long-term damage of inaction — more heatwaves, rising sea levels, disruptions to food output from droughts in some areas and floods in others.
“The green revolution is going to come anyway,” said Denmark’s Climate and Energy Minister Connie Hedegaard, the host of the planned U.N. meeting in December 2009 to agree a new U.N. pact, when asked about the impact of the economic slowdown.
And a drive to diversify away from oil unites everyone from left-wing green activists to the United States, alone among industrial nations in opposing the U.N.’s Kyoto Protocol capping greenhouse gas emissions in a first phase to 2012.
“We want to lessen our dependence on oil,” said Paula Dobriansky, the U.S. Under Secretary of State who leads Washington’s climate negotiations, when asked if economic woes would affect U.S. willingness to fight climate change.
Investments in renewable energies give a “double advantage” — easing dependence on oil and curbing greenhouse gases, she told Reuters. “It’s going to be a challenging, complex process.”
Brent oil is well below peaks of $147.27 a barrel in July but at $112 is still a spur for cleaner energies such as solar, wind, hydro or geothermal. A risk is that high oil prices also encourage a shift to coal, which emits more greenhouse gases.
President George W. Bush argued Kyoto would be too costly and it wrongly excluded nations such as China and India. He has preferred investments in new technologies and agreed to join a broader, successor treaty to Kyoto.
As evidence of a revolution, Hedegaard pointed to a study that China was becoming top producer of green technologies ahead of the United States — as well as top greenhouse gas emitter.
“It should also give some room for thought in the United States as to ‘how do we take care that our companies do not lag in this green revolution?’,” she said.
“If you are worried about job creation, then maybe what Ford (F.N) is experiencing — an $8.7 billion loss in one quarter — is not the trail to follow,” she told Reuters. Ford’s loss was linked to writing down truck and SUV operations — it said it would aim to break reliance on gas-guzzlers.
Both U.S. presidential candidates, Democrat Barack Obama and Republican John McCain, have promised tougher action than Bush to confront climate change.
Despite hopes of a revolution, shares in renewable stocks have tumbled after leaps in 2007. Curbs on solar subsidies, for instance in Spain, and a wider slowdown are among factors. Shares in Germany’s Q-Cells QCEG.DE, the world’s largest solar cell maker, now trade at 58.8 euros, versus a year high of 102.
Yvo de Boer, the head of the U.N. Climate Change Secretariat, said business still wanted an ambitious deal in Copenhagen despite a gloomier outlook.
Many investors want to know the long-term risks in coming decades, far beyond a short-term slowdown. “Business is still calling for clarity and ambition,” he told Reuters.
Economists say governments are clearly wary of saddling citizens with extra costs when they are already struggling to pay for gasoline or high food bills.
Even so, the U.N. Climate Panel say the costs of fighting climate change would amount to just 0.12 percent of gross domestic product a year.
In a sign of reluctance to get to grips, the Group of Eight nations agreed last month on a “vision” of cutting world emissions by 50 percent by 2050.
But they stopped short of setting G8 mileposts such as 2020 for cuts that would require tough political decisions now.
Any unravelling of the global economy may hit emissions in several ways. Economic slowdown by itself could briefly brake the rise in emissions — like when the collapse of the Soviet Union led to a tumble in Russia’s emissions.