Wednesday, 19 December 2012

After Doha: Living in a 3-Speed World

It's December, and that means we're once again picking through the results of a two-week United Nations climate change conference in search of meaning.

The UNFCCC website contains the text of all the official decisions reached in Doha. There's enough in there to keep the climate policy wonks busy for days.

But what does all of this mean for day-to-day practitioners involved in the fight against catastrophic climate change? It means, among other things, that we are living in a three-speed world. The UN negotiations are meant to pave the way for a unified international emissions reduction framework, with a global emissions reduction target that trickles down to individual country governments, and then to organisations and communities. When the Kyoto Protocol was drafted back in 1992, the plan was for a coordinated approach that ensures everyone made a fair contribution to truly ambitious global emission reductions.

With each subsequent climate change conference - from Bali to Copenhagen to Cancun to Durban to Doha - the limitations of this approach have become apparent. Government negotiators bicker over details small and large, for reasons of national sovereignty, economic advantage or sheer principle. The negotiating text, consequently, has splintered into parallel tracks, each of which must be agreed by consensus by 194 countries plus the EU - no majority voting here! With each subsequent round, the pace of negotiations has slowed, and the level of ambition seemingly has diminished.

In our three-speed framework, we'll label UN-speed "super-slow".

The news is slightly better at the country level.  The UK has set an ambitious 2050 reduction target and gradually is devising measures to meet a series of 5-year carbon budgets.  Australia has implemented an economy-wide cap and trade scheme to achieve its emission reduction targets.  So have New Zealand, South Korea and California (a U.S. state with an economy larger than many nations). Meanwhile, a host of other countries are developing national and regional cap and trade schemes, implementing some form of carbon tax, or are rolling out various greenhouse gas reporting regulations and financial incentives.  And of course, the European Union has deepened the reduction targets linked to the granddaddy of GHG cap and trade mechanisms, the EU ETS.

These are encouraging moves, and can take us part-way towards our global emission reduction targets.  The problem is that these are piecemeal efforts that are dependent in most cases on the whims of elected legislatures.  It is difficult for companies that operate under this system to make long term plans when the scheme may change with the next election.  What is more, the lack of international coordination encourages "environmental arbitrage", with some companies threatening to base their business investment (and employment) decisions on the relative cost of climate change legislation in different jurisdictions. Real or not, these arguments about economic competitiveness discourage many governments from taking more ambitious action to drive emission reductions.  At the country level, then we have real signs of progress, but fragmentary and subject to reversal.  Let us call national-speed "medium-slow" but inconsistent.

And then there is the business community. Taken together, the footprints of the 350 largest listed companies on the FTSE are greater than the UK's total direct emissionsAs our carbon maturity assessment showed, many companies are going far beyond their legal obligations to tackle their climate change impact.  Some companies have already achieved reductions of 20% or more and have set reduction targets that drastically outstrip those contemplated by governments or the United Nations.  In the U.S., Walmart has reached out to its global supply chain of over 100,000 businesses to help them evaluate and improve their environmental performance.

In the UK, meanwhile, Unilever is working with its customers to help them use its products in a more sustainable manner and Centreparcs has rolled out an incentive scheme to help employees save energy at home.  Other British firms, like Marks & Spencer and Sky, have gone "carbon neutral" taking immediate responsibility for 100% of their emissions* even while they work towards longer term footprint reductions.

We may be nearing a tipping point in which the business community as a whole embraces the need for an ambitious low-carbon transformation, but most of the action to date has been confined to a handful of global leaders, and primarily consumer facing brands. The emissions-intensive extractive industries have done significantly less to measure, report, reduce and offset their footprint beyond the bare minimum required by legislation, and efforts within other industry sectors remains spotty at best.

Let us call business-visionary-speed "fast", even as we acknowledge that there are not nearly enough companies in this category.

The Doha climate change negotiators reaffirmed this three-speed model of the world. COP 18 in Doha gave us a global commitment to extend the existing Kyoto Protocol mechanisms until a new global agreement is negotiated in 2015, and this new post-Kyoto agreement is expected to come into force no later than 2020. Encouragingly, some countries and negotiating blocs unilaterally increased their reduction targets. Distressingly, many of the biggest polluters - China, the U.S., Japan, Russia and Canada - have refused to commit to "Kyoto 2", but will continue to participate in negotiations. All of this is better than no effort to reach a comprehensive agreement at all, but it lacks the sense of urgency required to keep us within the 2 degree warming target required to stave off the worst climate change impacts.

While the global-level debates dragged on nearly 48 hours beyond the official deadline, individual country governments moved faster. Maldives pledged to become carbon-neutral by 2020, while Norway has made an unconditional 30% reduction pledge below business as usual over the same period. A host of companies, meanwhile, have pledged even greater reductions and a growing number are declaring themselves carbon-neutral every day.

Speaking in 2011, Christiana Figueres, Executive Secretary of the UNFCCC acknowledged the importance of the business community in this three-speed system, noting, "It is essential that from the outset we take into account the needs of the private sector, as, in the end, it will be the engine for action."

I think Secretary Figueres's observation captures the most important lesson from the recent Doha climate change conference. This three-speed system is a reality. We will - we must - continue working towards binding agreements that ensure every nation is doing its part to reduce global emissions levels. But the importance of that effort does not diminish the impact that pioneering nations can have when they set their own targets to drive emission reductions in advance of a global pact.  If anything, it is more important than ever for those countries to show leadership so that the rest of the international community can follow suit.

And the sometimes stuttering pace of national regulations does not dim the light shone by visionary corporate leaders, who go beyond compliance to achieve ambitious emission reductions in their operations, with their suppliers and customers, and through the use of offsets beyond even the boundaries of their own footprint.  Corporate leadership in our three-speed system can give country governments the courage to increase the scale of their ambition and encourage a faster transition to a low carbon world.