Policy on climate change is starting to resemble an eBay auction. Nothing happens for ages. Then there are a few speculative offers - and the whole thing ends in a frantic flurry of bids.

Instead of cash bids, the offers are targets, specifically percentage reductions in greenhouse gas (GHG) emissions. And the auction will come to a conclusion in December at the UN climate summit in Copenhagen. 

With its publication of roadmaps for meeting its targets, the UK is becoming a pace-setter in this process, revealing both targets and plans to reach them by rewarding low-carbon energy and penalising continuing greenhouse gas (GHG) emissions.  

Its plans follow the G8 summit where leaders raised the stakes by agreeing to cut the developed world’s emissions 80% by 2050 – an advance on the previous agreement to cut total global emissions by 50%.

The UK government deserves credit for focusing on the nearer term - what needs to be done by 2020. After all, it doesn’t take much political courage to set a target for 2050, when many of today’s world leaders will have themselves become carbon emissions. The tough call is what to promise for the next decade.  

The EU has bitten that bullet by setting a target of a 20% cut on 1990 levels by 2020 and offering to raise it to 30% if there is a deal in Copenhagen and others make comparable commitments. The UK already raised its target from 26% to 34% in the 2009 Budget. Not satisfied with that, Lord Turner’s Climate Change Committee is urging a rise to 42% if there is a deal in Copenhagen.

For businesses contemplating future investments, say in power stations or heat equipment for manufacturing, this auction can’t end soon enough. Companies want a clear idea of future policies so that they can calculate whether a project such as a wind farm or a power plant with carbon capture technology is going to be competitive. And the risk is that targets will keep moving, even after Copenhagen.
 
When targets keep shifting, planning investments is like trying to play chess on a bouncy castle. It’s impossible to work out whether a clean energy investment will pay off or turn out to be a white elephant. And without strong signals to go green, companies will be tempted to stick with fossil fuels and lock in decades of high emissions.  China’s building of a coal-fired power station a week shows how strong the pull of ‘business as usual’ can be.
 
So how can the targets be stabilised at levels that can tackle global warming and give business the stable investment framework it craves?  First politicians need to face up fully to what the science is telling them today. Second they need to anticipate what it may be saying tomorrow.

There has been an element of denial in the political response to the 2007 report from the Intergovernmental Panel on Climate Change (IPCC). The headline has been that global emissions need to be halved by 2050 to keep the global temperature rise on pre-industrial times to two degrees centigrade, widely seen as the tolerable threshold. Less widely reported has been the much more challenging finding that to meet the same goal, annual global GHG emissions would need to reach a peak in 2015.

This is extraordinarily ambitious. Bringing emissions to a peak by 2015, or even 2020, means reversing the upwards trend of two centuries in a decade or less – maximising energy savings, curbing deforestation and starting to end our dependence on fossil fuels by scaling up low-carbon energy – wind, solar, biomass – and for the future carbon capture, and, inevitably, some nuclear power. The IPCC says it means all developed countries should be aiming at cuts in emissions of 25-40% on 1990 levels by 2020 with significant cuts in emerging economies too. Currently the UK’s target is in that region. The EU’s may get there after Copenhagen. But the US, Japan and China are well behind schedule.  

No wonder politicians have omitted to discuss this aspect of the IPCC’s findings. At one point last year Tony Blair spoke up to endorse the 2015 peak date. But after a tour of key governments, he produced a report that discussed a peak around 2020. 2020 may be the best we can do, but the IPCC says that runs the risk of temperatures rising nearly three degrees on the pre-industrial age.

So political leaders worldwide need to stop talking about 2050 and focus on the next decade and what their scientific advisers are saying limiting the temperature rise to two degrees really demands. That way there is at least a chance that the right targets may be adopted and businesses will be able invest with confidence in green products and services.

But there is a still deeper issue to fix. Targets shift because science progresses. But the process by which the IPCC assesses science means there can be a time lag of 10 years or more between scientists making discoveries and those findings being reflected in policy.

And today, the science is getting scarier. Researchers are focusing not only on the direct impact of GHGs, but the impacts of the impacts – so-called ‘feedbacks’. These include the way that warming ice loses its reflectivity and melts faster and the way that melting tundra releases stored methane – a seriously powerful GHG. 

Scientists carrying out such research say it calls for immediate action. But they are part of a system that doesn’t do immediate. Today’s science will be assimilated into the IPCC’s next report - in 2014. By that time the judgement may be that emissions should have peaked several years in the past.   The danger is that pressure to factor in such science will grow after Copenhagen and the targets will start shifting yet again. 
 
So as well as looking unblinkingly at the current science, politicians need to think about whether they need a ‘rapid response’ system to assess new research in real time.

And while they are at it, why not establish larger, better staffed, higher profile organisations to co-ordinate the fight against global warming? Currently the core teams of the IPCC and the UN Framework Convention on Climate Change (UNFCCC), which runs the global talks, together operate on less than $50m a year, roughly what GE spends on research and development in a week.

Business leaders – if they really want the stable investment framework they’ve been calling for – should be aware of this issue, lobbying for it to be fixed, and perhaps even offering help. For a fraction of their existing capital investments, they could work with the UN and governments to transform the world’s response to climate change and write themselves into the history books as companies that showed what ‘corporate responsibility’ really meant.

David Vigar, Climate Change Adviser to Tomorrow’s Company

 

 

You can find the Tomorrow's Company report, Tomorrow's Climate - beyond peak carbon, authored by David, using this link.