AA: My work in the built environment sector is focussed on the practical delivery of carbon reductions. This is affected by a number of factors including: the extremely long development cycles in planning, urban design, architecture and construction, the need to transform the working practices and business models of the commercial property sector, and the institutional inertia and steep learning curve related to any change in policy. Hence, I thought your analogy in the introduction to the Beyond Peak Carbon report that the government was like an architect and business was like a builder was rather an interesting one.
Sweden provides an interesting example. In the Western Harbour development in Malmö in Southern Sweden, the city authorities entered into a highly innovative dialogue process with the private sector developers to see how to implement a high quality, environmentally sustainable output. This was linked to the European Housing Expo 2001, and much of their wish-list influenced the UK Government’s Code for Sustainable Homes and the notion of creating zero-carbon housing as mandatory for new build in the UK by 2016. The Western Harbour is self-sufficient in renewable energy because it is in a very windy spot, and the city planners were able to creatively engage with the private sector about how to deliver high standards. Also, they were not subject to opposition about the presence of wind turbines, unlike in green and pleasant England.
The question I have here is to what extent is there a need to appreciate local variations in the type of government and the type of business? What is the significance of having large, global corporations entering into one type of partnership with, or lobbying of, government, versus a large number of small companies who will be similarly affected? Government – and local government – in England operates in a very different way from equivalents on the Continent or in Scandinavia. Often they have a far greater degree of municipal independence so can more easily achieve integrated programmes for sustainable developments.
DV: Anthony - thanks for your detailed comments. I’m interested in what your experience tells you about the shortcomings of universal solutions and the need for local government and companies to find local solutions as exemplified in Malmö. Linked to that is the diverse experience of many small and medium companies in contributing to low-carbon outcomes. What this makes me ask is how success stories in these areas can be disseminated – if that is not to fall into the trap of seeking to universalise a strictly local experience. I am sure there are principles and attitudes that underpin such successful projects that can be replicated.
AA: When it comes to identifying climate change as a long-term risk, we could perhaps take a slightly wider view considering some additional realistic forecasts. The new buzzword is to think about ‘sustainability’ in terms of ‘resilience’. Much has been made of the need for a wartime mentality, a Manhattan Project or Marshall Plan, etc. Studying the economic, legal and communications initiatives at the dawn of the Second World War – in England at least – may produce some value. Financial mechanisms were instigated, rationing was brought in and people were collectively mobilised. Looking ahead, resilience can include any number of natural disasters that could have a catastrophic impact on society. A major volcano eruption on the scale of Krakatoa in say the USA or Caribbean, the Canaries or the Far East, a major earthquake in Tokyo, or the flu pandemic, can all produce huge potential loss of life and physical property that would send huge socio-economic shockwaves.
Food supply-chains could collapse leading to famines and mass migrations, airlines and manufacturers could collapse, and in the aftermath society could change in fundamental ways. Should a global risk and response strategy highlight other likelihoods, since these are also likely and were they to occur could also have a major impact on emissions? Military strategists and industrialists are currently considering in detail the implications of any closure of the Straits of Hormuz, where 40% of the world’s oil is delivered. Might this prompt a rapid shift to a low carbon economy in a similar way that the oil shocks of the 1970s did?
DV: I agree with you that there are many ‘black swan’ possibilities out there apart from climate change – earthquakes, financial collapses, pandemics and so on. A UN global risk agency, fully bought into by the most powerful member states, would be an interesting concept. Again, political differences might prevent Russia, China, the US and EU collaborating on scenarios that might contemplate flashpoints and conflicts. I believe companies and professional service firms sometimes commission such research however and I wonder if there is scope for making that public as an advanced and very brave form of ‘CSR’?
AA: I think this would be excellent. The internet was built on the principle that ‘information wants to be free’ even if certain governments and businesses operate on the principle of its strict control. The US is very open in many respects on this. Here is one instance as relates to oil risks, as we were just discussing. The US govt is also looking at a bill to make US university research publicly available online. The UK is already ahead of this. Could business be encouraged to join in too?
Turning to the UN Copenhagen frameworks, there is debate happening now over whether or not we can have unilateral action by nations or businesses. We need an effective system for actually bringing emissions down and having a rapid shift to a low carbon high growth economy (or the low growth economy if that way inclined). The United Nations offers a multi-lateral framework, but organised on the basis of Nations.
This leads to a particular organisational context and regarding climate change a few different approaches have tried to test this context – especially in light of the status quo created by the Kyoto Treaty. The Contraction and Convergence model, posed to the UNFCCC prior to the creation of Kyoto provides a universally multi-lateral framework whereby the level to which emissions must contract is set by scientific consensus, and then a convergence of national emissions to a per capita average is set as a date in the future agreed by political consensus. However, in marked contrast to this is a new framework, dubbed Kyoto 2, outlined in a book with the same name by Oliver Tickell. This instead says we should not target the consumers of fossil fuels on a per person (or per organisation) per nation basis – this is immensely bureaucratic and comes far too far down the supply chain. Instead, the producers of hydrocarbons should be addressed as close to the source as possible, namely the oil and gas companies and the coal-mining firms. This proposal is enormously significant. The question I have from all of this is: to what extent will the Copenhagen process be able to break out of the existing institutional paradigm of the UN?
DV: I think we’re on the same page in believing that unilateral, voluntary action cannot deliver. There has to be a top-down agreement and framework. You point up a contrast between the contraction and convergence model and the Oliver Tickell model. I think contraction and convergence isn’t actually a policy but an outcome of policy – it leaves open how you get the C&C effect. Tickell seems to be offering a variation on carbon trading that involves applying the cap ‘upstream’ at oil refineries and so on. But this is already where the EU trading system bites. Big emitters from power plants to steel factories to refineries have to limit their emissions or buy extra allowances.
Personally I think the issue is more one of scale than shape. Carbon trading should work well but so far – like Kyoto – it’s only been tried on a rather tame basis. The caps have been too lenient. The ability to carry emissions allowances forward encourages procrastination. Too many allowances have been given away and not enough sold. As a result the carbon price is too low to act as a proper deterrent to emitting or a sufficient incentive to green investment. But even in Europe, emissions actually went down in 2008. This may have been mainly to do with recession but it might have been at least a little influenced by the slightly tougher caps of Phase II of the European Trading System.
I certainly think it’s worth pressing for a much tougher ETS post Copenhagen when, if there is a deal, the EU is committed to raising its targets and will need to lower the current proposed caps. The question then is whether they will be lowered to a level that generates a robust price - €40 upwards – that starts to really change behaviour and make CCS and other low-carbon technologies a good risk. I still think trading is better than tax because you can’t ignore a legal ceiling whereas you can choose to pay a tax and take the hit, as motorists do every day. Basically I don’t think trading has really been tried properly yet. But I think a tougher trading regime needs trying – soon. Then if trading collapses it will be time to move to mandates and regulation.
AA: Essentially, does the cap part of cap-and-trade represent a strong enough system of what is effectively rationing to reduce global emissions. The Kyoto2 framework argues that the ration should be applied to production not consumption as there are fewer players involved. Very interesting that you point out that this is what the European ETS already does – goes after the low hanging fruit of big industry first. And in the UK these are to be rolled out to large organisations, including government bodies via the Carbon Reduction Commitment (CRC) scheme. The question may be how swiftly these can be applied in other countries in order to move towards universal coverage.
In response to the report’s question: “Does business understand the true scale of what is likely to happen post-Copenhagen?”, I suspect the answer is very probably not, as business is still fundamentally short-termist. Even large, stable businesses can be unseated by disruptive technology or change in moral climate (such as the tobacco example you quote). Few economists predicted the credit crunch, but perhaps in the future there will be a change in understanding the fundamental chaos and instability inherent in systems as complex as financial markets.
Chris Rose (of the consultancy Campaign Strategy) has a model of behavioural psychology that rates people’s fundamental attitudes (and political opinions) into three camps: settlers, prospectors and pioneers. Crudely speaking, the settlers want things to stay as they are, the prospectors want to follow the herd if its making money, and the pioneers want to be ahead of the herd being creative even though it is a gamble whether they will make money.
DV: I think the early 2000s saw a lot of big businesses aspire to join a clear leading group in the ‘pioneer’ camp through progressive environmental and social approaches – such as energy efficiency, capacity building in developing countries or ‘bottom of the pyramid’ marketing. Around the time of the Johannesburg sustainability summit in 2002, there was a real willingness to work with governments to find ways in which businesses could contribute to social and environmental progress at the same time as making profits and creating value. Governments didn’t do enough to take advantage of that attitude and I fear a high water mark has passed in terms of companies’ awareness of their role in society. A new effort needs to be made to stake out what leadership looks like and challenge companies to demonstrate it.
AA: Certainly a strong policy system is needed, but of course if it is prescriptive without solutions being readily available it will be resisted. A key example I always think of is the introduction of the mobile phone. This has had a transformative effect on societies around the globe, reducing poverty in African fishing villages etc. Yet there was no need to produce a UN legislation to achieve this as a social end. International standards must have been agreed, but fundamentally, there was a technology that clearly people were going to want. Business just got on with it. Over 20 years it went from being a niche product for the elite to being affordable to all. It could be that electric cars being cheaper to run than petrol cars will fly off the shelves. Their price could fall to the point that overall mobility increases substantially, especially in the developing world.
DV: I have often likened the cleantech movement to the telecoms / internet revolution. But I think the analogy only goes so far. The reason there was no need for UN legislation for the mobile was that people were prepared to pay for it – once the price came down far enough. Unlike a mobile, currently hardly anyone would pay for a solar panel, wind turbine, litre of bio-fuel or carbon capture power plant on economic grounds alone, except in very specialised circumstances. Sadly there are currently cheaper and dirtier alternatives to nearly all green energy products. Electric cars are making a lot of running though. It will be terrific if it proves commercially viable for companies to provide both cars and charging infrastructure.
AA: I think there is still a lot of excellent technological evolution the impact of which will be hard for us to imagine at present. Moore’s law in computing is an important model, which if an equivalent exists in clean tech such as solar panels will produce startling results. Personally, everyone is going to want a laptop or mobile that can be recharged from a solar cell built into its case, as all you need is to leave it in the sun to keep it going. Rising energy demand for graphics chips etc. may work against this, but this product must be technologically possible one day. Flexible solar cells are already on the way, and the applications will be very interesting. Similarly, the benefits of solar are so much greater the closer you get to the equator, so the Middle East, Africa, India, Central America etc. will have a very different potential for solar than up here in the often damp and dark countries of Northern Europe.
My personal suggestion for a policy is that we should not be moving towards an 80% cut in 1990 levels by 2050. By leaving 20% of the 1990 amount still in circulation then, everyone is left able to negotiate whether it might be them still in business. Instead, it would be much more powerful if we just said we are going to have a carbon switch off date. The parallel is with the digital switch over date for analogue TV. They set a date, then industry simply worked towards it. Perhaps, given the likely need to reduce emissions from current levels to 350 ppmv, a carbon switch off date in say 2025, or 15 years from now, would mean knowing that after that all coal and oil facilities would have to be switched off. This gets around the whole issue of carbon pricing.
A guaranteed increase in the price of carbon such that it no longer becomes economical to mine hydrocarbons would produce the result of decarbonisation (if the system could be put in place and then policed effectively.) But adding to the price of oil is not in itself going to stop people buying it – especially if there are no alternatives – it is just a way of distorting a market in favour of alternatives.
The example of the slave trade is taken as an analogy for our current fossil fuel dependency. A key political campaign debate in Bristol around the time of abolition put two candidates head to head on this issue. One argued that abolition would massively damage the local economy, the other that there was a moral issue at stake. Having abolished slavery, alternative solutions became viable. But imagine if today’s cap and trade system had been applied then. Plantation owners would be given a right to own a certain number of slaves, but with the understanding that the number they were allowed would decline over time. If they could decline faster they could sell the difference in the number of slaves they had to others who had exceeded their targets. Perhaps they could even sell their permits such that other people could buy more slaves. This analogy could be extended ad absurdum, but the point is that then the approach was ‘zero-tolerance’. A current climate campaign is dubbed ‘350’, arguing the need to get to 350ppmv (i.e. a subtraction on current levels, not just a cut to meet stabilisation at a higher level of 450ppmv). Science - and the precautionary principle - are jeopardised by the slow rate of the IPCC process and its use of quantitative modelling. (For a major critique of this method see Pilkey (2007) Useless Arithmetic: Why Environmental Scientists Can't Predict the Future and Lovelock’s most recent book).
This has resulted in a failure to take into account the feedback systems now known to be at work, and underestimated the impacts of issues such as sea-level rise. The IPCC forecasts are now feeding into national policy frameworks, meaning that the inertia spreads outwards, as the response to the problem is based on an under-estimate of the severity of the problem and its likely impact on infrastructure. The recent Met Office report also tries to bring a fresh assessment of the dangers to the table.
DV: I think the carbon switch off is an interesting idea. The UK is requiring all homes to be zero-carbon by 2016 so I suppose one could envisage also requiring all power to be zero-carbon by a certain date, transport likewise. But how would power and transport companies get the resources to invest sufficiently in the huge and expensive infrastructure of zero-carbon energy in advance of the deadline? If there wasn’t enough private investment, energy would need to come from something like a massive taxpayer subsidised state company which would need to build huge capacity in wind, CCS, electric cars etc. Not a bad thought actually as such a company might rapidly achieve the scale economies and technological progress that has eluded the green economy so far.
But I suppose the government preference now is to bring the private sector into that position over time through trading, mandates etc. The problem I keep coming back to is that so far governments have simply lacked the political determination to take tough enough action in terms of caps, targets etc to make low carbon solutions attractive. I also wonder about the absolutism of a switch off. Can carbon emissions be likened to slavery as a moral evil? I sympathise with the idea that allowing 20% of them to remain precipitates a rush to claim that residue among different countries and industries. However, CO2 is natural, as are hydrocarbons, and I don’t see a tolerable volume of them as a sin. Currently over 80% of our energy comes from fossil fuels and around 10% from nuclear. The other low/no carbon options (such as hydro and the burning of wood and other biomass in poor countries) amount to less than 10% and renewables account for only 1%.
On the other hand, I resist the idea that we should only do what is seen as ‘politically possible’ because that puts the definition of what’s possible into the political sphere when it belongs in the scientific one. But the current science suggests that we could keep 10-20% fossil fuels without catastrophe and I think holding out that possibility keeps the big emitters on board – both countries and companies. It may be that when feedback science is factored in – and its potential significance is a major theme in our report - then 20% is absurdly high. But I don’t think we can immediately a) factor in the feedbacks and b) win support for 0% carbon. Politicians who want to put these measures in place are swimming in difficult waters. Some of the public support them but a UK survey recently showed growing scepticism. I think stage one has to be to put in place genuinely tough anti-carbon measures at the same time as explaining much better to taxpayers and customers why they are being asked to pay the price.
AA: I think Professor David MacKay’s suggestion that burning gas for heating should be ‘a thermodynamic crime’ is an interesting one. Environmental lawyers are looking into the ethical considerations of the rights of future generations too. The question is what is a tolerable volume? At present what is certain is that constantly rising levels must stop, and carbon pollution should be brought under control and start falling on a global level within the next ten years. I think to get there we can learn from the story of the 1970s and 80s. At the beginning of the decade something like only 25% of homes in Britain had central heating. Now they all do. But the 1970s energy crisis prompted countries like Denmark to urgently reduce their dependence on energy imports.
It took them a decade or two, but now Copenhagen is one of the greenest cities on earth. They got the cars out of the city centre so it could become pedestrian and cycle friendly. They invented the cargo-cycle (
www.christianiabikes.com) so you can get the weekly shop in or drop the kids off to school by bike. They’ve put ultra-efficient combined heat and power plants into the city and built wind turbines off shore. To return to the first point made, they have achieved this in part because it was politically viable and economically sensible.
Thank you for a very useful and enjoyable discussion. In summary, I think five points have emerged and it would be great to talk more to see how these could be taken forward.
The points are:
1: Communication - the need to share experience of delivery
2: Forecasting risk - resilience to threats both climate related and others
3: Universal compliance - importance of a complete solution
4: Business Leadership - commercial viability / basic desirability of solutions
5: Science-led policy - What science says is needed not what is politically palatable.