Beyond Copenhagen

For the last few months, everyone engaged in international climate policy has been trying to work out exactly what happened in Copenhagen, why, and what it means or doesn’t mean ahead of the next big climate conference in Mexico this December. The debate has been particularly lively in the business community which, in 2009, mobilised like never before in support of an international, legally binding climate framework.

I led the drafting process on one initiative, the Copenhagen Communiqué, and was surprised by the strength of feeling among business leaders on the importance of reaching a deal. ‘Economic development will not be stabilised in the longer term unless the climate is stabilised. It is critical that we exit this recession in a way that lays the foundations for low-carbon growth and avoids locking us into a high-carbon future,’ we wrote in the document. In the run-up to Copenhagen this was endorsed by over 950 companies from more than 60 countries, ranging from the world’s largest businesses and best known brands to small and medium sized enterprises.

If a sufficiently ambitious, effective and globally equitable deal could be agreed, the Communiqué argued, it would create the conditions for transformational change in our global economy. Such an agreement would deliver the economic signals that companies need if they are to invest billions of dollars in low-carbon products, services, technologies and infrastructure.

Fine words, but no such deal came out of Copenhagen. So, where does all this leave the business community?

“The trouble with the whole climate policy area post-Copenhagen is that confidence in the process is shot to pieces,” says Jeremy Leggett, founder and executive chairman of Solarcentury, Britain’s leading solar energy company. “What business should do is forget about the problems politicians and governments are facing and get going on the low-carbon agenda themselves.” This is a sentiment I have heard many times since last December.

“There is no question that companies in our network saw Copenhagen as a bit of a letdown,” says US-based Anne Kelly, director of Business for Innovative Climate & Energy Policy [BICEP], whose members include Levi Strauss, Nike, Starbucks, Timberland, Sun Microsystems, eBay and Gap.

“So many people in so many companies worked hard to ensure their global brands engaged in advocacy and they were left disappointed. But those from the corporate sector who actually went to Copenhagen came away with a much deeper appreciation of the complexities involved, especially on the divide between the rich and poor countries. They left with a lot more sympathy for the problems faced by the negotiators and politicians trying to secure a long lasting agreement, and respect that at least we ended up with something,” adds Kelly.

“We have to get beyond seeing Copenhagen as a disappointment,” says James Smith, chairman of Shell UK. Smith offers a more optimistic perspective. He points to the content of the Copenhagen Accord. This two-and-a-half page statement was agreed in the final hours of the Copenhagen conference, first by the United States and Brazil, South Africa, India and China (known in the jargon as the ‘BASIC’ countries). It was then endorsed by more than a hundred other countries in the days and months that followed.

“Copenhagen was messy and chaotic, but we should recognise that it resulted in some significant outcomes,” says Smith. “For the first time, the US, China and all the major economies, representing more than 80% of global carbon emissions, came together and agreed to take verifiable action to reduce those emissions with the objective of keeping average global temperature rise to below 2°C. That’s significant.”

To many people’s surprise, the Copenhagen Accord also offered headline agreement on the financial commitments that the richer countries need to make to enable the poorer countries to tackle climate change (US$30 billion [£20bn] between 2010 and 2012, rising to US$100 billion [£65bn] per annum by 2020), and promised to establish a Copenhagen Green Climate Fund to channel much of this finance. There were also commitments to mobilise money to reduce emissions from deforestation (thought to represent around 20% of global emissions).

“Nevertheless, this is a dangerous period,” warns Smith, “because the process is now not clear. There is a small group of opinion formers out there who, for whatever reason, don’t want to see progress on this agenda and – at times like this – their voice gets louder. So it is critically important that the business community keeps saying how it still believes in the science of climate change, and in the economic rationale for action.”

‘Not clear’ is an understatement. While the Copenhagen Accord has been endorsed by all major economies, it has so far been rejected by a significant handful of countries that are members of the UN Climate Convention which, as a result, has formally decided only to ‘take note’ of the document, a phrase everyone agrees is conveniently ambiguous. Given that the Convention already contains two separate ‘negotiating tracks’, one on the future of the Kyoto Protocol (the current existing international framework) and one on possible new policy measures, this raises the prospect of three separate but simultaneous streams of negotiation taking place at the UN Climate Conference in Mexico, with no idea as to when or whether they will ever come back together again into a single new global agreement.

There remains a strong desire within the business community to see such an agreement, however. “What’s tantalising about the climate agenda is that most of the technologies we need to move to a low-carbon future already exist,” explains Smith. “They are imperfect, they have shortcomings, but the time has come to improve them as needed, move them out of the lab and start deploying them at industrial scale.

“It is only by doing this that technology will get to where it needs to be, but business needs to be able to recover the costs of doing so. Businesses such as Shell can spend hundreds of millions in the lab developing new technologies, but to spend the same amount on deployment of projects with no economic return is not practicable. So we need to change the terms of trade for energy so the costs of deployment can be recovered in the marketplace. Market competition will then drive these costs down. Changing the terms of trade for energy means things like a price on carbon emissions and standards for low-carbon energy. Without such market levers, industry is ready to go but stuck on the starting blocks.”

Kelly agrees. “In the US, there are plenty of small-scale entrepreneurs working to build the low-carbon economy and there is a lot of investment in clean tech, but nowhere near what would happen if the right
market signals and incentives were put in place.”

For this year, most of her attention has shifted back to push climate legislation through Congress. “We recognise that in the US we have a lot of homework to do. It’s hard for us to push for an international deal when we still don’t have our own house in order. If we can get something passed this year, then we can go to Mexico and re-engage much more effectively in the international policy debate.”

Leggett at Solarcentury believes a global deal is still needed and says there is a “strong balance of probabilities that the world will get it together at some point”. But he also believes the time has come for business to start deploying different arguments and to focus on demonstrating what is possible. “I’m now focused on making the clean-tech revolution happen. There is a real head of steam building behind these survival technologies, such as solar energy, because of their many attributes – not all to do with the climate crisis.”

Earlier this year, Leggett was one of five high-profile British businessmen (another was Sir Richard Branson) to put their names to a report warning of an imminent ‘oil crunch’.

‘As we reach maximum oil extraction rates, the era of cheap oil is behind us,’ they warned in the foreword. ‘We must plan for a world in which oil prices are likely to be both higher and more volatile and where oil price shocks have the potential to destabilise economic, political and social activity.’

“If clean tech megastars can outperform the market over the next few years as these shocks hit,” says Leggett, “it will show the way to other companies, with or without an international climate agreement.”

There is certainly a sense within the business community that the time has now come to ‘show the way’, including to the policy makers. After the disappointment of Copenhagen, business is starting to mobilise again but, this time, with a greater emphasis on the new low-carbon technologies and practices that are waiting in the wings, ready to take centre stage if a comprehensive international agreement can be put in place.

“There is so much that companies are already doing,” says Kelly, “whether it’s investing in energy efficiency, renewable energy, or measuring and reducing their carbon footprint. But the thing to remember is that the law, whether national or international, is usually a latecomer. It’s often the product of a consensus of thinking and action that has evolved beforehand, and which then helps shape the legal framework needed for the longer term. And climate change is no different to any other issue.”

Craig Bennett is deputy director at the University of Cambridge Programme for Sustainability Leadership and runs The Prince of Wales’s Corporate Leaders Group on Climate Change

Visit copenhagencommunique.com for more information on the Copenhagen Communiqué