IF THE world is to escape the worst of climate change it will probably be because business can see a way of making more money out of cleaning up than staying dirty. Some people may be uncomfortable with that idea, but it is true, nonetheless. So the real test of the Bali climate conference, which ended in air-conditioned high drama last weekend, is did it make future green profits more likely? On balance the answer has to be yes.
Right now, energy and manufacturing companies are contemplating billion-dollar green investments on the assumption that emitting carbon in a world of ever-tightening emissions targets will become increasingly costly. Likewise, finance houses and traders are licking their lips at the profits they hope to make from trading in carbon offsets, futures, derivatives and much else.
For all their bravado about risk-taking, what industrialists and traders crave most is certainty. That is why hundreds of them issued pleas even before Bali for early and ambitious targets for cutting carbon emissions. A report from management consultants McKinsey echoes the point. Many industrialists explicitly backed a European Union target for industrialised countries to cut greenhouse gas emissions by 25 to 40 per cent from their 1990 levels by 2020. As the biggest and smartest beasts in the commercial jungle, they are convinced that such cuts are needed and that they can profit from them.
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But a handful of governments, headed by the US, vetoed the plan and decided that enterprise would best be served by continued uncertainty. That was bad for the climate and bad for business. A clearer idea now of what is likely to emerge from negotiations for a successor to the Kyoto protocol would have unlocked more dollars. But at least there is a process under way, and where the talk in Kyoto a decade ago was of 5 per cent cuts, at Bali the figure was 50 per cent.
Historians of the climate wars will one day take as a case study the Bush administration鈥檚 retreat into a cul-de-sac of carbon protectionism (see 鈥淩oadmap to where? Analysis on the climate changes talks in Bali鈥�). Not least because it sits so uncomfortably with the many good things that the administration is doing to help green technologies leap from lab to marketplace. Witness the strange spectacle in Bali of US negotiator Jim Connaughton shoring up Bush鈥檚 opposition to an international emissions regime one minute, only to trumpet the next that the US is investing heavily in technology to turn cellulose into ethanol, which should see 15 per cent of US cars running on biofuels by 2017.
The US is not just pioneering green tech, either. It also has a strong argument when it points out how Europe鈥檚 often slavish adherence to national targets will be exploited by some industries. What is the point, Connaughton asked, of targets that drive energy-intensive industries like steel to countries with no emissions targets and less energy-efficient plants? How much better to push for greener standards to be adopted worldwide. Yet, while the US negotiators are undeniably right on this, they then undermined incentives for developing nations to join these initiatives.
In truth, the Bush administration has simply been left behind by the pace of change. We now live in a world where carbon markets are worth tens of billions of dollars a year. There is a real danger that the market monster now being created will start to serve its own needs rather than that of cutting carbon emissions. But with comprehensive controls on carbon movements into and out of the atmosphere, policed with good science, the market is capable of delivering the technologies needed for the swingeing cuts in emissions we now know to be essential.
鈥淭he market can deliver the technologies to make swingeing cuts in emissions we now know to be essential鈥�
Bali may not have provided as many signals for business to get busy on carbon as had been hoped. But with the US, China, Russia, India and other key nations all embracing the new scientific urgency and making promises that seemed highly unlikely even a year ago, there are grounds for hope.
In terms of rhetoric, the event will probably be remembered for the delegate from Papua New Guinea who told the US delegation, at a moment of impasse, that if they did not want to lead they should get out of the way. And they did, withdrawing a conference-wrecking veto. A dramatist might portray that as a moment when the world鈥檚 future hung in the balance. Maybe it did.
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