Carbon is Key
Financial Times, Friday May 30 2008
By Sir David King
The scientific message about human-induced climate change is both unequivocal and urgent. Following last year's reports by the Intergovernmental Panel on Climate Change, further studies have been published that show beyond all reasonable doubt that humans have already caused significant changes to the climate. Science also tells us that we have very little time left to put on the brakes before the risks become catastrophic.
Already, through deforestation and our use of fossil fuels, we have reached levels of carbon dioxide that the earth has not experienced since the cycle of the ice ages began some 3m years ago. The good news is that we seem to have cancelled the next ice age. The bad news is that we are heading for an earth that is hotter, with sea levels higher than humans have experienced.
Climate change is belatedly receiving the attention it deserves, but we cannot afford to count on a particularly hot summer or the high price of oil to drive change. A recent article in Nature magazine suggested that a natural cooling cycle over the next decade might mask the world's warming, lulling us into a false sense of safety. If the article is right, in the decade after that, the natural cycle will reinforce global warming and temperatures will resume the inexorable upward trend caused by increasing levels of greenhouse gases in the atmosphere. By then, if we have done nothing to kick the carbon habit, it might well be too late.
Decarbonising our economies at the scale and pace that we need is doable. But it will require a massive and immediate programme of action. In The Hot Topic, Gabrielle Walker and I outline what is needed. First, by the end of 2009, when the parties to the international climate change treaty will meet in Copenhagen, governments need to have reached an agreement about their commitments beyond 2012.
This agreement must send out a strong and stable carbon price signal, including specific trajectories, country by country. It should allow poorer countries to meet their development needs, while still providing a global cap and a trade emissions market. It will also need to create a mechanism for rich countries to provide assistance to the developing world, both to enable them to adapt to the inevitable changes, and to help them move to carbon-free technologies, "leapfrogging" the carbon-hungry development of the industrialised world.
Public opinion will be a strong driver in achieving this. Australians voted their prime minister out of office at least partly because he refused to take climate change seriously, and popular opinion in the US has forced all three presidential candidates to adopt a consistent call for change.
Perhaps even more important will be growing awareness among governments of the impacts on their countries. For instance, the Chinese government is highly aware of the potential damage to cities such as Shanghai from rising sea levels. To aid this process, science must provide more information on likely regional impacts and on how those regions can adapt.
The private sector will also play a vital role, which is why my new institute, the Smith School at Oxford, covers enterprise and the environment in equal measure. In this regard, there are further grounds for optimism. For instance, the market response to carbon cap and trade in Europe has been very strong, with some $50bn in trading last year. Following the imposition of new, more realistic, emissions caps, country by country, the price of carbon for the next phase of the European Trading Scheme is holding up well. And sophisticated processes are developing in the City of London that involve credit risk assessment, equities and dealing with clients who generate carbon credits.
Also, the International Energy Authority predicts that $30,000bn will be invested in energy technology in the next 20 years, and many companies see this as an opportunity, not a risk. Innovation in technology will pay off as global regulation drives out high-carbon technologies over the next few decades. For instance, Alstrom, Siemens and ABB have already moved into energy efficiency or low-carbon technologies in order to attract funding.
The resurgence of nuclear power will be part of the answer. The decision by the UK government in January to give the green light to new nuclear stations will unblock similar decisions in other countries.
And the new generation of power stations, with their improved efficiency, reduced waste and passive "walk-away" safety features will avoid many of the problems of the past.
However, in the past six months we have also seen several steps backwards. Earlier this year, the US Department of Energy withdrew from the public-private partnership FutureGen, which was to have created pilot energy plants to capture carbon dioxide and store it safely underground.
BP pulled the plug on a similar scheme at Peterhead, Scotland, though it is proceeding with projects in California and Abu Dhabi. Meanwhile, Shell has just decided to cancel its offshore wind project in Kent, south-east England.
This sort of backsliding, while disappointing, is a reflection of the overwhelming importance of a strong carbon price signal. Capturing CO2 will always be more expensive than letting the gas simply billow into the air. The message to politicians is that companies naturally seek profits, and low-carbon technologies will never be profitable without a proper price on carbon.
But I also have a warning for companies that engage in "greenwashing" - throwing in a little investment in order to gain the moral high ground and attract customers. The public, politicians and investors are becoming ever more sophisticated about climate change. As the world realises the scale and urgency of the problem, greenwashing will not be enough. Low-carbon thinking needs to be embedded in every cell of a company's body. Just as everything you do burns energy, so everything you do from now on must reflect the low-carbon imperative. The market depends on it - and so does the planet.
Sir David King is former chief scientific adviser to the UK government and director of the Smith School for Enterprise and the Environment, Oxford. He is co-author of The Hot Topic.
Source: http://us.ft.com/ftgateway/superpage.ft?news_id=fto053020081008222357
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