Can a divided world tackle global warming in 2005?

By Fiona Harvey

Financial Times

Published: December 31 2004

Polar bears could be extinct by the end of this century, scientists predict, if nothing is done to halt global climate change. Already, the Arctic ice sheet is half the thickness of 30 years agoand 10 per cent less extensive, according to the Arctic Climate Impact Assessment, the work of more than 250 scientists over four years. They blame global warming, caused by the burning of fossil fuels, and warn of consequences all over the world if ice covering solid ground melts and sea levels rise.

Warnings such as these and fears that the heat waves, floods and hurricanes of last year could have been early consequences of global warming have prompted Tony Blair, the British prime minister, to make tackling climate change a priority for world leaders in the coming year.

"Our effect on the environment, and in particular on climate change, is large and growing . . . We cannot afford to ignore the warnings," Mr Blair told business leaders in September when he announced plans to put climate change high on the agenda during Britain's tenure as chairman of the Group of Eight leading industrial nations from January. Mr Blair will also make the issue one of the main themes of the UK's six-month presidency of the European Union from July 2005.

Mr Blair plans to highlight global warming by holding an international science conference in February; as well as a conference in March bringing together, for the first time, environment and development ministers for G8 countries; and by making it a point for discussion at the G8 summit in July. This will represent, according to the UK government, an unprecedented international effort to focus on a strategy for tackling climate change.

"What we want to do is explore what common ground we can find among G8 members about some of the issues that are relevant to climate change. We hope to have constructive discussions," says Margaret Beckett, Britain's environment secretary.

Even without Britain's interjection, 2005 could be a landmark year for attempts to deal with global warming. The European Union's scheme for trading in greenhouse gas emissions begins in January (see below) and the Kyoto protocol will come into force in February, binding most industrialised countries to reduce their emissions to below the levels of 1990.

Sir David King, the British government's chief scientific adviser, has called climate change "the most severe problem that we are facing today - more serious even than the threat of terrorism". He has said repeatedly that failure to address the problem will result in catastrophe.

His strong words opened up the faultlines that lie beneath the climate change debate.

Mr Blair's pledge to push the issue up the G8 agenda surprised observers around the world, particularly those within the US political establishment. That Mr Blair should stake the success of Britain's leadership of the G8 and EU on an environmental issue puzzled advisers to the US president George W. Bush, who has resisted international action on climate change in the form of the UN-brokered Kyoto protocol. "No one can figure out why he's making it such a big deal," said one US official, who declined to be named. Mr Blair's attempts to raise the matter with Mr Bush are believed to have met a cool response, which does not bode well for his agenda.

Climate change arouses passionate opinions not just among politicians but also environmental pressure groups, business leaders, developing nations and anti-poverty campaigners. The issue divides scientists, politicians and public opinion: a poll by Mori, the market research company, published in November found that nearly two-thirds of the British public wanted political leaders to take urgent action on climate change, but fewer than half of US adults (46 per cent) agreed, saying "no major action should be taken until we know more".

Despite these divisions and the Kyoto protocol's bumpy ride from its beginnings at the Rio earth summit in 1992, and the opposition it has faced from the US and, until only recently, from Russia, the treaty has been welcomed. Kofi Annan, secretary general of the United Nations, said: "This is a historic step forward in the world's efforts to combat a truly global threat. Businesses that have been exploring the realm of green technology now have a strong signal about the market viability of their products and services. And the financial community and insurance industry, which have been trying to put a price on the risks associated with climate change, now have a stronger basis for their decision-making."

But even as the Kyoto protocol stands at last on the brink of implementation, the landmark environmental treaty looks in danger of failing to live up to expectations. The US, the world's biggest emitter of carbon dioxide, has refused to ratify the treaty under Mr Bush. But perhaps just as worrying for proponents of the treaty is the growing reluctance of developing countries to take on responsibilities for cutting their carbon emissions. Developing countries are not required to make cuts under the first stage of the treaty, which expires in 2012. The stages beyond that have yet to be negotiated and larger developing countries may be required to curb their emissions too.

At the latest conference on the treaty earlier this month in Buenos Aires, developing countries such as China, India and Brazil used their muscle to resist any extension of the protocol's provisions to limit their carbon emissions. They argue that such limitations would limit their growth as fossil fuels are the basis for most of their industrial growth.

Nestor Kirchner, president of Argentina, accused richer countries of double standards in insisting on debt repayments while refusing to acknowledge their own "environmental debt" to poorer countries, which would suffer the worst effects of climate change.

The US has also resisted any extensions to Kyoto's provisions, in opposing attempts to open discussions on future stages of the treaty beyond 2012. Though she insisted that the US had long-term plans to counter climate change, Paula Dobriansky, under secretary of state for global affairs, said: "It would be premature. I'm focused on what is, not what if."

A combination of the US and some large developing nations could pose serious problems for the treaty's supporters, chiefly the EU, Japan, Canada and some smaller developing nations. Resistance from larger developing nations will weigh even more heavily as their carbon emissions grow. A report at the conference from the Pew Centre on Climate Change, a US-based research organisation, found that China was the second biggest emitter of carbon in 2000, responsible for 14.8 per cent of the world's emissions to the US's 20.6 per cent. The EU accounted for 14 per cent, while India produced 5.5 per cent of worldwide emissions and Brazil 2.5 per cent.

Global concerns about climate change have been growing for decades. The global temperature is thought to have increased by 0.6 degrees Celsius or 1 degree Fahrenheit in the course of the 20th century. Most of this has been attributed to human effects, such as the burning of fossil fuels, increased agriculture and the decline of the earth's natural "carbon sinks" in the form of forests. Recent studies have added weight to predictions that global warming could accelerate.

Monitoring from the Mauna Loa observatory in Hawaii revealed that the amount of carbon dioxide in the atmosphere is rising faster than ever: it has been increasing each year by about 1.5 parts per million for several decades, but in 2002 and 2003 increased by more than 2ppm.

Some of the effects of global climate change may already have been felt. The heatwave that struck Europe last summer, claiming thousands of lives, has been blamed on climate change. Flooding in areas from Britain's west coast to Bangladesh has also been blamed on climate change, as have changes to wildlife in north America.

Estimates put the economic costs of global warming at $150bn a year in 10 years' time. This would translate into insurance claims of up to $40bn a year.

But the science behind predictions of global warming has come under fierce attack. Sceptical scientists have brought out their own reports to show that though some regions are warming, others appear to be cooling. They also argue that the world experienced many periods of warming in the past much greater than those we are witnessing today. Such warming allowed vineyards to flourish in England in the Middle Ages. Malaria affected northern Europe and cattle grazed in Viking settlements in Greenland that were subsequently abandoned as the "little ice age" took effect in the 14th century, lasting until the 19th. Any increase in global temperatures could therefore be the result of a natural variation in the earth's climate, rather than the effect of any human activity. Sceptics also attack the scientists whose computer models predict dangerous levels of global warming.

Others contend that although global warming is happening, there is little we can do about it and therefore we should concentrate our efforts instead on more pressing issues, such as the HIV epidemic and poverty. The champions of this view are the Copenhagen Consensus, a group of economists led by Bjorn Lomborg, professor of political science at Aarhus University in Denmark. He says: "We can only do very little about global warming . . . If we spend a large amount of money on global warming, we are taking away money that could be spent elsewhere to do much more good."

In the US, the debate splits along broadly political lines - Republicans tend to argue that anthropogenic climate change does not exist or is not a problem, while Democrats take the opposing view. In Europe, the faultlines are different, as climate change scepticism is rarer. US political observers are often surprised by the support that the UK's opposition Conservative party shows for policies tackling climate change. American business organisations also tend to side with the sceptics. Again, this is not the case in the UK, where the CBI employer's organisation has welcomed government action on emissions reduction.

Climate change sceptics have substantial influence within the Bush administration. Washington's official line is that it is taking steps to tackle climate change - for instance, by spending more than $5bn annually on research and new technology - but that more scientific evidence is needed to discover whether climate change is in fact a problem.

The US is funding the earth observation satellite system. Vice-Admiral Conrad Lautenbacher, administrator of the US National Oceanic and Atmospheric Administration, says: "We will have more compatible interpretations of the data [on climate change] than we have today." This will feed into the "science-based climate change strategy" which Mr Bush espouses. However, it is likely to take at least 10 years to put the system in place.

Critics of this stance argue that is simply a stalling tactic, as one can go on collecting scientific evidence indefinitely.

Meanwhile, the majority of scientific opinion asserts that global warming as a man-made phenomenon is taking place, and does represent a serious threat to the future way of life of large swathes of humanity.

If Mr Blair is serious about taking on climate change in 2005, he will face a huge political challenge. His success or failure could make this the decisive year for human action on climate change.

EU carbon trading a possible blueprint

Climate change will become a serious business issue for many European companies from 1st January with the start of the European Union’s mandatory greenhouse gas emissions trading scheme on New Year’s day.

For the first time, businesses in energy-intensive sectors will have to monitor and lower their emissions of carbon dioxide or face large fines. If successful, the scheme could provide the blueprint for lowering emissions around the world.

The scheme aims to lower the EU’s overall greenhouse gas emissions -in line with member states’ obligations under the Kyoto protocol - by targeting the sectors judged to be the biggest emitters of carbon dioxide and imposing limits on how much they are allowed to produce. Each country must submit a national allocation plan that calculates how much its affected industries should be allowed to emit under the scheme. About 12,000 installations, responsible for nearly half of Europe’s overall emissions of carbon dioxide, will be given individual targets.

Companies that reduce their carbon emissions, for instance by increasing their energy efficiency or by installing “cleaner” technology, will be able to sell their unused allowances on an open market. Companies that exceed their quota will be able to buy extra permits.Any company found to exceed its quota without valid permits will be fined at a rate of €40 ($54.60) a tonne.

The thinking behind the scheme is that the system should be flexible enough to reward companies that reduce their emissions substantially without unduly penalising those that require more time.

The cap on emissions will start relatively high but will be reduced over time. “There must be scarcity [of carbon allowances] for this to work,” says Peter Vis, acting head of the industrial emissions unit at the European Commission and one of the architects of the trading scheme.

The scheme applies only to industrial installations. Only six categories of business are covered, at least in its first stage: electricity generation; heat an d steam production; mineral oil refineries; the production and processing of ferrous metals; the manufacture of cement, bricks and ceramics; and the pulp and paper sector.

The scheme will be reviewed by the European Commission in 2006, and countries will have to submit their national allocation plans for the second period then.

Future stages of the scheme, to come into effect from 2008, could include sectors such as the manufacture of aluminium and the aviation industry. However, the inclusion of the latter is controversial, as it is difficult to calculate emissions for aircraft. After 2008, member states can also decide whether to include other greenhouse gases such as methane in the scheme.

Countries outside the EU can link up to the trading scheme in the future. Canada and Japan are seen as the most likely to do so.

The scheme will rely on close monitoring of emissions. Companies’ carbon allowances will be overseen by a central administrator for the EU.

Brokerages specialising in carbon trading have already begun trading in carbon futures and in carbon financial instruments. The volume of carbon being traded in this fashion has risen steadily throughout the past year.

Emissions trading has already had some success in the US, where it has been used to cut down pollutants such as nitrogen oxides and sulphur.