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Financial Times: Climate change: US change of tack seen as proof of pressure

By Fiona Harvey, Environment Correspondent
Published: November 9 2007 04:36 | Last updated: November 9 2007 04:36

The US Congress recently began to consider proposals to impose a carbon cap on businesses, at a federal level. There is no guarantee that such proposals will succeed, though there is strong support for them within the Democratic party and some members of the Republican party. They could be mired in the legislative process for months or years.

But the mere fact that a greenhouse gas cap-and-trade system has a serious chance of being adopted denotes a big change in the US attitude towards climate change, and the actions that will be needed to bring down carbon emissions.

Further evidence of such a change came in June, when President George W Bush pledged to hold a meeting of the world’s biggest emitters, and to enter into discussions hosted by the United Nations on a possible successor to the Kyoto protocol. This marked an abrupt reversal of strategy – previously, the US refused to participate in Kyoto discussions.

The international political climate has warmed to environmental concerns in the past year, in a way that will have profound effects on the energy industry. Mr Bush’s change of tack was derided by opponents, who said it did not betoken a change of heart, and who found his suggestions lacking in substance. But his move, even if more cosmetic than substantial, showed the extent of pressure piling up on political leaders to take action.

Mounting evidence for global warming has helped to build the case: the Arctic ice shrank to its smallest recorded area this year, even as the world’s leading climate scientists published a landmark report sweeping away the last doubts as to humanity’s role in causing global warming.

Those scientists, known as the Intergovernmental Panel on Climate Change, won the Nobel peace prize for their work, along with Al Gore, the better-known former US presidential candidate.

Around the world, governments have been responding. Europe has long taken a leading role in regulating emissions, most notably with the emissions trading scheme it set up in January 2005, and which will form a possible model for the US proposal. In March, the European Union went a step further, pledging that by 2020, 20 per cent of the bloc’s energy should come from renewable sources.

Japan has also piled pressure on its businesses to become more efficient, and the government was a big influence in persuading Mr Bush to accept the UN process as the main forum for climate change discussions, rather than setting up his own.

Australia, the only developed country outside the US to have rejected the Kyoto treaty, said this year it would look to setting up a carbon trading system. Several other countries, such as Norway and Iceland, have also taken steps to join the EU’s carbon trading system, in a strong endorsement of the concept as a method of cutting greenhouse gases.

But more important than all of the developed countries outside the US is China. Thanks to the breakneck speed of its industrialisation, China has either already overtaken the US as the world’s biggest emitter of greenhouse gases, or will soon do so. The country’s rapid development has been based largely on coal, a dirty fuel that produces more greenhouse gases than alternatives such as gas or nuclear power. The results can be seen as much in the polluted air of Chinese cities as in its contribution to carbon dioxide emissions.

But China has been taking action to curb its emissions. The latest five-year plan agreed by the Communist government places a strong emphasis on environmental issues. While China does not have targets to cut its emissions under the Kyoto protocol, it has benefited to the tune of a few billion dollars from the agreement, as funds have flowed from developed countries to set up carbon reduction projects, such as wind farms or systems to remove industrial gases from certain Chinese factories.

If offered similar incentives in the future, China may agree to curb its emissions further, though it is unlikely to accept targets to cut them overall. Yu Jie, climate adviser at the Heinrich Boll Foundation in Beijing, says the government is anxious to tackle environmental issues, but more concerned not to jeopardise growth.

She says the view is that developed countries must lead the way, as their per capita emissions are much higher than in poor countries, and because the stock of emissions in the atmosphere came from rich countries. But she says: “China will be a follower if the US leads.”

Other developing nations have taken a harder line. India, whose emissions are growing almost as fast as China’s, is reluctant to agree to take any action, arguing that rich countries must bear the burden.

The energy industry has responded in starkly different ways. James Smith, chairman of Shell, has called for more industry involvement in cutting greenhouse gas emissions in the short term. ExxonMobil, on the other hand, characterises climate change as a “century scale” issue, meaning that the problem can be dealt with over the next 100 years or so and does not require urgent attention. Rex Tillerson, chief executive, told the Financial Times that predictions of serious consequences from climate change if emissions were not cut soon were just “computer models”.

Will the world’s efforts to combat climate change be enough? There is still enough time to cut emissions before they cross the critical point, even by the gloomiest predictions. But time is running out. The IPCC warned in its report that greenhouse gas emissions must peak by about 2020 if the worst consequences of climate change are to be avoided.

To bring emissions to that level would require a Herculean effort, which is unlikely to materialise. Even if it takes longer, most analyses agree that taking action to cut emissions in the short term is much less expensive than allowing them to continue unchecked for decades, by which time the adverse effects of warming will be increasingly apparent.

Though it is far from certain that agreement will be reached on a successor to Kyoto, and less certain still what form it will take, there is one certainty: energy companies will have to bear the brunt of emissions cuts. But the details of any new regulation will be crucial, because they will make the difference between profit and loss – and between human failure and survival.

Copyright The Financial Times Limited 2007 and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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