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Financial Times: Business lobby demands clear emissions goals

By Fiona Harvey and John Aglionby in Bali
Published: December 11 2007 02:00 | Last updated: December 11 2007 02:00

Businesses yesterday told negotiators at international talks on climate change that they needed firm targets to encourage investment in reducing greenhouse gas emissions.

David Hone, group climate change adviser for Shell, the oil group, said countries should be given definite emissions targets, broken down into “clearly segmented timeframes”.

“The real confidence would ultimately come once we’ve set and passed one or two [target] deadlines and someone’s held to task if we don’t meet them. If that doesn’t happen, then the whole thing starts to unravel,” he said.

The Bali conference aims to set out a framework that will form the basis for future negotiations on a successor to the Kyoto protocol, the main provisions of which expire in 2012. The question of whether explicit targets on emissions cuts should be included in this framework is one of the most contentious issues facing the Bali conference.

The United Nations, the European Union and many developing countries want a target requiring developed countries to cut emissions by 25-40 per cent by 2020.

The US, however, is firmly opposed to putting a figure on future emissions reductions, even if they are non-binding. Japan and Canada are understood to have similar reservations.

Harlan Watson, chief negotiator for the US, said: “It’s difficult having a number that prejudges the outcome [of the talks].”

Yvo de Boer, executive secretary of the UN Framework Convention on Climate Change, said businesses wanted such a target in order to give them clarity on how emissions curbs after 2012 would affect them.

Mr de Boer said: “Business needs a sense of direction. If you launch negotiations but do not indicate what collective goal you are working towards, it will create greater uncertainty for the private sector.”

Curbs on emissions would affect most businesses, in particular power utilities, oil and gas companies, and carmakers.

Bjorn Stigson, president of the World Business Council on Sustainable Development, an organisation representing hundreds of companies across various sectors, said: “Long-term clarity [on emissions] influences investment, and uncertainty has a negative impact on levels of investment. Governments have to provide clarity.”

He cited an example of a power utility that was considering building a new power station: “The investment would depend on whether governments were shooting for targets of 50 per cent emissions cuts by 2050, or whatever.”

Steve Lennon, chair of the International Chamber of Commerce delegation at the Bali conference and managing director of Escom in South Africa, said: “Businesses and investors always look for certainty. What they want is a firm regulatory environment.”

Mr Lennon added that companies could benefit if the talks set the framework for a future global market in carbon emissions: “It’s very useful to have carbon -markets that set a price on carbon dioxide.”

Muhammad Hidayat, the chairman of the Indonesian chamber of commerce, said: “The government asks me to encourage our [business] community to push them to deliver their commitments on the climate change programme, but there’s no incentive from the government. We need more regulations that are clear and have timeframes.”

Copyright The Financial Times Limited 2007

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