Co-operation the key in a post-Kyoto world

The climate change debate took centre stage at November’s 20th World Energy Congress in Rome. With the argument for global action on climate change won seemingly hands down, politicians and the captains of the power industry discussed how best to tackle what European Commission president Juan Manuel Barroso dubbed ‘the single most important issue’ in the 21st century.

BY TIM PROBERT

Everyone who is anyone in the global power industry was at November’s 20th World Energy Congress (WEC) in Rome, and it was a privilege to witness several fascinating speeches and debates among the global business leaders and key politicians in the power industry. Climate change and carbon abatement, of course, formed the thread that ran through the Congress. The debate has moved on. The ‘Is it happening?’ line of questioning asked in Sydney 2004 evolved to ‘What shall we do?’ in Rome 2007.

There was no shortage of goodwill from power industry leaders in the climate change debate. Many are relishing the challenge and most are singing from the same hymn sheet. And they all realise that there is plenty of money to be made from environmental issues.

The business logic of investing in energy efficiency is sound. Patrick Kron, chairman and chief executive of French engineering group Alstom, struck a cord with other members at a Round Table on the subject of tackling climate change when he said that “environmental issues are a big opportunity for business, allowing us, for example to leverage research & development.” Looking to the future, Kron said there would be “an increasing cost of emitting CO2 while the cost of capturing CO2 will decline à‚— industry will make sure of it”. Lars Josefsson, president and chief executive of Sweden’s Vattenfall, said: “Climate change represents the best investment opportunity since the re-build after World War II”.

But to make the most of this opportunity, the industry needs a firm foundation on which to build. A global foundation, which every nation can work towards with its individual capability, is needed to replace the ineffectual Kyoto Protocol when it expires in 2012.

The protocol they argued, while having performed a very useful role in putting the issue of climate change in the public eye, was flawed. Indeed, CO2 emissions from 1990-2005 actually rose by 22 per cent.

According to Robert Stavins, director of the Harvard Environmental Economics Program, the Kyoto Protocol is insufficient because “it does too little, too fast” and the costs incurred in sticking to the commitments are too high. “The architectures for the post-Kyoto agreement” à‚— said Stavins à‚— “should be flexible and gradual in order to involve all the CO2 producing countries”.

Fatih Birol, chief economist of the International Energy Agency, stated that without the necessary interventions, carbon emissions would rise by 57 per cent by 2030, particularly as economic growth in India and China continues apace. “A third of Chinese emissions come from industrial activities aimed at producing goods to be exported throughout the world, and this is why the problem should be tackled jointly by all countries. We have no alternative solution other than providing incentives and involving China in working towards a sustainable world” stated Birol.

Rixin Kang, president of the China National Nuclear Corporation, defended his country’s environmental record in the wake of rapid economic growth. He said that reducing CO2 emissions is an objective in China. “From 2020 the contribution to China’s installed [electricity] capacity from nuclear power will double from 2 to 4 per cent,” he said. China currently has 11 nuclear reactors producing low-carbon energy and has a further eight reactors under construction.

Addressing the issue from a European perspective, Carlo Carraro, chairman of the Euro Mediterranean Centre on Climate Change, launched the following appeal: “We must drastically increase the percentage of GDP allocated to research & development, otherwise we will not be able to meet the European Union objective of stabilizing emissions at 450 ppm by the end of the century – with a view to preventing temperatures from rising by more than 2 degrees.”

The clear message from WEC 2007 was that climate change abatement would only be met by global governance that encouraged co-operation between the public and private sectors and the developed and developing world.

Josefsson emphasized this need for global leadership from governments and the private sector. “There are around a dozen world leaders who hold the key to resolving these problems, as well as business leaders,” he said. He added that in the future it is vital “that there is a price on emissions and that price must be as global as possible”.

Fulvio Conti, CEO of Italian utility Enel said, “To produce energy at a reasonable cost, while respecting the environment is an apparently impossible equation. I believe that, with a global approach, involving all countries, exploiting all the resources and available technologies, while actively searching for new ones, we can meet this goal.”

New World Energy Council chairman Pierre Gaddoneix, whose day job is CEO of French utility EdF, went further, saying that there needs to be a total re-conditioning of the global economy.

Gaddoneix said: “To rise to the climate change challenge, we need to reinvent the energy future. Reinventing means making progress by changing our approach, moving away from our comfort zone by involving actors from outside the industry, and accepting the discomfort that goes with change. “It means bringing new players on board, public and private, civil society and non-governmental organizations. It means working together à‚— by this I mean listening to one another, respecting one another, learning to establish common ground and share a common language.”

It was hoped that by the time WEC moves on to Montreal in 2010, those asking “What shall we do about climate change?” will be asking “How can we do more?”

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