Bridges Trade BioRes • Volume 9 • Number 17 • 5th October 2009

World Leaders Weigh In on Climate Change

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At two high-level summits in the past two weeks, world leaders have shown that they are willing to throw their political weight behind a global climate deal. But as scientists are now predicting ever-faster temperature rises in the years ahead, the time to act could be running out.

The climate change summit convened by UN Secretary General Ban Ki-moon in New York on 22 September raised expectations for further commitments at the meeting of leaders of the Group of 20 rich and emerging economies, held in Pittsburgh later that week.

At the New York summit, more than 100 heads of state witnessed the first-ever address of a Chinese President and of US President Barack Obama before the UN. They also heard Japan’s new Prime Minister Yukio Hatoyama renew his vow that Japan would cut its greenhouse gas emissions by 25 percent by 2020. Ban praised the leaders for the commitment they displayed and called on them to keep working. “While the summit is not the guarantee that we will get the global agreement, we are certainly one step closer to that global goal today,” Ban said.

But a few days later at a G20 meeting in Pittsburgh, the tone had changed somewhat. The heads of state made general commitments to share clean energy technologies and postponed discussions on climate change financing to the next meeting of their finance ministers in Scotland on 6 and 7 November.

Fossil fuel subsidies largely ignored

While Obama had already announced in New York that the G20 would address fossil fuel subsidies, climate change action in Pittsburgh was largely overshadowed by concerns about world economic recovery and nuclear proliferation.

But cutting fossil fuel subsidies for tackling climate change should not be underestimated. The International Energy Agency estimates that cutting such government support would reduce emissions by 10 percent.

Annually, governments spend as much as US$500 billion on fossil fuel subsidies. If the public funds currently devoted to energy subsidies were to be invested in the fight against climate change, they would largely suffice to meet the target that former World Bank economist Nicholas Stern has said would be needed to stabilise greenhouse gases below the levels at which they risk causing irreversible damage.

It is important to distinguish fossil fuel production subsidies from those subsidies used to promote the consumption of the products. Whereas developed economies tend to offer production support, emerging and developing nations are more likely to subsidise consumption. The G20 plan focuses on cutting consumption subsidies (or ‘inefficient’ subsidies as the summit declaration calls them), which means that the strategy would place a heavier burden on developing countries. Roughly 1.6 billion people in developing countries already lack access to electricity and with an increase in the price of fossil fuels, this number is set to grow.

Cutting subsidies could boost green job sector

Some analysts argue that it would be more sensible to cut fossil fuel production subsidies and divert the funds to renewable energy, where new investments could help create new ‘green’ jobs. The International Labour Organization recently calculated that a US$1 million investment in the oil industry creates five jobs, while the same investment in the renewable energy industry creates more than 15.

Existing WTO rules are not designed to address specific issues in the energy sector, and it is commonly accepted that the rules apply equally to all energy products. Complicating matters further, some governments are not especially forthcoming when it comes to reporting the subsidies that they implement. The WTO plays a major role in monitoring subsidies, but WTO members do not always clearly notify the subsidies they use.

Time may be running out

But even as G20 leaders are taking bold actions to respond to climate change, the time for action may be running out. On 29 September, the first day of a two-week meeting of climate negotiators in Bangkok, the Met Office - Britain’s national weather service - revealed new models that predict a dramatic acceleration of global warming. The UK scientists say the global average temperature could rise by 4 degrees Celsius as early as 2060. The study found wide variations: the Arctic could see a rise of up to 15 degrees C by the end of the century, while western and southern parts of Africa could warm by up to 10 degrees C.

British Prime Minister Gordon Brown now says he plans to go to Copenhagen to help seal the climate change deal. He is the first world leader to make such a pledge. Brown has also taken an international lead by suggesting rich nations should pay US$ 100 billion a year to help poor nations adapt to the changing climate. The EU and the US are also taking a practical approach, trying to forge a pact with China and the 30 rich-country members of the OECD to eliminate duties on green goods as an incentive to Beijing in a potential climate deal (see related story, this issue).

Further indications that major economies are starting to engage on climate change came on 30 September when President Obama authorised the US Environmental Protection Agency to begin regulating greenhouse gas emissions from 14,000 power plants and large industrial facilities. While Obama said he prefers a comprehensive legislative approach to regulating emissions, not a piecemeal application of rules, his move could stimulate lawmakers to reach an agreement and it could provide evidence of Washington’s commitment to securing a climate deal in Copenhagen.

ICTSD reporting.