Financial crisis prompts fears of climate failure
CarbonPositive, Wednesday, 8 October 2008
Fears are growing that the deepening global financial crisis and the inevitable recessionary conditions to follow will derail the fight against climate change, snuffing out investment in low-carbon technologies and weakening the chances of a new global political agreement to follow on from the Kyoto Protocol.
As governments in Europe this week were forced to follow US action to bail out banks, the global extent of world financial contagion that began across the Atlantic became clearer. Many now think recession across the major economies is unavoidable. The danger for climate campaigners and the clean technology sector is that long-term environmental considerations now take a back seat to short-term economic survival.
UN climate chief Yvo de Boer expressed his fear that the financial crisis might undermine international action on climate change - where a new global climate accord was considered too hard in the current financial environment and the process due to be finalised in Copenhagen in a year went into limbo.
But some advocates of action on climate change say climate will remain the big picture and only temporarily be put on the backburner. Others see great opportunity arising from the current financial and economic gloom.
"One alternative would be that we don't manage to meet a deadline in Copenhagen and that we slide into a WTO-like process that goes on without a clearly agreed deadline, or perhaps even worse that you get a highly fragmented approach to climate change," de Boer told Reuters this week. "I hope that this doesn't result in people in the South waiting for [climate change] adaptation money having to wait for mortgages and credit card debts to be paid off in the North," he said.
The chairman of the Intergovernmental Panel on Climate Change (IPCC), Rajendra Pachauri, said the global downturn would understandably dominate all priorities for the next two to three months. But he predicted that once a new US President came to office, momentum would return to global warming discussions.
"I'm absolutely sure that climate change will be the last thing people will think about at this point in time. But it's not going to go away," Pachauri said. "Sooner or later, they will come back to it … the evidence ... is getting stronger by the day,” he told Reuters.
de Boer’s concern was echoed by World Bank president Robert Zoellick who said the current financial crisis is in danger of spilling over into developing countries where it could cause great instability. Already, China has said developed nations’ commitments on clean technology transfer in climate negotiations have not been enough and China's climate change ambassador Yu Qingtai has expressed pessimism about finalising a new global agreement in that light.
Zoellick said it was essential to keep investing in developing nations, to rebuild essential infrastructure, through the current financial crisis. "The events of September could be a tipping point for many developing countries. A drop in exports, as well as capital inflow, will trigger a falloff in investments," Zoellick said. In yet another fundamental financial reform proposed in this crisis, he called for the G7 to be replaced by a G14 including major developing powers, with more value in its remit given to economic development.
On the subject of developed countries, Lord Nicholas Stern, author of the landmark 2006 report on the economics of climate change, has taken a very Keynesian view of the situation saying the required spending on low-carbon technologies could give economies much-needed stimulus in recessionary times.
Speaking to the UK’s Guardian newspaper, Stern added that amid recession and high energy prices there was value in investing in energy efficiency measures that eventually pay off in reduced costs. He warned that good leadership was necessary if renewables and other low-carbon industries were to flourish. "We're going to have to grow out of this ... and this is an area which looks as though it could well grow strongly and with the right support could be one of the major engines of growth," he said.
Australia’s chief climate change adviser is also urging leaders to hold their nerve. Professor Ross Garnaut last week released his own 670-page tome on climate change, which expressed doubts about nations agreeing to the tough emissions targets needed. He said leaders, especially the new US President, should not allow the climate fight to be “knocked off course”.
“It would be a really serious mistake if we saw the financial crisis as a reason for going slow,'' Garnaut said. “If we were negotiating an international agreement this week, then it would be a major problem, but financial crises are very damaging, hugely damaging, but they pass.''
In the United States, there was a win for climate when the $700 billion emergency bail-out package included in its final form $17 billion in tax concessions for alternative energy carbon capture and storage. Although the measures to promote investment in wind, solar and biomass energy were part of part of a much wider package of tax cuts, they were warmly welcomed by the renewables industry.
Republican Senator Richard Lugar said the US economy could be transformed through diversification and improved efficiency in energy use, providing new opportunities for jobs and economic growth.
In a key European parliamentary vote taken amid the financial drama unfolding in Europe, the European Commission’s proposed climate change legislation for 2013-20 cleared a major hurdle when the environment committee approved the key planks of the package.
"The economic climate has just gone from bad to worse but, for all the trouble we have, the single greatest challenge facing us is climate change," Reuters reports Irish MEP Avril Doyle saying. Doyle, a key figure in the EU climate policy debate, said “the crisis in liquidity is not a helpful backdrop, but it does not mean my colleagues or I should drop the ball."
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