Why business cares about climate change

Solutions to climate change will depend on how we develop and deploy low-carbon and energy-efficient technologies. However, there will need for a new international treaty that supports this.

The lion’s share of the responsibility for investing in developing and deploying technologies falls on business. The UNFCCC Secretariat has suggested that more than 85 percent of the financial flows to support the investment needed to address climate change in the developing world will come from the private sector. Worldwide, in the energy sector alone, the International Energy Agency (IEA) has estimated that investments of US$ 45 trillion will be needed up to 2050 to halve global greenhouse gas emissions.

As we all know, business is facing its own challenges at the moment. But uncertain financial times will not deter business from searching for solutions to the climate challenges ahead. Business people live in the same world as everyone else, use the planet’s same resources, and want to protect and preserve the future for their children, too. As providers of employment for themselves and others, business people also want to protect their ability to do business and make a profit in the future. Business is part of society, and just as it should be part of the solution to society’s problems, its needs must be considered when those solutions are formulated.

And what business needs now is clarity. It has the expertise, strategic thinking, innovative mindset and investment capital that will be needed, but what it doesn’t have yet is the international framework into which it can invest with confidence post-2012.

Business will have to play a key role in the practical implementation of the measures established by the framework agreement. There is no doubt that this will be difficult for some industries and companies, just as it will for some countries and regions. There will be winners, but there will be losers, too.

At the World Business Council for Sustainable Development we work with 200 of the world’s leading companies on finding economically responsible, equitable ways to sustainable development. We have been driving solutions to climate change for more than a decade. Our members are at the forefront of the technological research, development and deployment that will be necessary.

These companies tell us that not enough is being done to encourage investment in technology on the scale and in the timeframe that is needed. A new framework in Copenhagen will need to fix this.

The WBCSD believes a new framework agreement must:

* Trigger and support a reverse in the global decline in R&D investment, and to encourage more R&D on climate adaptation and mitigation.
* Enable a shift in technology investment to developing countries, where energy demand and emissions are growing.
* Support a portfolio of low-carbon technologies, to be developed in parallel, because there is no “silver bullet” and multiple solutions will be needed.
* Foster an unprecedented level of international cooperation on technologies, because countries and companies will need to pool their resources if technologies are to be brought to market quickly.
* Overcome policy, institutional and financial barriers in developed and developing countries.
* Provide incentives for business to invest. Many technologies will be more expensive than the ones they replace so policy support and financial incentives will be needed if they are to be deployed on the scale needed in the time available.

Energy efficiency is widely accepted as the most cost-effective way to mitigate climate change. Buildings are responsible for up to 40 percent of energy use in most countries, and that demand for energy is soaring as construction booms, especially in countries such as China and India.

The IEA says energy efficiency accounts for half of the potential to halve carbon dioxide emissions by 2050. Energy efficiency reduces energy costs, alleviates energy dependency, decreases vulnerability to energy prices and reduces greenhouse gas emissions. There should be a major global effort to expand the role of energy efficiency to make sure that we get as much out of its potential as we can.

Many of the technologies needed to address climate change are available. But what we lack is the funding necessary for big demonstration projects that precede the widespread deployment of that technology. Here policymakers and governments can help. We need to establish public-private partnerships so that governments, R&D institutions, business and end-users of technology can work together to organize, fund, define, develop and demonstrate technologies as expeditiously as possible. And existing financial mechanisms will need to be maintained, streamlined or expanded so that we move towards a truly global carbon market.

One additional mechanism that business believes should be encouraged is voluntary sectoral agreements. These would be satellites to the global agreement and should focus on emissions reduction activities and supporting technology and finance actions within specific sectors. These agreements should focus on activities that reduce emissions, either directly though large-scale emission reduction projects, or indirectly, for example by developing a low-carbon technology for future use. These kinds of projects would help developing counties by introducing new infrastructure and technologies, as well as capacity for ongoing operation and future expansion.

All of this is a tall order, but surely it is not beyond us. Despite the fallout from the world’s financial turmoil it is my belief that global business is as willing as ever to pursue sustainable development. My message to negotiators is this: Business is not standing in your way.