Strategy

Outlook 2010: How will climate-change issues affect business?

On climate change, Copenhagen was just an interim step. Next stop: Toronto

For those pushing for an international climate-change treaty, three words describe the ideal agreement: fair, ambitious and binding. “Fair” means requiring the industrial countries that caused the problem to pay to fix it. “Ambitious” means carbon emission reductions that will make a difference. “Binding” means a deal that can be legally enforced. Amid the bureaucratic fog of emission targets, “Annex I parties” and mitigation actions, it is easy to lose sight of the goal. But everyone from Greenpeace to the World Council of Churches to UN secretary general Ban Ki Moon cites those three basic criteria. Meeting that goal in 2010, particularly after the chaotic Copenhagen summit, will take U.S. legislation, G20 leadership — and a willingness to ignore the task’s futility. “Success in these things is always unlikely, but in this case it’s also absolutely necessary,” says Keith Stewart, director of WWF Canada’s climate-change campaign.

The United Nations, which has led climate-change treaty negotiations for 17 years, convenes its next summit in Mexico at the end of this year. To speculate whether that summit will break the climate-change impasse, it helps to assess what, exactly, happened last month in Copenhagen. The last-minute accord brokered by President Barack Obama represented the first time that the world’s major developing countries — China, Brazil, South Africa and India — committed to setting emission targets. But the deal is not binding: it failed to receive unanimous support from all 194 countries, as required under UN rules. Delegates agreed only to “take note” of the Copenhagen Accord, a procedural move that means they merely acknowledged its existence. Other countries now have until the beginning of February to decide whether they will join the accord; if they do, then they must also delineate their own emission-reduction targets. Only then will the accord’s potential be known. “It’s hard to say much with confidence about the impact of the accord until the dust has settled,” says Jacob Werksman of the World Resources Institute.

Perhaps most important will be whether the agreement will aid or hinder efforts to pass climate-change legislation in the United States. By calling for emission reduction targets from China and India, the accord addresses one of the major complaints among American politicians about 1997’s Kyoto Protocol, which placed obligations only on industrialized nations; it was never ratified by the United States. On the other hand, it also calls for $100 billion from industrialized countries to help developing nations address climate change, which could be a hard sell in lean economic times. Senate legislation on climate change is still being drafted, and a vote is not going to occur at least until April. (The House of Representatives passed a climate bill last summer, mandating 15% of electricity come from renewable resources, among other measures.) If Congress does not approve the bill, international negotiations will likely “fall apart,” says Meinhard Doelle, a Dalhousie University law professor who attended the Copenhagen summit. “Some countries will do nothing, and others will take action and then use trade measures to protect their industries from the economic impact of that action.”

On the other hand, U.S. legislation could provide momentum toward an international treaty, with or without UN participation. Observers note the Copenhagen Accord was negotiated outside the official process in a string of backroom meetings. “The lesson for the U.S. may be that the UN process isn’t working and they’re better off to negotiate directly with key countries,” Doelle says.

That could set up the G20 meeting in Toronto this June as a crucial forum for further negotiations. “In 1992, when the United Nations Framework Convention on Climate Change [UNFCCC] was established, you had developed and developing countries,” says Stewart. “Now you have China, India, Brazil and South Africa, which aren’t comfortably slotted in either category. And this is where I think the G8 and the G20 are going to play a role to get agreements brokered between the key players.”

Yet negotiating a deal at the G20 would risk excluding many of the developing nations that will be most affected by climate change. For that reason, countries like Papua New Guinea and leaders like British Prime Minister Gordon Brown have proposed reforming the UN process itself. The Mexico summit may be the last chance to redeem the UNFCCC after the Copenhagen debacle, when a handful of nations like Bolivia, Cuba and Sudan blocked the unanimous endorsement of a deal in order to embarrass the U.S. “It’s absurd that we be held hostage by that kind of tomfoolery,” says John Drexhage, a former Canadian negotiator who now works with the International Institute for Sustainable Development. The UN process could be reformed to allow for ratification when a proposal receives the support of a large majority of countries. Unfortunately, any change to the process would require unanimous consent. “Most of the problems are rooted in not having a good system in place to address the behaviour of minority parties,” Drexhage says.

Countries will begin 2010 with the Copenhagen Accord, the legacy of an imperfect system. Its flaws, however, may be what drives a fair, ambitious and binding treaty. “My fear was, we’d get an inadequate deal and the world would stop addressing the issue,” Doelle says. “What we got was something everyone recognizes is just an interim step.”