Private Sector Takes the Stage as Week Two of COP 16 Gets Underway

6 December 2010

CANCUN, MEXICO - WBCSD's Global Business Day was where much of the non-UNFCCC action was today in Cancun. Much interesting material was presented, with a highlight certainly being the keynote address presented by Christiana Figueres, the UNFCCC's Executive Secretary.

Figures spoke of the extension of the Kyoto Protocol being a major challenge with Japan, Canada and Russia being opposed to an additional period. Thus, most action is expected to take place under the Long-term Cooperative Action sub-tracks. Figures noted that the following questions have emerged in the tracks. First, parties have started discussing a so-called "emission peak," after which global emissions will go down. But the big question is: should parties set a specific year when emissions shall peak or is it enough if they say that the peak will be "A.S.A.P."?

Second, on adaptation, questions have emerged as to the scope of adaptation measures: does adaptation only mean accommodating the physical negative effects of climate change or should response measures also be taken into account? Finally, a large mitigation effort is under way. However, the question of how to capture the diverging pledges for emission cuts remains. According to the Copenhagen Accord, envisaged cuts are not anchored in a multilateral agreement.

On finance, it is not clear if countries should establish the "Green Fund" first and then work out its design (as Mexico and other developing countries want), or to design the fund first and then establish it (as the US wants).

On the role of the private sector, companies already did a baseline effort (to establish the point where cuts do not hurt (i.e., environmental measures companies have taken were good for them as it saved them energy and resources and being green was good for their image). But that's not enough anymore.

So there are three points for improvement for leveraging commitment from the private sector. First, companies need to adapt their value chains, so that they can pressure both upstream (suppliers) and downstream (consumers) to be low-carbon. This means that companies need to put more effort into informing and encouraging the people they deal with. Second, the private sector needs to invest in change in each sector specifically, as each sector has it peculiarities - this tends towards sectoral cooperative and integrated approaches. Third, strengthen ties with political constituencies; companies need to influence policy makers domestically and show business interests and their commitment to climate change solutions.

The private sector is obviously exerting profound influence on the climate change negotiations. Negotiators are stuck with progress on Kyoto not because of their governments but because of narrow business interests (e.g., from old industries such as oil and coal). The battle is increasing between those in the private sector that are climate winners - such as the renewable energy industry - and those that are the losers. The losers are much better organised though, they are better funded and they do more lobbying. In some countries, a clean energy representative can lobby a senator one day, but if for the following ten days only fossil fuel lobbyists walk in to the senator's office, you can predict what the result for policy will be."

Another point worth mentioning about today's Global Business Day event was an intervention by a WTO representative on trade and climate change. I've inserted two excerpts from the intervention below:

"Trade and investment can serve as an important conduit for knowledge and technology transfer. Countries that are more open to trade are more prone to benefit from R&D and innovation. In the WTO negotiations on EGS, the most important component is climate-friendly goods. Predictable policies on trade and investment will provide the right enabling environment for technology diffusion and development. And non-tariff measures such as subsidies, local content requirements and inefficient government procurement can be bigger barriers to trade than tariffs."

"Environmental services are at least as important for the EGS market (which is now as big as $800 billion per year and equals the pharmaceutical and IT sectors in size). Environmental services are mostly very complementary with envt goods and liberalizing trade in only one of them will bear limited fruit. finally, technology transfer and capacity building eforts that go beyond generalities need to be built in a future arrangement for liberalizing trade in EGS."

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