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Climate Change: Copenhagen Conference

My Lords, for many observers, the Copenhagen accord, signed at last month’s climate conference, is a failure. Targets for global emissions are conspicuously absent, and while national targets are included, they are set only on a voluntary basis. The failure to acknowledge an ongoing process for converting the accord into a legally binding treaty is disappointing. But despite falling short in these respects, the agreement makes significant progress in others. It commits all major polluters, not just developed countries, to take action on reducing emissions and to submit their plans to international oversight. The agreement enshrines a joint target to limit global warming to 2 degrees centigrade and it promises tens of billions of dollars for developing countries over the next decade, financed through private and public channels. This momentum must not be lost. As we look to the next major climate change meeting in Mexico City and beyond, I believe that three points are critical. First, policy-makers must pay attention to the requirements of business, whose job it is to deliver the transition to a low-carbon economy. Direction setting is important, but until the Copenhagen accord is translated into detailed policies, it will fail to have an impact on investment decisions. From a business perspective, carbon offsets are a practical way to reduce emissions at low cost. Yet the current system is too bureaucratic and lacks sufficient scale to fund the commitments envisaged by Copenhagen. Reformed carbon offset mechanisms, along with new policies to leverage private capital such as loan guarantees, will be needed to mobilise flows of carbon finance across borders. A second lesson is that expectations of what can be achieved through the current UN process need to be realistic. Big-tent multilateralism still makes sense in several areas; for example, transparency and adaptation funding. But differences of fundamental principle are best settled in smaller groupings involving heads of state, as demonstrated at Copenhagen. Deals to share low-carbon technologies may need to be brokered in even smaller groups or bilaterally. Initiatives within national borders, such as the promotion of strategic industries, should be given greater recognition and be learnt from by others. There is an opportunity to work with the Mexican Government, a member of both the Major Economies Forum on Energy and Climate and the G20, to develop a new multi-track approach. This brings me to my third point. The UK must target its diplomatic influence effectively. We must be pragmatic about the areas where this country can have a real influence; for example, over the design of carbon markets and international financing mechanisms. Whatever one’s political orientation, it makes sense to work much more closely with Europe on climate change matters. The EU is the world’s third largest polluter and yet it was absent from the room when the decisive deal was struck. Europe needs to present a more ambitious, unified front if it is to have influence commensurate with its importance in combating climate change. I agree with the recent suggestion by William Hague that the EU should direct more of its budget towards climate change. The protection of tropical forests is one area where this enhanced funding could be effectively deployed. With enduring political and financial support, I believe that the Copenhagen accord will go down as a cornerstone text in the history of mankind’s efforts to combat climate change. To ensure that it does, my advice to policy makers is simple: keep the requirements of business in mind when drafting policies; embrace a new multi-track approach to climate diplomacy; and focus the UK’s efforts where our influence is the greatest, working at the heart of Europe, not at its fringes.