It has now been two weeks since we found out that just 55 countries (many of these EU countries) have signed up to the Copenhagen Accord - the political deal that was struck in the dying moments of the UN climate talks in a snowy Copenhagen. The dust has settled but the impact of Copenhagen on British manufacturing is little clearer for it.
Let’s recap on the Accord. Unfortunately it is a vague document. It establishes a commitment to attempt to restrict temperature increases to 2°C. It sets monitoring and reporting requirements for all countries. And it provides initial funding of $30 billion over a three year period to assist developing countries in mitigating and adapting to climate change, rising to $100 billion a year by 2020. But it is the last two pages of the document which hold the most interest. They contain two annexes. One records the emission reduction commitments of developed countries. The other lists the actions pledged by developing countries.
The pledges fall far short of the cuts scientists say must occur in order to get anywhere near the 2°C goal. However, that 55 countries have submitted pledges is not to be sniffed at. Although many of these countries are based in the EU, the US, China, India and Brazil have for internationalised pledges for the first time. A year ago this would have been inconceivable. Together those making pledges account for around 80% of the world’s emissions. Sounds pretty impressive. Certainly Joan Ruddock, Minister for Climate Change, thought so when we met her recently to discuss the fall out from Copenhagen.
However it must not be forgotten that this document has no legal recognition. Until it is enshrined in domestic law, we have just the promises of politicians. I’m not a gambling woman but I would not like to hedge any bets on Obama’s ability to pass his plans on climate change through a Senate which is ultra sensitive to the current state of the economy. And China’s targets, while avoiding emissions that would have been generated on a business as usual scenario, will still allow growth to continue unabated.
So what does this mean for us? Well, it means we are still exposed to the risk of carbon leakage for one - where market share, investment decisions or production is driven into other economies to avoid the costs and limits imposed by the regulation of greenhouse gases. And so we definitely don’t think now is the time to impose even stricter regulation without real thought about how to protect our vulnerable industries.
Instead, we think government’s focus must be on helping industry cut energy costs and emissions through focussed and easily accessible funding for research, development and deployment. This could generate green technologies and help to secure jobs. And if government is serious about cutting substantial amounts of greenhouse gas, now is the time to step up diplomacy with countries like China, India, Brazil and the US. Rather than burdening UK manufacturers more, let’s try and get others to adopt comparable regulation and financial constraints.
You can read more about what happened in Copenhagen here, along with our messages to government on what we think the next steps should .