New Delhi: The business sector is confused about where global climate change talks are going, but it agrees that climate change is a concern and is willing to cooperate because it sees environment policies creating commercial opportunities, says Yvo de Boer, special global adviser, climate change and sustainability, at London-based consultancy KPMG International. De Boer, who was executive secretary of the United Nations Framework Convention on Climate Change before joining KPMG this year, discusses the difference between negotiating with countries and negotiating with companies in an interview. Edited excerpts:
Since moving from international negotiations to the business side, do you find the industry adapting to climate change faster?
Business side, I would say, is a mixture of confused, aware and willing. Confused in the sense that there is really no clarity in the international process in terms of where we stand on an international regime, whether that is going to come or not, and what exactly it is going to mean for business. Aware in the sense that businesses around the world recognize that this is an issue they need to come to grips with, not only because of climate change reason but with issues related to energy prices, energy security and material scarcity. And willing because they see new chances and opportunities.
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Is it easier to convince businesses than negotiate with countries?
Up to a point. That they understand the business case, for example, which relates to saving costs... But it can also be a business case when it is linked to the reputation of a product. And thirdly, businesses are also thinking about the direction in which policies are moving and how they can anticipate that—especially in the energy sector, where very long-term investments are being made.
Is impending regulation an incentive or a threat for companies to practise more sustainable businesses?
I think it is a combination of both. Opportunities are clearly seen in putting more sustainable products on the market to lower production costs to becoming more efficient. And policy isn’t seen as a threat always, either because it does provide the kind of clarity business needs in order to decide investments. If you’re going to build a steel or power plant, which would be there for 40-50 years, the worst thing would be lack of clarity.
What could the coming climate change talks in Cancun deliver?
Targets and action plans that were submitted in Copenhagen need to be worked. I don’t see a renegotiation with targets at Cancun, and I don’t think that would be terribly useful. We need to work with what we have. Cancun is key in terms of putting in place structures for practical implementation. For example, how will national actions to cut emissions be recorded internationally. How can companies with plans be recognized in the national plans? ... And how to safeguard the future of market-based mechanisms, which are important to countries like India?
Do multinational corporations (MNCs) have a bigger role in these terms in developing countries?
Developing countries are taking a role in renewable energy sector, both China and India. I do see MNCs taking a lead because very often they operate in foreign markets where certain quality standards are demanded of products.
From Copenhagen to Cancun, the momentum has plummeted. Are businesses losing interest?
Yes, but partly because Copenhagen itself was such a big hype. There were excessive expectations and there is always a slump afterwards. But the interesting thing I see is businesses filling the uncertainty gap. They are not getting clear signals from the political process, but in many cases, they are not sitting back and waiting.
What would you call success in Cancun?
I would like to see how problems over the recording of country actions in an international registry are resolved, and how can financial support be organized. Climate change, in its origin, is environmental, but, in its solution, it has to be economic. The IEA (International Energy Agency) has calculated that as we recover from the global (economic) crisis, we will be investing more than $20 trillion. And how those investments are made will shape our future for next 20-30 years.
Do you see embedded carbon tax at borders a possibility in the future, if nothing moves in negotiations?
First of all, I don’t think it is very nice, when you are in the middle of a negotiation process, to say that either you agree with me or I will slap a tax on your products. Secondly, I see a lot of practical problems with that. First, I don’t know how WTO (World Trade Organization) will react, whether it is possible or not. And secondly, the degree to which you can actually do it (is also unclear). It is relatively easy to calculate the carbon content of a tonne of steel or a bag of cement, but if you come to composite products, how do you calculate the carbon content? What I do see in the future is an increasing role of standards. That if the EU (European Union) or the US steel or cement or paper manufacturers have worked to a certain standard, then there will be attempts to apply those standards more broadly in a way we have already seen in emission standards in cars.