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ERT: getting the right climate

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n December, Kyoto, Japan will host the third Conference of the Parties (COP-III) of the UN Framework Convention on Climate Change. This climate summit is expected to agree on actions to limit emissions of greenhouses gases. In April this year, well in time for COP-III, the European Roundtable of Industrialists (ERT) released its new report on climate change. The report claims to show "how to choose the right policies for Europe".

One of the commitments made at the 1992 Earth Summit in Rio de Janeiro was a Convention on Climate Change. No real commitments were made at the last two climate summits, and the lack of progress to date in climate negotiating fora does not provide real hope for Kyoto. However, the European Union, which is responsible for 25 percent of global greenhouse emissions, has given signals of its intention to translate the convention into a protocol with the target of stabilizing emissions at current levels by the year 2010. Competitiveness being industry's main concern, corporate lobby groups are pressuring European decisionmakers to avoid such commitments.

This is not the first ERT report on climate change: its predecessor appeared in December 1994. Both reports harp on the same themes and demands, and both were prepared by the ERT environment watchdog group -- still chaired by the CEO of Pilkington, one of the British members of the Roundtable. Well aware that industry, as a significant polluter, will be asked to reduce its CO2 emissions, the new report insists that binding measures must be avoided. It stresses the "uncertain science" on climate change, although the ERT now devotes far fewer pages to this argument than was the case in the earlier report. The weight of scientific evidence is tending towards more "certain science", with for example the November 1995 second assessment report by the Intergovernmental Panel on Climate Change (IPCC) which sets out the dangers of global warming and exposes the human activities behind it.

Rights and wrongs of climate action

Other major ERT concerns are the need to keep European industry competitive, the rejection of short-term emission reductions and the inclusion of developing countries in the agreed measures.

Under the section The Rights and Wrongs, the ERT continues its personal crusade against the EU's proposed CO2/energy tax. It outlines a test every policy proposal should pass before adoption. The test basically consists of banning any measure which could undermine the sacred competitiveness of European industry or the distortion of the market by selecting actions according not to the target of emissions reduction, but by the performance of a cost-benefit analysis. As the only example of how governments can get it wrong, the report attacks the CO2 tax: "The ERT remains strongly opposed to any new or increased carbon, energy or combined carbon/energy tax". The argument, of course, is that such a tax will harm European competitiveness. The main goals of such taxes -- fighting global warming and the added benefit of creating employment -- are dismissed in the report with 'scientific' arguments: "Their potential for boosting jobs is greatly exaggerated ... They [CO2 taxes] are widely considered ineffective in reducing CO2 emissions".

The report rejects government regulation and groups ERT preferences into four categories: voluntary initiatives, technologies, global agreements and education. It encourages voluntary action by industry, accompanied by a system of tradeable permits which allows corporations to earn profit from the right to pollute. The most fashionable ERT concept, 'benchmarking' is also proposed as as method of finding the best energy-management system. Nuclear energy is one of the energy-efficient technologies proposed in the report.

The Roundtable also pushes for Joint Implementation (JI), in which companies in developed countries help business in developing countries to reduce greenhouse gas emissions. Reductions are then translated into credits, which are earned by the developed country and can be used to offset commitments to reduce emissions in their home country. In other words, a system which helps corporations to earn money from developing countries while avoiding agreed reductions at home. A tempting proposal for TNCs, JI activities are actively being promoted through a project called International Business Action on Climate Change, led by the World Business Council for Sustainable Development (WBCSD) in cooperation with the World Bank.

Industry has many interests at stake in Kyoto, and we can be sure that corporate lobby groups will carry out intensive lobbying before the end of the year. In its usual style, the ERT will attempt to set the direction of climate policies, rather than simply reacting to what governments propose. The latest report is addressed to policy makers, particularly those in the EU, whom the ERT urges "to draft policies that meet the tests laid out here, and then discuss their proposals with the ERT, UNICE, WBCSD and other relevant industry bodies".

N.B. CEO is preparing a briefing sheet on industry lobbying the climate negotiations and the upcoming Kyoto conference.

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