Financial Storm Dims Hope of Tough UN Climate Pact
Author: Alister Doyle, Environment Correspondent
The turmoil, straining government coffers with bank bailouts, may sap interest in more costly projects such as burying heat-trapping carbon dioxide from coal-fired power plants, refining biodiesel or some renewable energies.
"There will be a shift in investments" towards energy efficiency, said Nick Mabey, director of E3G think-tank in London. Saving energy, such as by insulating buildings, gives quick returns and can help create jobs.
A year ago, many governments were billing the fight against warming as humanity's top long-term challenge after the UN Climate Panel said human use of fossil fuels would bring more floods, heatwaves, droughts and rising seas.
Now, with the United States caught in a financial storm that may cost US$700 billion of taxpayers' money to fix, a plan to agree a new UN treaty to fight global warming in Copenhagen in December 2009 is looking ever more ambitious.
German Foreign Minister Frank-Walter Steinmeier said on Tuesday the market difficulties would make it harder to agree a climate deal, while US Democratic presidential candidate Barack Obama said last week he may be forced to scale back his planned investments in energy.
"It's starting to weigh on peoples' minds that the whole process could go completely wrong," said Mabey. In the worst case, the negotiations could collapse, like UN trade talks.
"The problem of climate change is going to stick with us. But the pace and the scale of ambition may be less in the near term," said Elliot Diringer, a director at the Pew Center on Global Climate Change in Washington.
"Hopefully the crisis will make us smarter in spending our money," said Bjorn Lomborg, Danish author of "The Skeptical Environmentalist", who says many governments like Britain focus too much on costly projects such as offshore windmills.
More mundane carbon-saving projects may benefit.
Consultants McKinsey & Co. reckon emissions-cutting measures such as better building insulation, fuel efficiency in vehicles, more efficient lighting and air conditioning end up paying for themselves via lower energy bills.
But policies such as burying carbon dioxide, refining biodiesel or avoiding deforestation are among the most costly ways of slowing emissions, it says.
In the United States, both Obama and Republican candidate McCain have promised to do more than President George W. Bush, who said the Kyoto Protocol, which binds 37 industrialised nations to cut emissions until 2012, would be too expensive.
The UN Climate Panel has estimated the costs of slowing climate change at only 0.12 percent of world gross domestic product to 2030, with vast benefits in avoiding human suffering.
Diringer said the next US president should re-cast the fight against warming as a way to break dependence on oil imports and as a tool to help economic recovery -- some revenues from future carbon trading could go to the Treasury.
The worst financial crisis since the 1930s may also mean less aid to help developing nations, such as China, India, Brazil and Indonesia, tackle their soaring emissions.
Norway, which has led international donor efforts to slow burning of tropical forests blamed for 20 percent of greenhouse gas emissions, said it was still committed to help.
"We believe this is not an act of charity, this is an investment," Prime Minister Jens Stoltenberg told Reuters of the plan, which includes up to US$1 billion to Brazil to protect the Amazon.
Sven Teske, renewable energy director for environmental group Greenpeace, said investments still made sense. The wind energy market totalled US$37 billion in 2007 and added more than 19 gigawatts to the grid, he said.
"Money would be better spent on this," he said.
Lomborg said the pendulum could swing too far against climate action. "There is a real risk that we could end up under-worrying about climate change just as we are over-worrying today," he said.
(Editing by Matthew Jones)