Block’s Indicator of Sustainable Growth

by Ray Block

 Although the climate accord in Copenhagen was a bit of a damp squib, and in no way robust, there is something to go on with.  Down the track, there is a binding agreement, but not yet.

 It must have been excruciating for Yvo de Boer, the chief UN climate negotiator, to get so far, and still miss out. But before one becomes too cynical about reaching any worthwhile agreement on climate change, there has been some good news.

 To have more than 190 countries represented in the one arena on climate change is historic in itself. With so many delegates and country blocs, some chaos and confusion was inevitable, with delegates staging dramatic walk outs at times. When time ran out, President Obama’s short circuit approach of making a political side deal with China and its BRIC companions enabled the compromise deal to be struck.  

 The Financial Times reprinted a letter signed by chief executives of 30 major US corporations addressed to President Obama. The letter was dated December 15 2009. The companies included some of the US’s largest companies in electric power generation, manufacturing, technology and consulting.

 Some of the verbatim sentiments expressed in the letter:

 Business needs a strong global deal to provide certainty, to create a level playing field and to fuel public sector investment in adaptation strategies world wide.

 Based on experience investing in and accelerating companies with low carbon solutions- wind, solar, geothermal, smart grid and efficiency, we’re flipping the competitiveness argument on its head.

 An agreement to price carbon will not hurt the economy, it will provide an urgently needed renewal of growth and job creation.

 We must put the United States on the path of significant emissions reductions, a stronger economy, and a new position of leadership in the global effort to stabilise our climate.

 The costs of inaction far outweigh the costs of action. Our environment and economy are at stake. In addition, millions of people in developing and low-lying nations are at risk from climate and related economic dislocations, which further pose geopolitical threats.

 The Financial Times quoted Mindy Lubber of the Investor Network on Climate Risk as saying: “The climate treaty announcement is legitimately catching some heat for being too little, too late.”

“ The enormity of the crisis cries out for strong binding reduction targets by all countries and massive infusions of public and private capital to catalyse a fast track transition to a low carbon economy. But expecting we’d get all this at COP15 was never realistic.”

Both United States and China, the two biggest carbon polluters have agreed to a ceiling level of global temperatures not to exceed two  degrees Celsius increase, which has both short run and long run implications for the level of greenhouse gas emissions in the atmosphere.

 There is a virtual commitment for a fund earmarked for small developing countries, which will start off with US$10 billion a year and will grow to $100 billion a year by 2020. This is to be reserved for adaptation to and mitigation of climate change.

 Funding will only partly  rely on voluntary handouts from developed countries, as non- conventional sources will be tapped, including the use of special drawing rights of the International Monetary Fund, together with a mix of public and private capital.

 In addition to funding proposals at Copenhagen, February 2010 will see developed countries required to restate their pledged targets on carbon emissions for 2020 and 2050, and the developing countries pledges for below current “business as usual” conditions. Copenhagen also made progress on tropical forest preservation, which is inadequately funded, and headway too on reducing carbon emissions from agriculture.

 The Copenhagen showdown demonstrated the serious battle of wits and guile between United States and China, for the hearts and minds of the developing world. Both countries want to be the undisputed leader in renewable energy, and they will go to any length to stay ahead of the opposition.