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Climate Change


The United Nations Intergovernmental Panel on Climate Change (IPCC) is the most authoritative source of scientific information on climate change. In their last report,500 climate change experts from 100 countries concluded that global warming is for real and humanity is contributing significantly towards it. In October 2006 Sir Nicholas Stern, former Chief Economist of the World Bank and now economic advisor to the UK government, complemented this scientific consensus with a comprehensive economic analysis that concluded the cost of acting now to avert climate change will be much lower than the costs of the devastating consequences if we do not. Former US democratic presidential candidate Al Gore has contributed much to raising public awareness of these issues through his film ‘An Inconvenient Truth’.

Since the industrial revolution the amount of greenhouse gases [most significantly CO2 from the burning of fossil fuels and methane from increasing agricultural production] in the atmosphere has risen from about 280 parts per million of carbon dioxide to about 430ppm [all greenhouse gasses are commonly measured in terms of CO2 equivalent]. If growth of emissions continues to escalate [and the chances are it will with the new economies of India and China moving towards developed world emission levels] then we could reach 1,000 or more ppm by the end of the century.

Greenhouse gases are good to a point because they retain heat. As the sun’s rays hit the earth they bounce back up into the atmosphere but some are trapped by the greenhouse gas effect thus enabling life on earth. More gas equals more heat trapped which is why the earth has warmed by nearly 1 degree centigrade since the beginning of the last century. Scientists estimate that heat could increase by between 2° and 5° by 2050, with the possibility that it could go as high as 10° by end of the century. Stern estimates that temperature increases to this extent could cost between 5% to 20% of global GDP. More to the point there would be devastating humanitarian and ecological effects that would mean dramatic action would be needed. Stern argues it's not too late if we act now; costs could be of the order of 1% of GDP which when set alongside global growth would be manageable without derailing the capitalist project. But delay beyond ten years could mean the costs in human, social and economic terms would no longer be feasible.

To put this in perspective, a 5° temperature increase would be equivalent to the increase in temperature from the last ice age until now. 5° more will bring a dramatic decline in crop yields in many parts of the world, extinction of up to 40% of species, water shortages affecting more than a billion people, intensifying weather systems, and rises is sea levels that could put low lying countries at risk. With as little as 2° increase sea levels could rise by up to a meter. As we look out across the Pacific from this California beach, many of the low lying Pacific Islands would be submerged; coastal land in areas such as Bangladesh would be threatened with the consequence of displacement of millions of people, and major cities such as London and New York would be at serious risk of flooding. Its hard to predict what could happen beyond 5° because of the potential for multiple secondary effects such as sea current reversals and melting of permafrost having consequences that are difficult to model. By this stage the effects could escalate conflicts over resources between rich and poor nations and differing ideologies to the point where civilization as we know it could be at risk of failing.

To contain these risks Stern argues that a target of 450-550ppm of CO2 equivalent should be set. Any greater constraint would be infeasible given the escalation process already under way; any greater and the risks become unacceptably high. He argues that our historic failure to incorporate the cost of greenhouse gas emissions into the global economy is the biggest market failure of all time.

A scientific consensus on the implications of global warming has existed for several years. It seems there is an emerging economic consensus, and that popular opinion is swinging towards the need to act. The USA, energized by the big oil lobby, and its ally Australia, appear to remain resolute in favor of relying on technology to solve the problem somewhere down the track, however both the leading Republican and Democratic contenders for the next US presidential race appear to be pro-climate action, and California [the world’s sixth biggest economy] is pressing ahead with climate change legislation independently.

Irrespective of how glacial political progress on climate change legislation and trans-national agreements, changing consumer perspectives will create radical change for business. The climate for climate change has shifted dramatically. Effects on business are likely to include:
  • Reduced demand for polluting goods and services
  • Increased demand for efficient and renewable energy
  • Switch to cleaner energy and transport technologies
  • Actions to prevent deforestation and renewed forestation
  • Legislative or consumer pressure for carbon offsetting and emissions trading
  • Investment in green technology including bio-fuels
  • Opportunities for working with developing nations to assist their transition to greener energy use.