ImageIn my pre-Doha blog I anticipated that we should not expect meaningful gains for the climate nor for business from COP18. That was proved the case. Negotiators from 200+ nations battled with the fragmented, confused, ineffective processes of the UN’s Framework Convention on Climate Change (UNFCCC) and managed, just, to keep the intergovernmental wheels moving on three key aspects: extending the Kyoto Protocol until 2020; albeit with a much reduced number of states representing just 15% of global emissions; planning for a successor agreement to the Kyoto Protocol; and, securing funding for developing countries’ mitigation and adaptation activities.

The most important achievement of COP18 was the extension of The Kyoto Protocol, due to expire at the end of this year, for another eight years to 2020. Without this, the intergovernmental process would have stalled completely and been unable to achieve a 2020 successor.

But a much reduced set of countries now carry the Kyoto baton that together represents only 15% of global emissions. Canada, Japan and Russia have left it to Australia, the EU and a few other small nations to struggle on valiantly under the much reduced Agreement.

So – in terms of keeping the wheels turning and spanning the gap to 2020 when the successor agreement to the Kyoto Protocol is to be put in place – progress was made, although clearly inadequate in its impact on global emissions reductions.

Christiana Figueres, Executive Secretary of the UNFCCC summed up the Doha outcomes as “moving steadily in the right direction ….. but alarmingly slow”, and went on to say that “The UN is the venue for global decision-making, but it is not the driver of domestic decisions. Domestic interests in resource sustainability, stability and competitiveness are the powerful drivers of action on climate change.”

What she really means is – it’s time for business to provide the lead.

 

A rocky road ahead, but a powerful precedent for business leadership

The ‘Doha Climate Gateway’ (the term given to the collection of agreements struck in Doha) opens to a rocky road of much tougher negotiations required to seal an all-nations post 2020 climate deal by 2015, and we’d need to be highly optimistic to anticipate a positive outcome given past form.

Many of the same issues remain - developing nations demanding technology transfer & climate aid while developed nations dig in for better governance, measurement and payment for results. This suggests that pre-compliance action across the private sector is where progress will be made for the next eight years at least.

However, there is a powerful precedent for successful business leadership within a UN inter-governmental agreement. The UN’s Montreal Protocol of 1989 has been hailed a success in protecting the ozone layer and transforming the $1trillion CFC industry. The Montreal Protocol took shape after 500 producers and users of CFCs, led by Dow and Du Pont, issued a statement supporting international regulation of ozone depleting substances based upon scientific research conducted in laboratories (i.e. without clear evidence from the field).

Hailed as a success, this Treaty has focused on its core task and made quick and steady progress in protecting the ozone layer. It has worked in collaboration with business and other Agencies to progress its objectives. For example, the United Nations Development Agency was recently recognised for the $670m support it has mobilised to 118 countries to destroy ozone depleting substances and at the same time avoid 4Gt of GHG emissions.

 

What should business do after Doha?

While the UNFCCC process limps along with the tacit support of 200 nations, it has not been able to realise and leverage the potential of the private sector the way the Montreal Protocol did for ozone depleting substances. ;As a result the inter-governmental process is set to fail to deliver a stable climate.

In addition, the failure of the CDM to ensure developed nations raise their mitigation ambitions, despite its success in identifying and funding a multitude of cost-effective reduction opportunities, has made the private sector extremely wary of the UNFCCC’s ability to scale private sector finance effectively.

There are, however, critical lessons that can be learned from the Montreal Protocol about how business can help shape global agreements that work.

  • Business led on the ozone depleting substances issue, and used the UN process to formalise rules which rewarded its leadership. Business has the capital, innovation capacity, and vision to do the same for climate change.
  • Business made its investment decisions on the basis of incomplete but compelling science. The science of climate change is more solid, and so business is again in the position to act on sound intelligence to minimise risks and optimise commercial opportunities in a low-carbon economy.
  • A large part of business’s response to the ozone depletion issue was driven by competition between the US and Europe within a $1trillion industry. The same positive power of corporate and national competitiveness needs to be unleashed to solve this issue.
  • Business was able to influence the shape of the Montreal Protocol through its ability to deliver solutions. Business has the same to deliver for climate, and needs to bring that capacity and ingenuity to the heart of the political process.
  • Business must use the eight years between now and a planned successor agreement to the Kyoto Protocol in 2020 wisely to ensure success.  

That means making investment decisions that seek competitive advantage for a low-carbon world as a matter of priority, and not treating this as an issue of compliance for when regulations may finally emerge.