When President Obama entered office on Jan. 20, 2009, there were great expectations that the United States would enact climate legislation and join the world community in a new climate treaty by year-end. However, a deteriorating U.S. and global economy has derailed the fast-moving climate talks and drastically lowered expectations for action for at least another year.
Even without a formal, legal agreement emerging from this month’s climate negotiations in Copenhagen, the historic gathering of 192 nations still could provide important signals of what a future international accord may look like.
Coal and oil will still be kings for at least a few more decades, to be sure. The International Energy Agency (IEA), in its annual World Energy Outlook report last month, estimated a 40 percent rise in energy demand by 2030, with 77 percent of the increase being met by fossil fuels.
The United Nations’ Intergovernmental Panel on Climate Change (IPCC) has urged developed nations to reduce emissions as much as 40 percent from 1990 levels by 2020 so that climate change can be stabilized, and in the long term, to reduce emissions at least 80 percent by 2050. Advocates for action on global warming have long hoped that the talks in Copenhagen, being described as the largest environmental meeting in history, would result in a treaty that put the world on track to reach those goals.
However, all the goals set by industrialized nations heading into the conference fall short of the IPCC targets. The Obama Administration recently pledged to cut U.S. emissions 17 percent below 2005 levels by 2020, which amounts to a 4 percent reduction from 1990 levels. China, which recently surpassed the United States as the biggest emitter of carbon dioxide, has pledged to reduce its “carbon intensity,” or the amount of CO2 released for each unit of GDP, by 40-45 percent from 2005 levels by 2020, but the result could be little actual reduction in emissions, considering the expected growth of China’s economy. The European Union, the third-largest source of emissions, proposes cutting 20 percent below 1990 levels by 2020, and by 30 percent if other wealthy nations follow suit.
Leaders of the Copenhagen summit have already conceded that a binding agreement will not be reached before the talks close Dec. 18. The head of the host country, Danish Prime Minister Lars Lokke Rasmussen, has proposed that participants instead negotiate a political deal, and then set a firm deadline for writing a formal treaty. “We are not aiming to let anyone off the hook,” Rasmussen said when he unveiled his plan in mid-November.
In addition to developing a scheme for reducing emissions, negotiators need to address how mitigation efforts will be verified, how much money rich nations will provide poorer nations to deal with climate change, and how intellectual property rights will be protected in technology transfers.
Many climate advocates cite as a chief reason for the lowered expectations at Copenhagen as the failure of Congress to enact climate legislation, leaving U.S. negotiators with nothing to back up their verbal promises. President Obama plans to attend the start of the summit on his way to Oslo to pick up his Nobel Prize, but his presence alone cannot guarantee to other nations that U.S. action will follow.
“The administration has spent the last month or so really reducing the expectations for the conference,” says Bracewell & Giuliani partner Scott Segal, who represents energy companies on climate issues. “They are expecting limited results, and I am not sure the pieces are in place to change that.”
In fact, the U.S. pledge to cut its emissions by 17 percent below 2005 levels is merely a statement of the goal established in the climate bill that passed the House in May. A 20 percent goal is outlined in legislation pending in the Senate, but the administration’s use of the House number in its announcement that Obama would go to Copenhagen implied a lack of confidence that the Senate will pass a stronger bill.
Some observers believe a dose of reality in the lead-up to Copenhagen is not all bad. “A year or two ago, people expected Copenhagen to produce the equivalent of the Kyoto Protocol—a comprehensive climate roadmap for the next decade or more,” said Dan Farber, director of the Environmental Law Program at the University of California, Berkeley, on his blog. “It seems unlikely that the Copenhagen meeting will live up to those expectations, although there’s always the chance of a last-minute surprise.”
At the same time, Congress is inching ahead on legislation, many states are adopting climate programs, the EPA is strengthening regulations, and major developing nations like China and India are showing signs of flexibility on mitigation efforts, Farber noted. “So there is reason to be optimistic looking forward, even if nothing major comes out of Copenhagen,” he said. “One way or another, Copenhagen is just one stopping point on a long road.”
The big question is whether that road will lead to more of the same policies that doomed U.S. participation in the Kyoto agreement—caps on emissions for developed countries; no limits on emissions from developing nations like China and India—or whether a genuine transition from carbon-based energy to cleaner sources can be engineered.
Top U.S. climate negotiator Todd Stern has made clear that any framework based on Kyoto will be rejected again. “We have to send the message, in word and deed, that the effort to reach a new climate change agreement is not simply about putting a cap on emissions, it is about development—low-carbon development,” Stern told the House Foreign Affairs Committee in early November.
Numerous studies this year have argued for wholesale restructuring of the global energy economy. One by the office of former British Prime Minister Tony Blair and the London-based Climate Group said direct investment in clean-energy development on a worldwide collaborative basis would be less costly and more effective than capping emissions and spending on mitigation.
Another report in November by World Wildlife Fund International concluded: “Runaway climate change is almost inevitable without specific action to implement low-carbon re-industrialization over the next five years.” The study conducted by Climate Risk Pty. Ltd. of Great Britain and Australia said achieving an 80 percent reduction in greenhouse gases by mid-century will require worldwide investment of $400 billion annually until 2025 in energy efficiency and clean generation technologies, low-carbon agriculture and sustainable forestry.
The IEA made a similar estimate in its World Energy Outlook 2009 report. The agency said “cumulative incremental investment of $10.5 trillion is needed” in low-carbon energy technologies and energy efficiency by 2030, but it said those costs would be mostly offset by $8.6 trillion in savings on energy costs in transportation, buildings and industry from 2010 to 2030.
None of this means investments in fossil fuels will decline in the coming decades as the oil, gas and coal industries scramble to meet energy demands that will begin rising quickly once the global recession ends.
The head of British Petroleum, Tony Hayward, projects that $1 trillion a year will be invested in energy development worldwide until 2030, with much of the money going for crude oil and other fossil fuels. “I don’t believe there’s a shortage of fossil fuels…We have around 40 years of oil and 60 years of gas at the current consumption rates,” Hayward told the Commonwealth Business Forum, a meeting of more than 50 countries, in late November.
Peter Voser, CEO of Royal Dutch Shell, made a similar forecast in an October speech to the World Business Forum in New York, saying that “even with rapid growth of renewable energy, fossil fuels and nuclear power will still supply at least 70 percent of the world’s energy in 2050.”
The transition to cleaner forms of energy will take decades, Voser said, noting that it typically takes 25 years for a new source to capture just 1 percent of the energy market.
China provides a perfect example of the problem. While the government’s goal in the world’s largest and fastest-growing nation is to have 20 percent of its energy come from renewable sources by 2020—and it has doubled the number of wind-energy plants in each of the last four years and committed to building 30 new emission-free nuclear power plants—China also has plans to build more than 550 new coal-fired power plants over the next eight years. As a result, some experts expect China to account for half the world’s growth in greenhouse gas emissions over the next 20 years.
To help address that dilemma, the IEA in a separate report this fall called for construction of 3,400 carbon-capture and storage projects by mid-century, mostly in developing nations that will account for 97 percent of the growth in emissions. The cost would be more than $5 trillion, with $275 billion needed in China and India just for construction of 62,000 miles of underground pipelines. Indeed, one of President Obama’s key achievements on his recent Bejing trip was the establishment of a robust new initiative with U.S. and China cooperation on clean coal research and development. Norway has suggested a World Bank trust fund should finance CCS projects, as a way to meet the demands of developing nations and that the industrialized world bears the brunt of climate change mitigation costs.
Yvo de Boer, executive secretary of the United Nations Framework Convention on Climate Change, has called for global spending of $100 billion annually to help vulnerable nations adapt to climate change and $200 billion annually to develop clean energy sources.
Thanks largely to the recognition of de Boer and other negotiators that there is insufficient time and consensus among nations to craft a legally binding agreement, it seems more realistic to develop something akin to a political agreement—one where the President’s and China’s aspirational limits on carbon emissions can set the stage for longer-term negotiations. In the meantime, the U.S. and global economies need time to recover. Until the U.S. economy is growing again and the 2010 elections are completed, it is highly unlikely that Congress will take any action on climate legislation.