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The Warsaw Voice » Business » August 1, 2013
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Climate Change: Can We Afford It?
August 1, 2013   
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In November, Warsaw will host an international climate conference (COP-19) that follows up on those held in Copenhagen (2009), Cancun (2010), Durban (2011), and Doha (2012).

Conference aims

Scientists are sounding the alarm that concentration of carbon dioxide (CO2) in the atmosphere has grown since it was first measured when Europe and then the rest of the world were undergoing industrialization. At the same time, average temperatures have increased by 2 degrees Celsius in a trend associated with CO2 emissions. The increase is considered to be dangerous for mankind. Many organizations and movements have emerged to defend the atmosphere, and ex-U.S. Vice-President Al Gore has been awarded the Nobel Prize as a defender of the world’s climate.

Meanwhile, some scientists argue that the increase in global temperature is not due to human activity, claiming that this has a negligible influence on climate change. According to these scientists, there is a natural cycle whereby there was much more CO2 on Earth in the past and the climate was, in fact, much warmer.

I don’t want to judge who is right and who is wrong. My approach is different. We should care for a clean environment, breathing in clean air, without any detrimental effects caused by CO2 and other gases. That is why I support all efforts leading to a cleaner planet and climate. That is definitely the greatest challenge facing all of mankind.

How should this challenge be understood?

The challenge is understood in a positive way by practically all countries all over the world and many positive declarations and pledges have been made. The leading role is played by the EU, supported by OECD countries and the G-20, not excluding developing economies. It seems that the understanding of the problem is excellent and any multinational agreement can be easily reached. Unfortunately, the devil is in the details. To name some of them: different levels of economic development and further development prospects, different geographical influences on renewable energy sources (RES), different indigenous sources of energy, and different legal philosophies—should any solution suggested to countries be obligatory or based on pledges, and what are the international consequences of them failing to meet their obligations, if any?

How to measure CO2 emissions: % or tons?

All discussions have been based on percentage references to individual countries. What does it mean when we say that country x has decreased its CO2 emissions by 20 percent or even more since 1990? This says nothing to the average person because he/she does not know what the 20 percent actually means for Australia, for example, and what it means for the EU. Using percentage terms in the discussion on CO2 emissions is not always the right policy because it does not show the actual economic strength and development of a particular country. That is why I appreciate Central Europe Energy Partners’ proposal to use tons per capita rather than percentages in all post-2020 documents. Tons per capita is a clearer reference for everybody and easier for comparative studies, as everyone concerned already knows the actual emissions. That is why, to better understand the whole situation and the differences, I will use tons per capita rather than percentages.

Easier said than done

We have to take note of the huge differences in economic development all over the world, and of the aspirations of many countries to develop their economies through industrialization. In the majority of cases, industrialization means more CO2 emissions. Take, for example, the United States, a wealthy country where emissions per capita in 2011 amounted to 17.3 tons. Canada had 16.2 tons, Australia 19, Japan 9.8, Russia 12.8, and South Korea 12.6, whereas the average for Europe was 7.5 tons. It’s evident that the EU had to spend a lot of money to curb its CO2 emissions. The global average is 4.9 tons as of 2011.

If we discuss the global effect, we should underline that the majority of countries are actually below the EU level. The biggest emitter in the world, China, is quickly catching up with the EU average of 7.5 tons per capita. China faces a disastrous situation because its pollution is very much concentrated in heavily populated industrial areas. Many big countries are in fact far below the EU average. For example, India produces only 1.6 tons per capita, Brazil 2.3, and Turkey 2. This means that these countries will not be very keen to decrease their emissions. Just the opposite, they want to increase them through investment projects, as they aspire to catch up with developed economies. I do not see anyone stopping their ambitions.

As a matter of fact, the world is divided into two blocs: countries crossing the EU benchmark of 7.5 tons of CO2 emissions per capita and those that emit much less. Some of the countries which are above the EU average are at the same time relatively rich and the biggest emitters, and they should come down to the EU benchmark.

Paying lip service to climate change?

We should realize that there is a lot of propaganda in many countries aimed at convincing their populations that they are going to do a lot to defend polar bears and protect the climate. No one can say that nothing has been achieved, but the results are very modest in global terms. The biggest progress has been observed in the EU, which is criticized by many entrepreneurs for spending money on climate protection, as this means a decrease in its competitiveness in relation to countries such as China and the United States. Wolfgang Eder, chief executive of Voestalpine, an Austrian steel-making company, recently stated that an “exodus has started in the chemical, automotive and steel industries. Unless Europe changes its course, that process will accelerate and may not be reversible at some point.” Companies following suit include Royal Dutch Shell, Wacker Chemie, BASF, and Vallourec. The U.S. is building on its shale gas bonanza and attracting foreign investors, but even the use of gas as a cleaner source of energy in comparison to coal will not solve the issue of CO2 decreases, while a recent statement by President Obama on CO2 emissions, so enthusiastically welcomed by green movements, leads nowhere. In his speech Obama referred to coal-fired power plants having to be shut down, yet this was not a new stance, but simply telling everyone the obvious. The U.S. has to close its coal-fired power plants down because they are already too old. According to the National Association of Regulatory Utility Commissioners, about 74 percent of all coal-fired power plants in the U.S. are at least 30 years old, and the average life of such a plant is just 40 years. In my opinion, it would be much better to hear that the U.S. is going to decrease its CO2 emissions per capita to 10 tons by 2020, from 17.3 tons in 2011. Nobody is expecting that to happen, so why do we in the EU have to go well below 7 tons per capita by 2020? Are we so wealthy, and are we alone in the world when it comes to understanding the importance of the climate issue?

The pledges made by 90 countries during the last Climate Conference have been only about 30 percent met, again with the exception of the EU, which has fulfilled all its obligations. Unfortunately, the EU’s impact on the world’s CO2 emissions is below 11 percent.

Is the situation in the EU uniform?

Today, individual EU member states are free to determine their own energy mix. While the French energy mix is 78 percent nuclear power, in Denmark 48 percent of the electrical power is generated from coal. In Poland, winds are not as strong as in Scotland, and in Lithuania the sun is not as readily available for energy generation as in Italy or Greece.

One should admit that the EU’s policy to lower its CO2 emissions is very successful in comparison to the rest of the world, and a suitable program has been adopted to control the level of emissions. The target yearly decrease of 1.74 percent of CO2 under the ETS scheme is regularly achieved.

That does not mean that everybody is happy with this scheme. The European Parliament is divided on the price of CO2 emissions allowances. And, if we in Europe cannot reach consensus, how can we expect to see a global understanding during the climate conference? For the time being, we do not know how to bridge the huge gaps between individual EU countries. The EU average is 7.5 tons per capita (2011), but Luxembourg, for example, has 19.2 tons and Romania only 4.5 tons. Luxembourg had a GDP per capita of 83,600 euros in 2012 and Romania had only 6,200 euros, but in percentage terms both these countries have to decrease their emissions by 20 percent by 2020. Romania should be allowed to have higher emissions if it wants to catch up with the EU15, whose average GDP per capita was 29,700 euros in 2012.

It seems evident that richer countries should contribute to a decrease in CO2 emissions to a greater extent than countries with weak economies. Richer countries include those in the EU, OECD, and the G-20. The contribution of all these developed countries should be more or less equal until 2030 and calculated not in percentages, which would not be fair, but in tons per capita. According to my calculations, all these countries should be shooting for 7.1 tons per capita by 2030.

As for developing countries, they should be helped by the wealthier ones through the delivery of Best Available Technologies (BAT) and by enabling them to develop with the lowest possible CO2 emissions.

Suggestions for the conference

- For a better understanding of CO2 emissions by the global population, a switch in the calculation method should be seriously considered from percentage terms to tons per capita.

- Richer countries who are the biggest emitters (EU/OECD/G-20) should set their target emissions level by 2030 at 7.1 tons per capita.

- Developing countries should get proper aid to deploy BAT in their development.

Bogdan Janicki
Senior Advisor
Grupa Lotos & CEEP
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