Print

Mail

wiki links

Carrots, sticks needed to fight global warming

AFP, WASHINGTON
Friday, Feb 16, 2007, Page 9

Saving the planet is a worthy goal, but corporate America also sees that there is money to be made in the fight against global warming.

First, however, the US business world needs its skeptical government to pave the legal and regulatory path to climate riches.

Former Federal Reserve vice chairman Roger Ferguson, who is now a top executive at insurance giant Swiss Re, spelt out the case for government action at a climate change conference of global legislators held at the US Senate on Tuesday.

"Only a long-term policy framework provides the incentives to the business community that we are eager and willing [to pursue]," he said.

As Ferguson noted, the insurance industry is as vulnerable as any sector to the intensifying storms that scientists say are a devastating offshoot of climate change.

In 2005, insurers paid out a record-breaking US$78 billion to victims of natural disasters worldwide, including US$45 billion for Hurricane Katrina alone.

Corporate bosses noted the EU's pioneering experience in setting up a market to "cap and trade" emissions of carbon dioxide and other greenhouse gases.

Under this system, which has had a volatile two years in existence, EU companies trade excess emissions of greenhouse gases among themselves with the aim of slashing overall levels.

Such schemes are already being used experimentally by California and northeast US states, while the US leads the world in research into renewable energy sources.

"We believe that the time has come for America to adopt a market-based approach. We believe that cap and trade is just that," said Rick Lazio, a former congressman who is now a senior vice president at JPMorgan Chase.

According to the World Bank, the world carbon market is estimated to have been worth US$25 billion to US$30 billion last year, rising to US$40 billion a year by 2010.

But for the emissions scheme to go truly global, the Republican administration of US President George W. Bush would have to shed its opposition to binding greenhouse limits on industry.

The Washington forum was an informal attempt by legislators from rich nations, and major developing nations like China and India, to craft the outlines of a global-warming pact to succeed the Kyoto treaty after 2012.

Bush has refused to adopt Kyoto, arguing that the economic costs would be crippling and that the science behind global warming remained unclear.

But speaker after speaker at the forum, including Republican presidential hopeful John McCain, lined up to argue that climate change is real and risks becoming an irreversible disaster without action now.

"The business community really wants to be at the table, with the right options," said Steve Howard, chief executive of the Climate Group, a non-profit outfit promoting corporate and government cooperation on the issue.

But Howard stressed that businesses will need a long-term policy framework that covers the next four to five decades to provide justification for the vast investments that are needed now in clean technologies.

Virgin Group tycoon Sir Richard Branson was also at the forum, after last week launching a US$25 million prize to inspire innovators to develop a way to remove greenhouse gases from the atmosphere.

He noted that Virgin Atlantic wants an industry pact to tow planes to and from runways, so they can cut the time their engines are running and limit jet-fuel emissions.

Planes could carry 6 tonnes less of fuel on each journey and 80 percent of local airport pollution would be eliminated, the British entrepreneur said.

But Virgin is "having hell" to persuade other airlines of the scheme's merit, he told the forum.

"It does seem it needs government sticks, as well as just leaving it up to companies to do it themselves," he said.
This story has been viewed 1385 times.