The latest UN summit is underway in Montreal, once again wrestling with the knotted politics of climate change, following the entry into force of the Kyoto Protocol and the first year of experience with the EU Emissions Trading System.
 
During the Montreal meetings, some developed countries will attempt to begin discussions of a longer term greenhouse gas reduction commitment, while developing countries will insist on addressing their imperative needs (without emissions limitations): economic growth, poverty alleviation, enhanced access to energy and technological advancement.

The world business community, as represented by the International Chamber of Commerce, recognizes that climate change presents risks of serious economic and environmental consequences. Addressing these risks is clearly a high priority, long-term concern for governments and business. Yet business people remain puzzled and frustrated by the intense flurry of governmental activity that has yet to fully define the challenges or assess the effectiveness of steps already taken. 

One of the fundamental principles of business is that of continual improvement, embodied in the plan-do-check-improvement cycle. In the climate process, while the “doing” phase is underway, business and others have been evaluating the progress made, and have encountered doubts, costs and obstacles to achieving the desired results, which to us suggests the need to change and improve.

What are the real challenges  to be resolved in Montreal? Based on the International Energy Agency’s World Energy Investment Outlook last year, business suggests that securing the energy necessary for development, while also addressing climate change, is the central issue. Energy is a critically important engine of economic growth and higher living standards. In particular, the global response to climate change should be placed in the context of meeting growing demand for energy in a world where nearly two billion people today are without access to the essential benefits of commercial energy, and as such, are impaired from rising above poverty. 

What are the necessary enabling frameworks for stimulating and broadening the business contribution to meeting energy needs while managing climate risks?  The basic requirements are: good governance, sound enforced regulations, strong institutions, intellectual property right protection, safe and stable communities, and open markets.

Do the  Montreal negotiations offer different opportunities – rather than continuing what has thus far given every indication of costing a great deal while achieving little? Can governments grasp the opportunity  to begin framing alternatives that incentivize innovation, encourage all countries to work cooperatively, stimulate investment in energy infrastructure in the developing countries that need it most, and focus on long term solutions, rather than arbitrary targets?

 
The business community is convinced that the most economically feasible way to meet the long-term challenge of climate change is through the more widespread use of existing efficient technologies, and the development, commercialization and dissemination of innovative technologies to help reduce greenhouse gas emissions. There is no question that this is best done within a free market setting.
 
Companies in many parts of the world are already significantly improving energy efficiency through research, investment and voluntary initiatives, and have deployed new processes and products that lower greenhouse gas emissions. Examples include hybrid cars, more efficient power generation (including co-generation), renewable and alternative energy sources and exploration of new methods to capture and store carbon.

Business is heartened by new emerging approaches that reframe the challenge and stress the role of technology in bringing solutions to bear. One promising example is the Asia Pacific Partnership which comprises more than 50% of the world population and more than 50% of the world’s GHG emissions. Another is the G8 climate initiative, which involves other important institutions, like the World Bank, along with business. 

Governments in Montreal should not miss this opportunity to truly advance concrete global cooperation on climate change, and contribute to the broader objectives of energy and development for the developing world.

This is a challenge in which businesses all over the world are engaged: to meet the world's growing demand for energy – essential to raising global living standards – while also reducing the risks of harmful impacts of greenhouse gas emissions.  

Global business remains committed to the UN Framework Convention on Climate Change (UNFCCC) and believes that it provides a useful structure in which countries across the world can co-operate to develop measures to confront climate change over the longer term.

Guy Sebban is Secretary General of the International Chamber of Commerce.

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A version of this article appeared in the South China Morning Post on 10 December 2005.