The business
recipe for combating climate change
Kyoto, 4 December 1997
– World business leaders attending the international climate change
conference urged governments to accept that voluntary actions by industry are
the most effective way to reduce greenhouse gas emissions.
At a separate symposium on business initiatives for mitigating climate change,
a group of ten national and international business associations spelled out
what governments should do to maximize industry's contribution.
In a statement distributed to government delegations, the business leaders said
that the right government framework would include market mechanisms and avoid
excessive regulation. Industry would thus be able to use its technological,
managerial and entrepreneurial expertise to the full.
The business conference was convened by the Japan Federation of Economic Organizations,
Keidanren; the International Chamber of Commerce, ICC; and the World Business
Council for Sustainable Development, WBCSD.
Other industry bodies endorsing the statement were: the Business and Industry
Advisory Committee to the
OECD, BIAC; the Business Council of Australia; the
Centre of Business and the Environment; the International Federation of Industrial
Energy Consumers, IFIEC; the International Federation of Consulting Engineers,
FIDIC; the Union of Industrial and Employers Confederation of Europe, UNICE;
and the World Coal Institute.
Opening the session, Shoichiro Toyoda, Chairman of Keidanren, said: "Industry,
with its know-how, talent and financing power has a vital role in the common
endeavour of solving global warming."
As the business leaders met, government negotiators at the other end of town
continued negotiations on setting a legally binding numerical target for cutting
greenhouse gas emissions after the year 2000.
The business and industry appeal came at the end of a symposium at which company
executives provided evidence that business on every continent is already making
significant progress in curbing emissions.
They listed a whole range of business contributions including a commitment by
Kansai of Japan to reduce CO2 emission by 6% in five years despite an increase
of 13% in electricity generation during the same period. TEPCO of Japan has
already reduced emissions to 86 grams per kilo watt hour, 70% of the average
level in Europe and the United States, the conference was told.
The Aluminium industry in the United States intends to eliminate 40% of CO2
emissions, equivalent to over five million tons by the year 2000. Johnson and
Johnson are committed to an energy reduction of 25% over the same period, despite
increased product output.
Bjorn Stigson, President of the WBCSD, said: "Many of these voluntary business
initiatives have been good for the corporate bottom line as well as for the
global atmosphere."
Other speakers demonstrated how their companies had managed to cut costs by
economizing in energy, recycling waste, overhauling production methods and instilling
strict environmental principles on the shop floor.
Klaus Kohlhase of UNICE said business wanted the Third Conference of the Parties
to the UN Framework Convention on Climate Change to succeed. "We need a
political framework within which we can invest. Business is part of the solution
because it is a major promoter of technology development which will make the
reduction of emissions possible."
Winding up the conference on behalf of ICC Reijiro Hattori, Chairman of Seiko
Corporation said industry would be a major actor in finding solutions to the
global warming problem. They would involve substantial financial investment
, a re-examination of production processes for goods and services and intensified
research.
"This will not be an easy task, we will all be confronted by difficult
decisions of risk management for decades to come," Mr Hattori said. "Such
a complex effort will require thousands of small measures in the functioning
of business of society, having an impact on the daily life of every individual."
A constant theme running through the conference was the importance of an agreement
in Kyoto that provided long-term certainty about the legal framework for the
operations of industrial companies. Experts pointed out that new plant and production
methods were always more energy efficient than the ones they displaced. Investment
in updating plants requires a stable legal background. In order to innovate,
business needs to know where it stands.
Joint implementation as a solution for technology transfer was welcomed by speakers
at the business conference. It allows developed countries to offset their own
emission of greenhouse gases by investing in lower-cost emission-reduction in
other countries. Both countries then share the credits for the result.
Business speakers pointed out that joint implementation would be valuable because
coun
tries with advanced technology were finding that further reduction in greenhouse
gas emissions achieve less at greater cost - the law of diminishing returns.
Such an arrangement would enable companies in industrialized countries to effect
emissions reductions in developing countries, where factories and instillations
are outdated and waste energy.
Michael Kohn, a European authority on energy issues, who is Honorary Chairman
of the ICC Energy Commission, described some of the drawbacks of government
direct regulation in achieving environmental objectives, including lack of flexibility
and escalating costs. "In many countries, environmental regulations became
so technically detailed, strict and bureaucratic that they began to be counter-productive."
In contrast, voluntary agreements were increasingly widespread and experience
shows how effective they could be in meeting government objectives. They also
enabled industry to ensure that its views were taken into account. "Voluntary
approaches are market-friendly and a viable and attractive policy to address
climate change."
Dr Kohn added a warning that failure by industry to carry out its voluntary
initiatives might prompt governments to resort to other instruments, among them
regulation and taxes. Mr Hattori agreed: "Voluntary initiatives have to
produce concrete results if they are to be deemed by governments and the public
alike to be viable alternatives," the Seiko Chairman said.
To
Commission on Environment