Fresh reports every day tell of glaciers melting, thinning polar ice triggering prospects of a new colonial scramble for the riches under the Arctic ice cap, dangers to the natural habitat of polar bears and worries about rising water levels inundating low-lying countries from Kiribati to Bangladesh. Then there are the pieces of a trillion plastic bags that are discarded every year on both sides of the Pacific being fed mistakenly by albatrosses to their chicks on remote Midway Atoll, and soaring oil prices causing truck drivers and fishermen across Europe to set up blockades.
With this background, environment ministers, scientists and bureaucrats from the Group of Eight industrialised nations and leading developing countries – like Brazil, China, India, Indonesia, Mexico and South Africa – met in Kobe, Japan, last weekend. Their aim was to do something about the most pressing environmental issues facing this fragile planet. Three days of deliberations produced just another few million dollars of hot air. They agreed to try to agree to halve emissions of gases blamed for global warming by 2050 – which is almost two generations away – and called on the rich countries – which is them – to lead the way. Just to show that they have their eye on hot-button issues, they also declared that reducing the use of disposable plastic bags and other consumer products is a good idea.
Devotees of international diplomacy said Kobe represented a significant step forward from last year’s decision in Heiligendamm, Germany, to “seriously consider” slashing output of greenhouse gases. Kobe now has its own special line in the index of international negotiations, as “the Kobe Initiative”.
It should be named “the Kobe Pious Wish”. Indeed, how could anyone dream of reaching a real agreement while George W. Bush is in the White House? Scott Fulton, of the US Environmental Protection Agency, said the purpose of Kobe was to avoid “delicate subjects” like midterm emissions-reduction targets. How could it be otherwise when the US has rejected the Kyoto Protocol, which requires greenhouse gas cuts of a mere 5.2 per cent from 1990 levels by 2012?
Washington does its defiant diplomatic dance with the grace of a spoiled child screaming that it won’t join the party unless the new children, notably China and India, promise in advance not to drink too much. The newcomers ask why they must restrict growth when the industrialised countries have despoiled the world’s resources and fouled the atmosphere for years. There are few reasons to be optimistic that a new US president will change American attitudes.
Global warming itself is becoming a fervently fought issue that could turn into a latter-day religious war. Most scientists accept the overwhelming evidence that global warming poses a major threat. But there are still small groups of non-believers, with powerful political and business backing, who demand more evidence or more time.
Even among the believers, there are deep divisions: some, like Al Gore and Nicholas Stern, argue for strict action now to save the Earth for future generations; others claim that the prices Mr Gore would impose on this generation are too high.
One camp wants to pour resources into the development of new species of genetically modified trees which will gobble up the harmful gases and thus remove the problem. Others argue that scientists have always solved problems in the past.
Yet others say global warming has stolen the limelight and that other issues like environmental degradation, nuclear proliferation, global hunger and social injustice are more serious and immediate dangers.
So the hot air of greenhouse gases and the hot air of politicians talking continue virtually unabated. Yet, surely, it is time to do something urgently to lighten the damaging footprint of humans. The issues are interlocked, and arguing over which should be tackled first encourages inaction and exacerbates the problems.
The rising world population has seen the available land per person fall from 8 hectares in 1900 to about 2 hectares today. The cutting down of forests, pollution of water sources, demands for higher standards of living and more energy consumption are all killing the planet.
Spoilt Americans are screaming about the high price of fuel for their gas-guzzling cars as petrol reaches US$4 a gallon. China and India also have lots to learn about responsible economic management. India pays out US$20 billion a year in subsidies to keep petrol and kerosene prices below market rates. China’s prices are lower still.
It is surely time for the G8 leaders to take some simple steps that might pave the way for more substantial measures. First, admit China and India as full members to the group, so that they are part of the solution, not an extension of the problem. Next, commit to measures of minimum fuel-efficiency of vehicles, petrol prices that reflect the market – say, a minimum of US$5 a gallon – and shared moves to promote energy efficiency. Learn from what Japan did in the first oil shock of the 1970s.
The markets and speculators are already making a mockery of the politicians. Prices of oil have doubled since May last year, from US$65 a barrel to US$130, and US$200 a barrel oil is no longer mere fantasy. But global demand has risen by just 2 per cent.
Common action may stick in America’s craw. But, otherwise, the law of the jungle will prevail. Who will win? China and India are better placed than the profligate US, used to a high-energy-consuming economy that has run up huge debts.
China has huge foreign exchange reserves and has quietly been wooing friends to assure supplies of oil and other commodities.
But all of us must learn that we all share this fragile home and, like the albatross chicks on Midway, suffer from its damage.
Global warming comes with a big price tag for every country around the world. The 80 percent reduction in U.S. emissions that will be needed to lead international action to stop climate change may not come cheaply, but the cost of failing to act will be much greater. New research shows that if present trends continue, the total cost of global warming will be as high as 3.6 percent of gross domestic product (GDP). Four global warming impacts alone—hurricane damage, real estate losses, energy costs, and water costs—will come with a price tag of 1.8 percent of U.S. GDP, or almost $1.9 trillion annually (in today’s dollars) by 2100. We know how to avert most of these damages through strong national and international action to reduce the emissions that cause global warming. But we must act now. The longer we wait, the more painful—and expensive—the consequences will be.
This report focuses on a “business-as-usual” future in which the world continues to emit heat-trapping gases at an increasing rate. We base our economic projections on the most pessimistic of the business-as-usual climate forecasts considered “likely” by the scientific community. In this projected climate future, which is still far from the worst case scenario, global warming causes drastic changes to the planet’s climate, with average temperature increases of 13 degrees Fahrenheit in most of the United States and 18 degrees Fahrenheit in Alaska over the next 100 years. The effects of climate change will be felt in the form of more severe heat waves, hurricanes, droughts, and other erratic weather events—and in their impact on our economy’s bottom line.
impacts and a comprehensive look at the costs to the country as a whole. Our detailed accounting of costs begins with historical data for four especially important climate impacts: hurricane damages, real estate losses, energy costs, and water costs. We then build upward to estimate the impact of future climatic conditions in these four impact areas. The second part of our analysis is a comprehensive view of climate change impacts: we take a general rule about how the climate affects the country as a whole and then apply that rule to business-as-usual climate forecasts. Although the detailed impact studies can provide only a partial accounting of the full economic costs estimated by our comprehensive model, the impact studies allow us to examine the costs of climate change with greater specificity for the particular case of the United States.
Droughts, floods, wildfires, and hurricanes have already caused multibillion-dollar losses, and these extreme weather events will likely become more frequent and more devastating as the climate continues to change. Tourism, agriculture, and other weather-dependent industries will be hit especially hard, but no one will be exempt.
Hurricane damages: $422 billion in economic losses caused by the increasing intensity of Atlantic and Gulf Coast storms.
hurricanes will cause more damage as higher sea levels exacerbate storm surges, flooding, and erosion. In recent years, hurricane damages have averaged $12 billion and more than 120 deaths per year. With business-as-usual emissions, average annual hurricane damages in 2100 will have grown by $422 billion and an astounding 760 deaths just from climate change impacts.
nothing is done to hold back the waves, rising sea levels will inundate low-lying coastal properties. Even those properties that remain above water will be more likely to sustain storm damage, as encroachment of the sea allows storm surges to reach inland areas that were not previously affected. By 2100, U.S. residential real estate losses will be $360 billion per year.
Energy costs: $141 billion in increasing energy costs as a result of the rising demand for energy.
As temperatures rise, higher demand for airconditioning and refrigeration across the country will increase energy costs, and many households and businesses, especially in the North, that currently don’t have air conditioners will purchase them. Only a fraction of these increased costs will be offset by reduced demand for heat in Northern states.The highest net energy costs—after taking into consideration savings from lower heating bills—will fall on Southeast and Southwest states. Total costs will add up to more than $200 billion for extra electricity and new air conditioners, compared with almost $60 billion in reduced heating costs. The net result is that energy sector costs will be $141 billion higher in 2100 due to global warming.
States as climate change exacerbates drought conditions and disrupts existing patterns of water supply.
The business-as-usual case forecasts less rainfall in much of the United States—or, in some states, less rain at the times of year when it is needed most. By 2100, providing the water we need throughout the country will cost an estimated $950 billion more per year as a result of climate change. Drought conditions, already a problem in Western states and in the Southeast, will become more frequent and more severe.
Our analysis finds that, if present trends continue, these four global warming impacts alone will come with a price tag of almost $1.9 trillion annually (in today’s dollars), or 1.8 percent of U.S. GDP per year by 2100. And this bottom line represents only the cost of the four categories we examined in detail; the total cost of continuing on a business-as-usual path will be even greater—as high as 3.6 percent of GDP when economic and noneconomic costs such as health impacts and wildlife damages are factored in.
Many economic models have attempted to capture the costs of climate change for the United States. For the most part, however, these analyses grossly underestimate costs by making predictions that are out of step with the scientific consensus on the daunting scope of climatic changes and the urgent need to reduce global warming emissions. The Economics of Climate Change—a report commissioned by the British government and released in 2006, also known as the Stern Review after its author, Nicholas Stern—employed a different model that represented a major step forward in economic analysis of climate impacts. We used a revised version of the Stern Review’s model to provide a more accurate, comprehensive picture of the cost of global warming to the U.S. economy. This new model estimates that the true cost of all aspects of global warming—including economic losses, noneconomic damages, and increased risks of catastrophe—will reach 3.6 percent of U.S. GDP by 2100 if business-as-usual emissions are allowed to continue.
Damage on the order of a few percentage points of GDP each year would be a serious impact for any country, even a relatively rich one like the United States. And we will not experience the worst of the global problem: The sad irony is that while richer countries like the United States are responsible for much greater per person greenhouse gas emissions, many of the poorest countries around the world will experience damages that are much larger as a percentage of their national output.
For countries that have fewer resources with which to fend off the consequences of climate change, the impacts will be devastating. The question is not just how we value damages to future generations living in the United States, but also how we value costs to people around the world — today and in the future—whose economic circumstances make them much more vulnerable than we are. Decisions about when and how to respond to climate change must depend not only on our concern for our own comfort and economic well-being, but on the well-being of those who share the same small world with us. Our disproportionate contribution to the problem of climate change should be accompanied by elevated responsibility to participate, and even to lead the way, in its solution.
species extinction, loss of unique ecosystems, increased social conflict, and other impacts extend far beyond any monetary measure. But by measuring the economic damage of global warming in the United States, we can begin to understand the magnitude of the challenges we will face if we continue to do nothing to push back against climate change. Curbing global warming pollution will require a substantial investment, but the cost of doing nothing will be far greater. Immediate action can save lives, avoid trillions of dollars of economic damage, and put us on a path to solving one of the greatest challenges of the 21st century.
View the complete study on The Cost Of Climate Change.
What do you think of the height restrictions in Tsim Sha Tsui?
Tsim Sha Tsui is already a crowded place packed with cars and people.
The streets and alleys are small, narrow and filthy.
This kind of environment is uncomfortable and it puts people under pressure.
The more skyscrapers are built there, the more cramped and polluted a place it will become.
The imposition of the height restrictions provides people with more space.
On both sides of the harbour, views of Hong Kong’s hills are often obscured by high-rise buildings.
It is only when I get up to The Peak, that I can get a clear view of the landscape, and, in particular, the hills of the Kowloon peninsula.
The height restriction will protect the view of these hills.
A HK$3.2 billion subsidy scheme to encourage owners of trucks and buses to replace them with eco-friendly equivalents has attracted just 9 per cent of eligible vehicles.
The scheme, launched in April last year, had received 5,681 applications by the end of last month, the Environmental Protection Department said yesterday.
Some 5,355 of these were approved, involving HK$216 million in subsidies.
A total of 74,000 are eligible under the scheme, and owners can claim a grant of between HK$17,000 and HK$173,000 if they get rid of vehicles built before the European Union introduced limits on vehicle emissions in 1992 (Euro I standard) and replace them with cleaner Euro IV models.
Leung Hung, chairman of the Hong Kong, Kowloon and New Territories Public and Maxicab Light Bus Merchants United Association, said the government had not carried out enough consultation.
He claimed Euro IV vehicles were not suitable for places with heavy traffic congestion, such as Hong Kong.
“Many of the users of Euro IV models told us they have to spend at least an extra HK$1,000 on petrol,” Mr Leung said. “These models are supposed to drive smoothly at high speed … but in Hong Kong it is not possible. So the vehicles end up consuming more petrol than they should because they never achieve optimum [operating] level.
His view was shared by Lai Ming-hung, spokesman for the Taxi and Public Light Bus Concern Group. Mr Lai said the subsidy was too meagre, as it covered less than half the replacement cost.
Lawmaker Audrey Eu Yuet-mee, chairwoman of the Legislative Council’s environmental affairs panel, said the scheme was doomed to fail because it was “made behind closed doors”. She urged the government to launch more drastic measures to improve vehicle pollution, such as electronic road pricing.
A spokesman for the Environmental Protection Department said the government planned to give the scheme more publicity to encourage more people to apply.
Dongguan will order 176 polluting factories to shut and 600 to migrate by the end of the year.
The manufacturing hub also will stop approving new investments in highly polluting industries such as coal-fired power plants, cement factories and paper mills, while banning smaller projects in electro-plating and dyeing, according to the Guangzhou Daily.
The paper said the city was too crowded and had neither the electricity nor resources to support new investments that also threatened the environment.
It added that Dongguan had 15 million migrant workers, far outnumbering the 1.68 million local residents.
The mainland is to try to kick a 3 billion-a-day plastic bag habit. But breaking the addiction, in a bid to save energy and protect the environment, will be easier said than done.
On Sunday, it will join a growing list of countries, from Ireland to Bangladesh, that are aiming to change shoppers’ habits when a ban on the production of plastic bags under 0.025mm thick comes into force.
Ultra-thin bags are the principal target of the crackdown because they are typically used once and then discarded, adding to waste in a country that is increasingly conscious of the air and water pollution caused by its breakneck economic growth.
Shopkeepers will also be barred from handing out free plastic carrier bags except for fresh and cooked foods. Those breaking the law face fines and could have their goods confiscated.
The mainland consumes 37 million barrels of what is very expensive crude oil each year to churn out the 3 billion plastic bags that its 1.3 billion people use on average each day, according to official figures.
Bag makers have felt the pinch from the looming restrictions. Some have been forced out of business.
But Ning Rongju of Friends of Nature, a non-governmental organisation, says all will depend on whether the new rules are enforced, especially in cities such as Beijing, where demand for bags is huge.
“The execution and monitoring of the law will actually determine the future of plastic bags,” she said.
Xiao Ling, the mother of a six-year-old boy, said her family was already using nylon shopping bags. But she, too, was sceptical. “Getting rid of all ultra-thin bags will take a long time,” she said while shopping at a Wal-Mart supermarket in Beijing.
For plastic processors, the curbs are the latest blow to a sector struggling with soaring raw material and labour costs, a rising exchange rate and an end to export tax rebates.
The plastic bag industry is highly segmented, with factories in almost every province. One major centre is Taizhou, a city in Zhejiang province, where more than 10,000 manufacturers of plastic products enjoy sales of 40 billion yuan (HK$44.92 billion) each year, according to the Taizhou Plastics Industry Association.
Chen Jiazeng, the group’s director, said “small factories might ignore the rule and keep making ultra-thin bags” as long as they could make money.
The prospect that some underground manufacturers will turn a blind eye to the law is especially unsettling for smaller firms.
The Taizhou Xinxing Plastic Packaging Company, which employs 300 people and has annual sales of about 15 million yuan, mostly from plastic bags, is considering switching to other plastic goods.
Fear of illegal competition is shared by big manufacturers such as Huiqiang in Henan province, whose plastic bags all conform to the new national standards.
Richard Wright, who says new height restrictions on buildings in Mid-Levels are unfair, must either be ignorant of the harmful effects of air pollution or is one of those investors who cares not one iota about how he makes money (“Building height rules are unfair and will discourage investment”, May 26).
If Mr Wright bought his flat to live in then he must have his head in the sand not to have read, over the past few years, how the “tunnel and wall” effects of high-rise buildings exacerbate air pollution. Central and Mid-Levels are now two of the most dangerously polluted places in Hong Kong to live, and if the city adopted and followed modern air-pollution indicators, he would learn that these are areas not even fit for human habitation.
If, on the other hand, his purchase of a flat was solely for investment and hopefully capital appreciation, then he must appreciate that no investment is without risk.
He cannot be unaware that public sentiment has changed over the past few years about unrestricted building of skyscrapers by property developers. If he missed this changing sentiment and did not adjust his investment strategy accordingly, he should have stuck to keeping his money in a bank savings account.
Founded in 1886 in Boston, Arthur D Little (ADL), the world’s first management consulting firm, is focusing on advising Chinese enterprises on maximizing the benefits from the international trade in carbon credit under the Kyoto Protocol.
To do so, the company’s China operation, covering Beijing, Shanghai and Hong Kong, is expanding its consultant team from 45 to 100 professionals in 2008. In an interview with China Business Weekly reporter Tuo Yannan, Thomas Schiller, managing director of ADL China, says his single most important goal is to bring ADL’s expertise and experience to the fast growing Chinese market.
Arthur D Little was established by Arthur Dehon Little, a chemist, who was credited for the discovery of acetate, and co-worker Roger Griffin, in Cambridge, Massachusetts. The company was involved in the development of the word processor and synthetic penicillin, and the founding of the NASDAQ trading system. Today the company is one of the world’s leading management consulting firms, providing a broad range of services to enterprises such like GE, IBM and GM.
Q: What kind of carbon advisory services do you provide? And what benefit can your customers get by this service?
A: First of all I must explain that carbon advisory is just a very small piece of advisory we provide. Actually though we are a strategy consulting company, we provide not only strategy but also innovation. We do carbon advisory as a part of strategy, we need to identify the risks and the opportunities, and especially in the western world, carbon margin is a long-term effect. If you identify the strategy, you consider how the carbon makes a “carbon margin”. Use the investment strategy as an example, you can invest in low carbon technology that has a long-term positive affect on your business.
Let’s use energy sourcing for an illustration. For example, for a chemical industry company energy is its most important cost of its business, so the entire carbon margin strategy means investing for 20 years. Especially in the CO2 emissions and the downstream of the products used. We provide our customer’s entire strategy including designing the value chain, investment plan, and so on. It’s not a strategy from which you can make a profit in one night, but a forward-looking plan for the future especially in multinational business.
Q: Could you give some examples to illustrate the cost effectiveness of your solutions when applied in the market?
A: We have three examples from the different industry segments. First one, a Saudi telecom operator. We made a strategy in investment changes that resulted in a 14 percent energy efficiency improvement and 40 percent CO2 emissions reduction.
For a manufacturing group we had $1.5 million in savings. And the “carbon margin” we did for a national oil company had $10 million in revenues from carbon credits.
Because the carbon credits can be traded globally, and based on our strategy using the different investments, we have different services to provide. Take an example from a global oil company. It’s allowed 30 carbon credits globally. If the company not consumed all the carbon pollution, it can sell the rest carbon credits to other companies. So they can get revenues from those trades.
Q: In China, who are your customers in carbon advisory services? The Chinese enterprises or MNCs?
A: Currently multinational companies are our major customers. They all have very strong business in China and have a deep influence in Chinese companies. But I think Chinese companies here in the local market especially in the areas of energy consumption, energy efficiency and low-carbon investment, will invest more than the foreign companies. So the Chinese companies are our important potential and prospective customers.
Q: Can you give some analyses about China’s efforts to save energy and reduce emissions? And what service do you offer to help your customers adapt it?
A: The Chinese Government has an energy consumption reduction target of 20 percent per unit of GDP by end of 2010 and has its own energy saving targets for new projects, coal-fired power plants and outdated production facilities etc. However, businesses themselves can look to reduce their own carbon emissions and find business opportunities in upgrading their existing business strategies. In particular we can assist companies to reduce their own emissions by using more efficient production technologies and improving materials efficiency. They can also use fewer carbon intensive energy sources in production, make use of low carbon technologies and better manage energy demand and better source appropriate energy solutions.
For example, we worked with an international chemicals company to identify approaches to re-organize their new product division to exploit opportunities created by climate change. We developed a number of segments amounting to 30 billion yuan ($4.32 bilion) market size by 2012 by increasing their competencies and potential for partnerships.
Q: Some MNCs have a very good relationship with the Chinese government and local companies. Do you consider cooperating with the government or private Chinese companies?
A: We do have cooperation with other countries’ governments, including in the United States and mainly in Europe and Northern Europe, even Saudi Arabia. And I think most of our business in China should be with Chinese companies. A lot of multinational companies in China use the business models of Europe or America, but many companies failed because the Chinese market is completely different. So I think making a closer relationship and ties to the Chinese local governments and companies are vital for foreign companies.
Q: Compared with their foreigner competitors, what are the most important things you think Chinese companies should improve on?
A: Of cause it’s dissimilar working with Chinese companies, but a similar problem is management expertise – the management confidence. Sometimes the Chinese companies don’t get enough managers to run the business. Their strong point is that they are very familiar with the Chinese local market. The next step includes two things, first is to enhance the product’s quality, making it more competitive in the global market. Second is to have enough long-term success to do multinational business. Here I see a big value in consulting services in China.
Q: What is your goal in a specific period?
A: We now have three offices in China, in Beijing, Shanghai and Hong Kong. Our clerks were sent to every province in China. Last year our sales revenue grew 400 percent over 2006, and because our business in China grows so fast, we made an ambitious layout for 2008 to increase the number of our strategy consulters from 45 to 100.
With each passing year, the impending crisis of global warming looms closer and closer. Time is running out for preventative action. The European Union’s “20-20-20” mantra aims to cut greenhouse gas emissions by 20 per cent, relative to their level in 1990, and to increase the share of renewable resources to 20 per cent by the year 2020. Is it really viable?
The EU seemingly has a long-term record of championing action to prevent climate change. In 1994, it committed itself to the greenhouse gas reductions set forth by the Kyoto Protocol, and ratified it in 2002. The 15 members promised an 8 per cent reduction in emissions by 2010.
Every industrial nation that has not ratified Kyoto, first and foremost the United States, has been criticised for being “environmentally irresponsible”. But, in the period between 1990 and 2005, the EU-15 managed to reduce emissions by only 2 per cent, and it is now obvious that they will not fulfil the Kyoto commitment. Only five of the EU-15 are on track to meet their targets. The EU-15 could, under the best circumstances, reduce emissions by 4.6 per cent by 2010.
This failure does not come as a big surprise. What is surprising is that the EU-15 have managed to market their failure as a success.
When the 20-20-20 commitment was adopted in March last year, the decision was much trumpeted and sold to the public as another success for EU climate change policy.
However, when it came to sharing the burden of emissions reduction among EU member states, the European Commission proposed in January to change the base year from 1990 to 2005. This approach – endorsed as a basis for negotiation in the recent EU council – amounted to allowing some member states not to fulfil their supposedly binding Kyoto burden-sharing targets.
The reason was simple: the EU-12 – the new members admitted in 2004 – have been outperforming the EU-15. The new members have not agreed to a collective Kyoto goal but, as a group, they are projected to reduce emissions relative to 1990 by around 20 per cent by 2010.
Latvia, Lithuania and Estonia have, for example, managed to more than halve their 1990 emissions by 2005. This can partly be attributed to the collapse of heavily polluting Soviet-style industry. But, in changing the base year for absolute emission levels from 1990 to 2005, the commission also seems to be trying to cover up the EU-15’s failure while pushing excessively large reduction targets onto the EU member states that are already the most environmentally efficient.
By sacrificing the needs of growing economies that have met their goals to those of more mature markets, the commission is rewarding inefficiency and reducing the effectiveness of the EU’s climate change policy and its common market. With the EU-15 comprising 80 per cent of all union greenhouse gas emissions, these countries should take a leading role in its climate change policy. It is time they stepped up their efforts.