Page last updated at 13:17 GMT, Tuesday, 9 December 2008

We need to turn carbon into gold

Oliver Tickell
Oliver Tickell

Little meaningful progress seems to have been made at the UN climate summit in Poznan, Poland, says Oliver Tickell, author of Kyoto2. In this week's Green Room, he calls on world leaders to back a deal that will raise the serious funds needed to deliver a low carbon future.

Solar mirrors (Getty Images)
Developing nations need financial support in order to switch to renewables

Progress at the UN climate summit in Poznan, Poland, appears to have ground to a halt.

As the global gathering enters it second and final week, there has been a dismal lack of progress to date.

One of the key stumbling blocks is how all the things that we need to tackle the climate change problem will be financed.

Here are some of the key topics being debated:

Forests and soils

Forest destruction and degradation contributes up to 20% of human greenhouse gas emissions.

Pile of logs (Getty Images)
Trees are worth more dead than alive

To have a hope of bringing climate change under control we need to bring these emissions to a halt, and make forests (as well as soils, peatlands and other terrestrial sinks) into major carbon sinks.

But how can we bring about the change we need?

The answer has to be to make forests worth more alive than dead to governments and forest owners.

As things stand we are happy to pay for palm oil, beef, soya beans, rubber and timber from deforested land.

To persuade countries like Brazil and Indonesia to change their ways, we need to pay them more keep their forest than we are already paying them to destroy it.

Currently the main idea, which goes under the acronym of REDD, is to create carbon credits by reducing deforestation in poor countries, and selling the credits to rich countries so that they can let their industrial emissions rip.

But this suffers from the grave defect that we need to reduce emissions from both forests and industry at the same time, not trade one off against the other.

Adaptation to climate change

The cost to poor countries of the climate change that is already taking place, no matter what action we take to reduce emissions, is up to $100 billion per year.

This cost is incurred in the effort to cope with the consequences of drought, flood risk, rising sea levels, increasing insect-borne disease, and other hazards.

So far, a paltry few percent of this funding has been lined up. Since the damages are a direct result of the historic emissions of rich countries, and the world's poorest people are the principal victims, this is nothing short of iniquitous.

Meanwhile, more than $60bn-a-year is sloshing around the world's carbon markets, such as the European Union's Emissions Trading Scheme and the "flexibility mechanisms" of the Kyoto Protocol.

It sometimes seems that everyone is making fortunes out of the carbon market, except those who really need it to adapt to the far harsher conditions that climate change is creating.

Renewable energy

Renewable energy is a key part of any sustainable future. But developing and rapidly industrialising countries are generally choosing coal-fired power generation, because it is relatively cheap, it works, and it's available now.

Coal power station's cooling tower, China (Image: AP)
Every fossil fuel power station built locks in decades of further emissions

This development path will lock these nations into burning coal for up to 75 years, undermining any effort made elsewhere to reduce emissions.

This makes it essential to divert the hundreds of billions of dollars each year that are being invested in fossil fuels in developing countries and put them into renewables.

But in order to make this happen, extra funds need to be found to bridge the gap between the cost of coal fired power stations and renewables.

In the long run, renewables make good economic sense because once they are built there is no need to buy the fuel to keep them running.

But in the short term there is an extra cost to be paid and at the moment, there's no one to pick up the bill.

Energy efficiency

Vastly improved energy efficiency is absolutely necessary to reduce greenhouse gas emissions and to satisfy rising demand for energy around the world.

Even though energy savings can be made for next to nothing, they tend not to take place. This is usually because the costs are picked up by one person, while another enjoys the benefits.

So how are we to stimulate the revolution we need?

One answer is to regulate. EU citizens are already aware of the "energy rating" system that applies to many household appliances, and this approach has been highly effective. It should now be extended globally to all energy consuming goods, homes, buildings, factories and offices.

Poor countries will of course need extra funding to have their short-term costs covered. But in the long term, they will also benefit from reduced energy costs.

Powerful industrial greenhouse gases

The hydrofluorocarbons (HFCs) are gases used as refrigerants and foam blowing agents.

Pile of fridges (Image: PA)
The use of HFCs, used in fridges and freezers, continues to grow

They were introduced by the chemical industry to replace ozone destroying CFCs, which have (almost) been phased out by the Montreal Protocol.

However, HFCs are powerful greenhouse gases, and their production is rising by 15% per year.

The Environmental Investigation Agency estimates that without controls, they could be responsible for the equivalent of about 10 gigatonnes of CO2 emissions per year by 2040, or about one-third of the world's current burn of fossil fuels.

The obvious way to control them is in the same way that the Montreal Protocol phased out the CFCs.

This would involve a direct regulatory approach, guided by an expert panel, with funding made available to help developing nations meet the cost of adapting affected industries.

Where is the money going to come from?

Currently there is no mechanism capable of taking on the problems of climate change.

My own calculations indicate that it will cost the world about one trillion dollars each year.

That is certainly a lot of money, but it is an amount that looks affordable when it is compared to what the world is spending to deal with the global financial crisis.

One obvious way to raise the funds is to sell greenhouse gas emissions permits on a global basis, rather than giving them away as under the current Kyoto Protocol.

With industrial global emissions accounting for about 33 gigatonnes, a $30-per-tonne carbon price would pay the whole bill.

The EU is already going this way. More and more allowances under the ETS are being auctioned, and the European Parliament is calling for the proceeds to finance climate solutions.

President-elect Barack Obama has a similar national policy for the US, and a new report by humanitarian charity Oxfam calls for this model to be applied to rich country emissions allocations, with auctioning taking over from free allocations.

This general approach has to be the way forward, for the simple reason that there's nowhere else for the money to come from.

Governmental aid flows remain pathetically insufficient even to deal with all the "old" problems of poverty, never mind the new problems of climate change.

Charities are nowhere near rich enough, and the private sector will only invest where there is profit to be made.

So here is one principle for delegates in Poznan to agree on - the carbon market must be turned into gold, not for carbon traders and financiers, but to finance the world's transition to a low carbon, equitable future.

Oliver Tickell is author of Kyoto2 - how to manage the global greenhouse, published by Zed Books

The Green Room is a series of opinion articles on environmental topics running weekly on the BBC News website

Do you agree with Oliver Tickell? Do we have to make it more cost effective to protect the planet than it is to pollute it? Are carbon markets, like the EU Emissions Trading Scheme, failing to deliver the money where it is most needed? Or is there little hope of nations reaching a meaningful agreement on how to curb climate change?

People like Steve Jones and William Walsh are prime examples of the fools that have let this problem get to the stage it is at. Anyone who can deny the fact that mans impact on this planet is getting worse and will eventually lead to our demise is the equivelant of those fools who proclaimed the earth was flat and that the sun orbited us. Mere fanatiscists that will not accept that change is needed and fast. I fully agree with Oliver.
Paul Reynolds, UK

Why not simply place a direct carbon tax on every barrel of oil and ton of coal,(Tax the source). The more a country consumes, the more they pollute, the more money they are contributing. Monies collected could then be allocated to fund climate mitigation programs in the developing world. Such a fund could be administered via the World Bank and or the UNFCCC.
Geoff Hodges, Indonesia

Our world is doomed already if we have to pay people NOT to destroy it !
Philip Lethbridge, Wakefield

I wish people would actually do some research before jumping on the bogus 'carbon footprint' bandwaggon. Climate change is a natural cycle mainly caused by solar activity. By focussing on this red herring, we are ignoring much more important environmental issues, that will have a real effect on us in the long term.
Ben, Guildford

Aha! So according to the author the rich countries should pay poor countires to keep their forests and the rich countries in this way could emitt their emmisions.

In this way, the rich would develope and the poor would be a reservation of wild naives.

My response: Let the real barbarians, like the Brits, Belgians and Spanish, nations who destroyed their forests, plant trees in their own countries.

Why you Brits destroyed your own forests? You are the real barbarians.
Ravi, Turku

More rubbish on how greenhouse gases are catastrophic for our fair planet.

From the whole report, the only item that really stands out for me (other than the fact that defostiation and land use change is not good for our environment) is the following two paragraphs;

"Meanwhile, more than $60bn-a-year is sloshing around the world's carbon markets, such as the European Union's Emissions Trading Scheme and the "flexibility mechanisms" of the Kyoto Protocol.

It sometimes seems that everyone is making fortunes out of the carbon market... "

And thats the problem. There are too many people getting rich off the back of this GW/CC bogeyman. It is no longer science when people will use all their resources to get rich from proclaiming religious verse on AGW "doom Dooom DOOOOM"

To much money is going to carbon businesses and the government for them to stop funding the pseudo scientists and climate modelers. It doesn't make "business sense"

To get the truth to the people, funding MUST go to real scientists to study changes in our climate and to projects that protect forests, fish stocks, green land etc etc. Only then will we combat "Climate Change"
Paul Shanahan, Manchester

Ok so let me get this straight. You make cattle more valuable alive than slaughtered, then no one will slaughter cattle for meat, this reduced supply will drive up the cost of meat, which will make it more vuluable slaughtered than alive. So again you make it more valuable alive than slaughtered, which will reduce supply and drive up the cost of meat again, making cattle more valauble slaughterd than alive. Only the wealthy will eat meat? Good luck selling this idea.

Also we are going to replace HFC's with something new? Let me guess, Amonia right? Amonia was used as a refrigerant before it was replaced by CFC's which were replaced by HFC's which will be replaced by amonia agian. Do you people actually get paid for this circular thinking?
Ken, Halifax, canada

Yet another propaganda piece from blinkered environmentalists, and the BBC being the bastion of illuminati propaganda will toe the line and give this guy some space. Read the FT editorial entitled "And now time for a world government" and you will see where this disinformation is headed. People do your own research before you accept this rubbish!
Steve Jones, London

Yes, I agree with Oliver Tickell. I'm glad he mentioned energy efficiency (too much energy is being wasted at present). It is one advantage of energy prices increases people may use their energy utilities more wisely. Regards, Micheal.
Micheal O' Conghaile, Campinas, Brazil.

"Progress at the UN climate summit in Poznan, Poland, appears to have ground to a halt" fantastic
oh yes, err yes

Anyone who knows the frustration of getting "green" projects off the ground would agree with this report. We stakeholders (all of us on earth that is) will never achieve the ghg reduction goals that are necessary to turn back the anthropogenic emissions clock under the current systems in place. They were a start, but much more will be required of us. A Social Carbon Cost must come into play where a real value is established for gwp=1. I also propose that the concept of "additionality" be scrapped entirely and that the qualifying concept be one of "baseline and reduction or performance benefit" which uses the already established methodologies of baseline and offsets. This way already established formulas and easily available technology can monitor the actual performance results of renewable systems installations or sample representative models of energy efficiency mitigation projects to quantify actual results. Project applications and verification would be rapidly fast-tracked under such a method, all offsets could be digitally ID'd, secured, tracked, and cleared yearly worldwide. This would do away with the backlog and expense of the current CDM structure which sets the standard for process. The new system would be more reliant on an APX-type registry as is used by the VCS. In essence, keep what is good and scrap what is not working fast enough.
stephen vance, conshohocken, pa, usa

I think we do, I agree. To governments economics and the economy make the world turn and its all about balancing the books. Giving money to countries like brazil and Indonesia would aid the maintenance of rainforests but then there is the question of how job loss is to be compensated for. These countries are poor enough already, industries that are creating revenue aren't likely to stop because deforestation is the means of creating the revenue. Also if there is a demand for mahogany or rubber derivatives who says that persons are going to stop tapping into the market. A cost effective approach for governments is an active step forward but for people who rely on an industry for income its not. GDP per capita will decrease inevitably and international competitiveness will be at stake. What government is going to sacrifice a rise in international competitiveness at present for te sake of preserving the environment for the future. There are many factors which make this argument complicated and EU not necessarily effective.
Diana Pearce , Wetherby, West Yorkshire

Good thinking-you hit the nail front and centre. I just hope humanity has the will and ability to attain this goal. Our past history leaves me a little cynical however---good luck to us all!!!
robert p curtin, santos-brazil

Man's contribution to warming is about one tenth of a percent. All the rest is part of the natural cycle. To cure the mythical global warming Tickell et al would bring about global poverty on an apocalyptic scale. It is a trumped up excuse to institute global government while certain interests become rich while contributing nothing but mischief.
William Walsh, Newport, NH

If paying ransom for the natural habitat of future generations of this planet is the ONLY way of preventing more damaging changes to the climate, then I believe we need to offer all we can to those who refuse to cooperate in the conservation of our ecosystem on a environmental level and begin as soon as possible. However, we will have conceded yet another element of conscience with regards to their stewardship of the planet as we accept the fact that greed really has overcome any compassion to be found in the motivation of the rulers of mankind. The World's leaders have bound themselves to the will of the industrial sector who themselves have too much at stake in the old order of energy production to risk the pole-shift in policy those who are serious about climate change propose and, hence, will not be able to form agreements that limit the commercial potential of this super-sector at Poznan or any other summit even if they have the slightest private belief in the proposed solutions openly available to climate change, such as those the energy [r]evolution is pleading for the enactment of. Therefore, we might have to stoop to their level and wave the only carrot they follow at them in a last gasp attempt to stop them destroying the planet we know so well yet take such advantage of. It's far from first choice but perhaps it will become the temporary reprieve necessary to allow the advancement in attitudes towards the seriousness of this largely man-made problem to manifest as political decisiveness to act against it. My real fear is that they will only see this necessity when it is already too late.
Ben Jasper, Prague

It is a pity that the UN Adaptation Fund or an equivalent climate change fund does not to my knowledge allow individual donations. As i would happily transfer my existing monthly charitable donations if i knew it might help. Predominantly individuals want to help, however it is finding a way to channel that desire to an effective solution that i think is blocking their good intentions.
anonymous, UK

I agree wholeheartedly - and I believe that to really protect life on Earth, we need to go further and ban all use of Fossil Fuels from 2020 - that is for any use at all - ie transport, energy, plastics, agriculture and medicines. That is what I am going to campaign for.
Melanie Cartwright, london

YES YES YES, We have to take action now and carbon credits is the way forward, fingers crossed the powers that be will see it this way too.
suzanne, Edinburgh

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