• Interesting speech by WTO boss Pascal Lamy: “Climate first, trade second”. Talks about border adjustment tax and carbon leakage.
• New French report on the impacts and costs of climate change: billions of euros will be needed to deal with the negative effects on water, health, biodiversity, energy systems, agriculture and forestry and tourism. For a synthesis (in French), see CDurable.info.
• Bad news for gas producers? The International Energy Agency predicts that the demand for gas will peak by 2020 and there will be overcapacity and under-utilisation of pipeline capacity. Read the article in the Financial Times.
• Is carbon trading the next subprime? Yes according to a new report by Friends of the Earth. Bankers and speculators, not the planet, are the real winners of the carbon market. The green group advocates a carbon tax instead of cap and trade. Good coverage in the Guardian and The Ecologist.

• Meltdown for nuclear renaissance? The nuclear safety authorities of three countries (France, Finland and the UK) have called into question the safety of Areva’s third-generation (EPR) nuclear plants. See and the reactions from Areva and Greenpeace.
• The Potsdam Institute for Climate Research, WWF and Allianz presented a new cost analysis of climate policies. Main conclusion: the costs are manageable (only a one year GDP-loss by 2050) and Europe can even afford to go it alone.
• The Guardian’s Environment Network has an interesting comment on the growing skepticism of public opinion about global warming.

• The EU’s announcement that it will back carbon emission reductions up to 95% for the developed world by 2050 is no more than cheap rhetoric. These hollow commitments are meaningless when they are not backed up with clear and detailed plans on how to effectively implement such promises. Moreover, the political leaders who try to impress, will not be the ones who will have to face the evaluation come 2050.
• Deutsche Bank’s top oil analyst Paul Sankey says the oil price will go to 175 dollars a barrel by 2016 and he predicts the end of the oil age as transport will go electric. Excellent coverage of this story in Barron’s (with interview of Sankey) and investor’s website Seeking Alpha.

I have always maintained that it will be business and not policymakers nor civil society which will take leadership in our transition to sustainability and in the fight against climate change. Of course, even the most resource-enlightened businesses still have a long way to go in terms of changing their business models to the new economic and ecological reality of limits but there are encouraging signs that change is happening.

One of the interesting developments is the shifting of climate alliances in the US. 

In recent weeks, several utilities have left trade associations because of the anti-climate-policy stance of these interest groups (see “Companies desert the climate deniosphere”).

It is tragic that this is happening at the same time when we start seeing a public backlash against the first feeble efforts of politicians to tax carbon or create new climate instruments (see the French debate on the carbon tax).

German economist Hans-Werner Sinn (IFO – Institute for Economic Research) makes the excellent case in today’s Financial Times that as long as climate policies do not focus on energy supply instead of demand they achieve very little and even have perverse effects. “… Instead of mulling over for the thousandth time which technical fixes could be applied to reduce CO2 emissions, we should turn to the core question of how to induce resource owners to leave more carbon underground”.

He also provides a good reality-check for the dreamers of carbon capture and storage: “The process of capturing CO2 from a chimney and turning it into a liquid consumes a third of the energy generated by burning the fuel in the first place. On top of that, the amount of storage volume required would be gigantic, as each carbon atom is joined by two oxygen atoms upon combustion – and they all need to be stored. Carbon captured from anthracite coal would occupy five times as much space underground as the coal itself; in the case of crude oil, three times the volume would be needed”.

His critique of current climate policy is hard-hitting: “The silence of politicians on how to slow down fossil fuel extraction smacks of denial. Gesture politics go a long way towards soothing green-tinged souls (and firming up business for the environmental industries), but whether they actually achieve anything appears to be of no interest”.

Sinn’s theory about the “green paradox” is not new. He has been writing on this issue for the last three years. Other climate experts have been critical of his approach but it seems to me that he has some interesting points which need further discussion. For a good critique of Sinn’s ideas, see Claudia Kemfert (head of the energy department at the same IFO): “There is no green paradox” in European Energy Review.

Don’t get me wrong. I am all in favour of transforming our petrol-based car industry and putting it on a more sustainable path. But it seems to me the new enthusiasm about electric cars might need a good reality check.

The latest example of electric car hype comes from Germany, where the CDU-SPD government presented an action plan (“Nationaler Entwicklungsplan Elektromobilität”) to put one million electric cars on the road by 2020. Read about this action plan in Focus, Der Spiegel (“Koalition treibt Wahlkampf mit E-Auto-Plan”) and Handelsblatt. It is interesting to see that some of the media look at this plan as an election stunt from both governing parties.

The problem with electric cars is that they can only be as green as the source from which the electricity is generated. Do we really need cars on the road powered by new coal power plants? Is that climate-friendly?

Another issue is that it will still take quite a while before these cars will be commercialised and bought in big numbers. In the meantime, Chinese and Indians will continue putting more petrol-based cars on the roads and the contribution of the transport industry to global warming will continue to grow.

Last but not least, the batteries for these electric cars need precious metals like lithium and a rush for this metal could lead to new resource scarcities (see Wall Street Journal blog “Peak Lithium: Will Supply Fears Drive Alternative Batteries?”).

Bjørn Lomborg may call himself an environmentalist, but he surely is no ecologist. His latest efforts to remain in the spotlight of the media (and earn in the process huge speaking fees at business conferences) focuses on climate engineering. Tricking several media into believing the climate skeptic had changed sides, Lomborg helped launch the new study of his Copenhagen Consensus Center (brilliant use of the word consensus BTW) on geo-engineering last week.

The study (undertaken by Eric Bickel of the University of Texas at Austin and Lee Lane of the American Enterprise Institute) is an economic evaluation of benefits and costs of starting R&D on climate engineering. Bickel and Lane come to the conclusion that several technical solutions to tinkering with the Earth’s climate would probably be less expensive than current carbon mitigation policies. It has to be said that the study mentions on several occasions that there might be unintended consequences to these experiments which could not be economically valued. The Copenhagen Consensus Center has also given two other scientists the opportunity to look at the Bickel-Lane study and criticise its assumptions and calculations.

A few blogs have published excellent critical reactions to the Copenhagen Center analysis.

The Business Green blog (“Have Bond Villains taught us nothing about messing with the climate?”) highlights the fact that “the project would only serve to mask the effect of climate change, not reverse it by addressing concentrations of greenhouse gases in the atmosphere” and “create an unprecedented political and security challenge as world leaders attempted to negotiate who gets to play God and control the technology”.

The Real Climate blog calls the study a “biased economic analysis of geoengineering” and points out a lot of scientific work which has been ignored by the study’s authors. This blog post concludes: “It may be that the benefits of geoengineering will outweigh the negative aspects, and that most of the problems can be dealt with, but the paper from Lomborg’s center ignores the real consensus among all responsible geoengineering researchers. The real consensus, as expressed at the National Academy conference and in the AMS statement, is that mitigation needs to be our first and overwhelming response to global warming, and that whether geoengineering can even be considered as an emergency measure in the future should climate change become too dangerous is not now known. Policymakers will only be able to make such decisions after they see results from an intensive research program. Lomborg’s report should have stopped at the need for a research program, and not issued its flawed and premature conclusions.”

My other main objection to the analysis promoted by “environmentalist” Lomborg is that his study misses the big picture. Even if more geo-experimenting would be able to help in the climate change battle, it does not do anything for the other sustainability challenges that we are facing (water scarcity, peak energy, biodiversity loss etc). By continuing the hold up the promise of technological fixes, Lomborg provides the illusion that we can overcome all sustainability challenges without having to question our current way of life. I am sure the Danish wonderboy will get lots of new speaking opportunities as a result of this “convenient” study.

Wanna bet that even the next European Commission will suddenly find research money for the geo-engineering illusion?

The coming end of globalisation: Philips CEO talks about the shift from global to regional supply chains – see Financial Times (“Crisis and climate force supply chain shift”). On the same subject, read Jeff Rubin’s “Why your world is about to get a whole lot smaller”

Has “sceptical environmentalist” Bjorn Lomborg really changed sides on climate change as the FT (“Sceptic switches tack”) reported last week? Not according to the Desmog Blog (“Incorrigible Lomborg: Defending the right of rich people to pollute”).

• On the Open Democracy website, Paul Rogers does a good evaluation of some of the studies undertaken by the US military into the security threats of climate change. His verdict is that these studies are excellent at analysing the climate challenge but their solutions are too narrow and very much related to national interests. But he sees some interesting developments: “Some of their analysis of world trends could appear almost word-for-word in a Greenpeace or Friends of the Earth tract; the problem is that they are rarely able to escape from a narrow perspective on national security which sees it almost entirely in terms of the defence of their realm, rather than the common security of the wider world. If even a few of these analysts could rise above that and take a larger – and more truly realistic – view, the service they could do to the wider community could be hugely significant.”

• McKinsey continues to beat the drum of energy efficiency with a new report about the opportunities in this area in the US. The report “Unlocking energy efficiency in the U.S. Economy” shows potential huge profits of 130 billion dollars a year. Read on this report the coverage by GreenBiz. Similar studies have come to the same conclusions for the EU. I wonder if the pay-off is really so big, why it is not happening then? Maybe the answer is in a new book just published by Earthscan “The myth of resource efficiency. The Jevons Paradox” (I will review this book – which I am reading now – next month).

• The French debate on the carbon tax becomes red hot. French finance minister Christine Lagarde thinks the Rocard proposal of 32 euro per tonne of CO2 is “too expensive” but in “Le Monde” economy professor Thomas Pikkety is convinced this price is not high enough to change citizens’ behaviour : “Je ne suis pas spécialiste de ces sujets, mais j’ai du mal à croire qu’une taxe additionnelle de 7 centimes par litre va véritablement changer les comportements. Quant à l’augmentation prévue d’ici 2030, avec un prix de la tonne de C0₂ passant de 32 à 100 euros, elle correspond, si je comprends bien, à une taxe additionnelle d’un peu plus de 20 centimes par litre d’essence en 2030. Je peux me tromper, mais il ne me semble pas qu’on va changer de civilisation avec un tel instrument. La hausse prévue n’est d’ailleurs sans doute pas très éloignée de celle appliquée ces dernières décennies. La montagne a accouché d’une souris… et en plus, d’une souris qui fait peur !”. Love that image: politicians afraid of the mice they have created

In the run-up to the Copenhagen summit, developed and developing nations (with India and China in front) keep using the same false arguments to put the blame and therefore the responsibility of a possible failure on each other. Looking at their arguments from the traditional paradigm of growth, both sides seem to be right. If the BRICs and other emerging economies do not commit to some form of emission cuts, there is no stopping climate change and whatever we do in Europe or the US will be in vain. That said, the developed countries built their economic development and their wealth (and the material welfare of its citizens) on the pollution of the atmosphere and the rapid overconsumption of natural resources, so why would India, Russia, China and so many others not have the same rights to pollute and destroy the Earth’s fragile ecological balance? The problem is that nature does not know any artificial boundaries and that therefore thinking in terms of nation states is absolutely ludicrous. In our Spaceship Earth, there is just NO right to pollute. There is only a responsibility to share and survive.

What is more, both sides fall into the trap of thinking that taking mitigation measures will harm their economies and their businesses. This shortsightedness is really one of the main culprits of our predicament. Climate change is just the tip of the iceberg. Peak energy, conflicts over access to raw materials, food and water crises might still be partially hidden under water but their impact on our global  economic and social balance will be no less dramatic. Only those economies and those countries which will be able to build resilience and produce the transition to a new sustainable economy will prosper in the long run. Those ones which are unwilling to act against ALL horsemen of the ecological Apocalypse will fail and collapse.

The reality is that if we do not manage to counter climate change, our world will face enormous costs in the long run and not just financial costs (20% of GDP according to the Stern report) but also costs in terms of lives and probably in terms of democratic freedoms. Ecological fascism will be the logical solution once collapse is unstoppable. Fact is: our developed countries will be able to deal even with the 20% GDP losses Stern predicts. It will be tough and there will be social conflicts and possibly other social shocks. But will some of the emerging economies let alone will the poorer countries? There will be few winners from a runaway climate and resource collapse but the countries (and companies) which invested in future-proofing their economies (and businesses) will have much better chances.

So even if India and China do not join the climate fight, let’s continue on our own path, not because it is the right thing to do but because it is fully in our own long-term self-interest.

And remember: “He who comes too late will be punished by life”.