"There is an urgency to act and define a new global policy framework post 2012 to guide long-term investments in technology and infrastructure"

Speech by Bjorn Stigson, President of the World Business Council for Sustainable Development given at the Bali Global Business Day, Nusa Dua, Bali, Indonesia (10 December 2007)

"The private sector is the major source of innovation, technology and investments that can transform the global energy system. We are making investment decisions that will impact the climate issue for 20, 30, 50 years or more into the future. To do “the right thing” we need clarity on the policy framework within which we do our business" said WBCSD President, Bjorn Stigson at the Bali Global Business Day.

Good morning, ladies and gentlemen

Let me add my words of welcome to this Business Day.

Why a Business Day at COP?

Concerns for sustainable development in general and climate change in particular are at a tipping point in society. This is also true for the business community.

There is a realization that climate change can only be resolved in a constructive cooperation between all parts of society, in particular between governments and business.

However, when it comes to intergovernmental negotiations like here at COP 13, business is a side event, a luncheon speech or a cocktail reception. This does not match the strong interest governments are expressing for the active cooperation and support from business to combat climate change.

I saw the need to do what we did in Johannesburg at the WSSD in 2002 – to organize a dedicated Business Day where business can bring its views across in a structured way and think them through in dialogue with other parts of society.

Like in Johannesburg , I invited ICC to join the WBCSD as an organizing partner.

And here we are today. At the Bali Business Day. 300 participants, an impressive list of panelists and 10 business partner organizations.

The Context

It is obvious that we need to move toward a low carbon economy to address climate change. The climate science as presented by IPCC is clear and requires both mitigation of emissions and adaptation to the consequences. There is an urgency to act and define a new global policy framework post 2012 to guide long-term investments in technology and infrastructure.

The context for our actions is complex and involves difficult balancing between competing societal goals. Five key elements of this context are:

1. Climate change and development must be addressed together.
   This involves trade, financial flows, technology cooperation and preservation of forests.
   
   
2. Energy demand will grow, driven by the developing countries and their need for poverty alleviation.
   
   
3. There is a lot of inertia in the global energy infrastructure and change will take a long time because of the enormous amount of existing capital stock.
   
   
4. Fossil fuels will be the primary energy source for decades.
   
   
5. Carbon emissions will grow as a consequence.

The Role of Business

Business' role in society is the efficient provision of goods and services that people want and can afford. We are fulfilling this in a way that minimizes resource use and pollution because it makes perfect business sense and will reduce costs and risks.

The private sector is the major source of innovation, technology and investments that can transform the global energy system. We are making investment decisions that will impact the climate issue for 20, 30, 50 years or more into the future. To do “the right thing” we need clarity on the policy framework within which we do our business.

The Role of Governments

The role of governments is to balance competing societal interests and decide on the difficult trade-offs between these interests. Nationally and globally we need to find the balance between the economic development needed to improve living conditions for the many poor in the developing countries, the growing energy demand to fuel this economic development, affordable access to energy, energy security, climate change challenges and competition concerns between countries and companies.

Clarity is needed short-term to define the policy framework post 2012 when the Kyoto Protocol expires. But we also need clarity on the long-term ambition level of GHG emission reductions to 2050 by governments to guide the investment decisions by business.

At this point in time, I think it is fair to say that governments have some way to go to fulfill their societal role to provide clarity. We hope that this COP will change that and that governments will start serious negotiations to complete a new climate change regime before the end of 2009. We cannot continue the “you first” mentality that has been present at past COP's. We need leadership and actions by governments.

I wish to express my strong support for the work of Yvo de Boer and his colleagues to achieve this. Let me also recognize the very important and constructive role that IEA plays as a governmental think tank with a very open attitude to cooperating with business.

Technology

Technologies and policies go hand in hand. We need what the British would call “horses for courses” – policies that are adapted to the respective type of technologies we want to see developed and deployed. Existing technologies have significant potential for reducing emissions that is not realized because of the lack of enabling policies.

Policies can be of many different types:

• Simplifying red tape for planning and permitting like for big hydro and nuclear
  
  
• Energy efficiency standards for appliances and cars
  
  
• Building codes for energy efficiency
  
  
• Subsidies for fast market penetration of renewable energy and how to get these to scale and thereby reduce costs for these technologies
  
  
• Sharing of R&D costs between governments and business for new technologies like carbon capture and storage or next generation of nuclear
  
  
• Risk guarantees for these new major technologies.

Technology Transfer

Let me also say a few words about “technology transfer” or as I prefer to call it “technology cooperation”.

In the efforts to find a way to engage the developing countries in a global climate agreement there have been proposals for industrialized countries to buy IPRs and transfer technology, like was done for HIV/AIDS and the Montreal Protocol.

These examples are not applicable to climate change. The private sector wants investment opportunities, not divesting its technologies. Even if we were willing to sell technology then, the scale of technology for climate change would be prohibitive in monetary terms. Besides it would send strong negative signals to business, regarding investments in future R&D.

What governments can do instead is to facilitate and create the policy frameworks which encourage the private sector to engage in technology cooperation – to work with our partners in developing countries to invest in clean energy and low carbon technologies. If we have an unambiguous signal from governments within a clear, simple and fair framework, then that is the direction business investments will go. The carbon markets including CDM are important tools to achieve this.

We realize that access to funding and technology will be key for the developing countries ability to respond to climate change. Finding solutions to this will require innovative thinking around the perspective roles of governments and business.

Recommendations from Business

Business has put forward an array of recommendations to governments coming from different national, sectoral and global business organizations.

I believe the following points could be seen as a common denominator for most of these business recommendations:

• An urgent need for a new global policy framework post 2012 to be finalized before the end of 2009 based on
• A long-term target for GHG emissions
• A price of carbon
• Use of market mechanisms
• Push for energy efficiency and demand side management
• Strengthened R&D and accelerated deployment of energy technologies
• Clean coal solutions, including carbon capture and storage
• Revival of nuclear and big hydro
• A reformed and broadened CDM
• New policy tools- like industrial sectoral approaches

WBCSD Work Program

Let me give some more specific examples from the WBCSD Work Program. How we address these matters.

Our Trilogy of reports on Energy and Climate to 2050 are built around the five key areas of the energy system:

• Power generation
• Industry and manufacturing
• Mobility
• Buildings
• Consumer choices

We have in the “Policy Directions to 2050” outlined an international framework built on national approaches. A new WBCSD report to this COP gives a model for how to link these national systems into a global carbon market.

Our Electricity Utilities project is launching a new report “Powering a Sustainable Future: Policies and measures to make it happen”.

In this report we outline 9 electricity technology stabilization wedges amounting to a savings potential of 21 Gt of CO2.

We specify the challenges to be overcome and the policy measures needed to achieve this.

The report is signed by 10 CEO's of leading electricity utilities companies.

Buildings represent about 40% of global energy use. Our Energy Efficiency in Buildings project has set the vision of zero net energy use in buildings by 2050. They have released a report “Business Realities and Opportunities” outlining the barriers to achieve the vision.

The Cement Sector is a major energy user and GHG emitter. Our Cement Sustainability Initiative is a lead actor in developing sector approaches to emissions reductions. Our 18 cement company members represent 50% of all commercially traded cement and they have established a data bank for 700 cement kilns and set benchmarks for performance.

We know that forest management is a key issue for climate change.

Our Sustainable Forest Products Industry project involves 15 companies responsible for half of the global forest, paper and packaging sales. They have issued a report, “Carbon and Climate: Key messages for policy-makers,” which has also been a platform here at the COP for dialogues with stakeholders.

Development and climate change are strongly linked. Our Focus Area Development has produced a new report, “Investing in a Low-Carbon Energy Future in the Developing World”.

In another report, “Mobility for Development,” they are outlining the Facts and Trends around the crucial role of mobility as an enabler for economic and human development.

WBCSD is also providing tools for climate change action.

Our GHG Protocol project together with the WRI has here at the COP launched a report, “Measuring to Manage: A guide to designing programs for GHG Accounting and Reporting”.

On our website you can find many tools and guidance documents to support GHG accounting and reporting.

We are also actively pursuing GHG Pilot Projects in countries like Mexico, Philippines, Brazil and China.

We are as WBCSD also strongly interested in building knowledge around complex topics for which we produce Issue Briefs. We have launched a new Biofuels Issue Brief here at the COP.

These are some examples from our work that I expect will be further highlighted by panels in the sessions here today.

To Conclude

I am looking forward to the interactions between business and our stakeholders here at this Business Day.

I also hope this is the first in a long sequence of Business Day's at future COP's.

“Business cannot succeed in a society that fails” as stated in one of our reports six years ago. We want thriving societies that are good places for doing business.

The WBCSD and its members that represent a market value at stock exchanges of 7 trillion USD and an economic activity that reaches half of the world's population every day with a product or a service is looking forward to a constructive public private partnership to create a sustainable world for future generations.

The proceedings of the TRI HITA KARANA - Bali Global Business Day will become available on the Business Day YoutTube channel at http://www.youtube.com/balibusinessday later this week.

Author Bjorn Stigson Publication Date 10 Dec 2007 Document Type Speeches Issue/Topic Business Role/CSR Energy & Climate Region Asia Country Indonesia Source WBCSD Include In RSS WBCSD News & Updates Sustainable Development Speeches