From FT.comAction on climate change needed to break deadlockBy Fiona HarveyWhen representatives of close to 200 countries descend on Montreal this week to discuss how to protect the world from the impact of climate change, the aircraft transporting them will produce their own mini-spike in carbon dioxide emissions.It is an irony not lost on the organisers of the meeting to discuss the United Nations-brokered Kyoto protocol. To compensate, they have invested in an electricity generation project in Honduras. By using the gas, that is a byproduct of sewage treatment, the Hondurans will be able to produce sufficient "green" energy to offset the damage to the ozone layer inflicted by the arrival of as many as 8,000 temporary visitors.But if the wider world is to benefit from the talks, Canadian negotiators will have to break a deadlock that has hobbled international action on climate change for eight years.The Kyoto protocol requires developed countries to reduce their greenhouse gas emissions by an average of about 5 per cent from 1990 levels by 2012. Agreed in 1997, it was implemented only this year and without the participation of the US, the world's biggest emitter of greenhouse gases.The current treaty does not expire until 2012. But given past rates of progress, that means the clock is already ticking towards midnight in terms of striking a fresh deal. The seven years left before the current provisions expire could easily be eaten up in the same sort of stalling and painfully slow negotiations that have characterised previous conferences. The scientific consensus on climate change that the warming of the earth can be traced largely to human activity ncreasing the amount of greenhouse gases in the atmosphere has strengthened. But the political will to take action to reduce the output of those gases, by measures such as switching to new sources of energy and using fuel more efficiently, appears still to be lacking.This year's talks will be the toughest for years. The implementation of the protocol has deepened the divide between the US and the rest of the developed world which, bar Australia, has accepted the agreement. That split has in turn sharpened the focus on the small number of developing countries that have yet to commit themselves to either camp. The ally most eagerly sought by each side is China. No future form of the treaty can fail to take account of the startling reality that the People's Republic is now the world's second biggest emitter of greenhouse gases and looks likely to overtake the US within two decades.However, proponents of action on climate change fear the US is close to a shift in strategy that would further undermine the prospects for a deal. Washington's official line has been that to discuss the future would be "premature". Some observers believe that, having stalled talks as long as possible on those grounds, the US could reverse its position in the next year or two to argue that, with fewer than six years remaining before the 2012 deadline, a "flipping point" had been reached which meant it was too late for talks on what form the treaty should take in its next phase.Some observers fear the US would then argue that the rest of the world should drop targets and timetables for emissions reduction and concentrate on its own preferred answer to the climate-change problem: technology that could reduce emissions in the future.Tony Juniper, executive director of Friends of the Earth, the environmental pressure group, underlines the frustration in the climate-change camp when he asserts that the US should simply be ignored."There is no question of the US administration coming on board at these talks and the EU and the UK presidency [of the European Union] are wasting their time by trying to convince them," he says. "What is needed is clear leadership from the EU to show that action can be taken with or without the US. American people, business, state and city leaders want to see international action." Mr Juniper adds: "The world cannot afford to wait for regime change in the US."At last year's conference, says Henry Derwent, special representative on climate change for Tony Blair, UK prime minister, the US refused to countenance any document that contained overt references to the future.The UK which, as holder of the EU's revolving presidency, will play a central role at this year's meeting has, however, sought to avoid painting President George W.?Bush's administration into a corner.Margaret Beckett, the UK's environment minister, said in London recently: "The US has said they are not prepared to begin negotiations [on the next stage of Kyoto] in Montreal. Well, it is extraordinarily unlikely that anyone will ask them to begin negotiations in Montreal."Ms Beckett said any expectation from environmental organisations and others that this week's meeting would begin to discuss targets for the next stage of the treaty was "unrealistic" and "played into the hands" of opponents of the treaty. Instead, she indicated, the best that proponents could hope for was that the US would agree that discussions on the future shape of the treaty beyond 2012 could begin next year essentially reducing this year's meeting to "talks about talks".But the deadlock between the US and the developed-country supporters of the Kyoto protocol may yet be broken from a different direction. The rapid industrialisation of countries such as China, India, Brazil and Mexico has irrevocably changed the nature of climate-change negotiations.Countries classed as "developing" have no obligation to reduce their emissions under the protocol as it stands. But the emissions of several of these countries have been soaring, in tandem with their economic growth.Tom Burke, a professor at London's Imperial College and a former UK government adviser on climate change, says gaining China's support will be crucial to progress on the issue: "China holds the key to climate change, because of the way its emissions are going. No one can ignore that."With this in mind, both the US and the EU have begun to woo developing countries, especially China. In July, the US announced the Asia Pacific Partnership on Clean Development and Climate, which calls for the sharing of technologies that reduce emissions but without targets on emissions cuts. In September, the EU followed by disclosing a deal to give China access to technology for burning coal more efficiently in its power plants.The question of whether to take a vigorous approach to greenhouse gas reduction encapsulates the dilemma of a country that has reached a critical point in its development as an industrial nation.Like other developing countries, China fears that efforts to cut its emissions may hamper its runaway economic growth. This argument underlies the Kyoto treaty, which excluded developing countries partly on the grounds that the industrialised world, which has created most of the greenhouse gas problem to date, should bear the cost of solving it. Developing country emissions, while growing in absolute terms, also tend to be much smaller per capita than those of the developed world.However, China has first-hand experience of some of the problems that climate change is expected to bring. An increase in desertification and drought is destroying precious agricultural land and causing dust storms that afflict major cities. Air quality in many areas is also impoverished by dirty power stations and factories.As China grows, the strains on its environment are starting to show more and more clearly. The Beijing government will have to calculate whether the risks associated with climate change outweigh the benefits of untrammelled emissions increases.For advocates of the treaty, there are some encouraging signs. At the summit for the Group of Eight industrialised nations at Gleneagles in July, for instance, the five developing countries invited to parallel discussions signed a statement strongly supportive of the principles of the Kyoto protocol.Most developing countries, including China, have also shown a keen interest in the "clean development mechanism", an arrangement under the treaty by which governments and companies in the developed world can finance projects, such as renewable energy generation, in the developing world in order to offset their own emissions. The Canadian government's funding of that sewage-treatment project in Honduras provides an example of this.But finding a way to reconcile the concerns of developing countries with the need to cut emissions, and within the tight timetable available before 2012, will require much more in the way of what Stéphane Dion, the Canadian minister for the environment, calls "innovation".A few suggestions have been proposed: the International Energy Agency has suggested a system of rewarding poor countries if their emissions fall below a certain threshold but not penalising them if they rise above it. The Virginia-based Pew Center for Global Climate Change has suggested a mixture of mandatory and voluntary targets for different countries, or even for differing industrial sectors around the world.Eileen Claussen, president of the Pew Center, says she is "optimistic" that a way forward will be found: "There are many ways of dealing with this problem. We're not going to be able to negotiate a one-size-fits-all approach. But there are other flexible but rigorous approaches."First, however, the countries represented in Montreal must agree to talk about the future. At the current rate of progress, that will be a significant achievement in itself.BUSINESS WILL COMPLY TO GAIN CERTAINTY Cutting the world's emissions of greenhouse gases would involve a shift away from the fossil fuels that powered the industrial revolution and provided cheap energy for more than a century. As this implies massive disruption at a potentially huge cost, businesses must be at the forefront of any attempt to curb the gases.But while some business lobbies have resisted international action on climate change for precisely these reasons, a growing number of high-profile companies are calling for stiffer regulation of carbon dioxide.These businesses are seeking greater regulatory certainty for future investment decisions, a level playing field for their industry internationally and, in the long term, to help stave off the worst effects of climate change.Some may also have an eye to the possibility of future legal action by environmental groups holding them responsible for damaging the planet, while a few sectors oil and aviation in particular may want to embrace curbs on emissions as a cheaper alternative to threatened taxes.Margaret Beckett, the UK's environment minister, says: "You only have to spend 30 seconds with the business community to find they want to know what direction, what goals, what timetable [for action on climate change]. They need that certainty and clarity for planning."Ahead of the meeting of the Group of Eight industrialised nations in Scotland in July, a group of 24 companies called for a global emissions trading scheme to be set up. They included Alcan, BT, EDF, Hewlett-Packard, Petrobras, Rio Tinto, Siemens, Toyota and Volkswagen. The International Chamber of Commerce and the World Economic Forum said such a system was "inevitable". Jeff Immelt, chief executive of General Electric, echoed that view, though he stopped short of calling for tighter regulation.Activist shareholders have also played a large part in the past year. A group of investors controlling assets of $800bn called last week on 30 of the US's biggest insurance companies to disclose information on the risk to them and their policyholders of climate change.More than 350 of the world's biggest companies report on their greenhouse gas emissions under the Carbon Disclosure Project.Governments in favour of the Kyoto treaty and environmental groups want to capitalise on this goodwill from business leaders by cementing the structures of the Kyoto treaty in place beyond 2012. If they fail, the appetite for mandatory emissions reduction systems among businesses may start to wane.HOW TO CUT EMISSIONS THE AMERICAN WAYWhile the White House remains implacably opposed to the Kyoto protocol, mayors across the US are signing up to the climate-change agenda in the most practical way possible committing to cut the greenhouse gas emissions generated by their own towns and cities.Underlining their growing clout, they have organised a gathering on the fringes of the Montreal meeting where they will be joined by counterparts from other countries in what is becoming an increasingly potent grassroots movement. To date, nearly 200 mayors from the US, representing more than 40m citizens, have joined in the "mayors climate protection agreement": a pledge to meet or exceed the reductions that would be required under Kyoto. In another sign of more active approaches to climate change being adopted within the US, several north-eastern states have been working on an agreement that would limit the carbon dioxide emissions from power stations, allowing companies within those states to trade permits to produce the gas with one another, in a similar way to the "cap and trade" system in operation in the European Union. California, which has initiated its own programmes to reduce greenhouse gases, may also join the initiative. Also, confounding the stereotype of US legislators as antipathetical to the climate-change agenda, there are signs that Congress may try to encourage a shift in attitude. In the summer, the Senate passed a non-binding resolution calling on Congress to initiate mandatory greenhouse gas reductions in a way that did not harm the US economy.In response, the Bush administration has been keen to talk up the measures it has taken to tackle global warming. For instance, James Connaughton, chairman of the White House's council on environmental quality, recently visited Europe to trumpet the $5bn a year the US devotes to research into climate change and the development of numerous technologies aimed at combating the problem. "[We] are spending serious money on these innovations," he said.President George W.?Bush has also pledged to reduce the so-called greenhouse gas intensity of the US economy by 18 per cent by 2012. However, that is not the same as an absolute reduction in the amount of greenhouse gas the US emits. "Intensity" refers to the amount of greenhouse gas produced per dollar of gross domestic product. That means the US's total emissions could keep rising as long as they do so at a slower rate than the country's economy grows.