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Dr Neil Bentley, CBI Director of Business Environment, examines the need for a global deal on climate change to support green innovation and for the UK to develop the right skills for a low carbon economy.

UK companies have demonstrated that they are ready and willing to do their share to tackle climate change. But they cannot act alone.

For climate action to be effective, it needs to be coordinated, and it needs to be global.

Companies will deliver the new technology to drive the development of a low carbon economy, but they cannot do so unless they have signals from government about where we are headed.

This is where Copenhagen comes in. To unlock the potential of a low carbon economy, we need governments to negotiate a climate change deal that provides certainty about emissions reductions targets from which new policies and regulations will flow. Giving companies the confidence to make long-term investments in new low carbon technologies.

Green innovation is key to meeting the level of emissions reductions needed to prevent dangerous climate change. There is no doubt that the UK can become a global low carbon leader. The global market is worth £3tn, and as all the major economies try to get their slice of this, it’s important UK firms don’t lose out.

But to become a world leader we need to use the UK’s existing strengths. We cannot hope to compete in all the low carbon technologies, but where we do compete, we must look to lead.

Our automotive sector is already developing the next generation of low carbon vehicles. Our experience in the North Sea means we’re a leading global player in offshore and subsea engineering, employing some 100,000 people. As we develop wind and marine power and carbon capture and storage technology, this will prove invaluable. Britain’s laboratories, whether public, private or academic, are producing groundbreaking work. And wind speeds around the British Isles are some of the best in the world for on- and off-shore generation.

But we need to develop the right commercial environment. Many things will have to come together for investment to be successful, including the right research and development environment, the right protection for intellectual property, improved access to finance and a better skills base.

Protecting intellectual property is a key incentive for business to develop and deploy technology. There are worrying signs that in the Copenhagen negotiations the government is preparing to blink on this issue to help the rapid diffusion of low carbon technologies in developing countries.

But, any compulsory licensing of these technologies would be counter-productive and damaging in the longer term by reducing the incentive for business to continue innovating. In any case, the growing number of patents from emerging countries shows that the current regime of protection is working. China has 38 per cent of the patents in solar, for example.

However Britain, just like its competitors, needs to develop the right skills base if it is to build intellectual property in the first place. This means increasing the number of young people coming through our schools and universities with the right science, technology, engineering and maths (STEM) skills.

Developing and maintaining economic value in the UK from low carbon innovation will not be possible without these STEM skills. We need to see more young people studying all three sciences at GCSE, as this is the best preparation for further science study. It is only by developing the right skills that we’ll create the new green jobs we all want to see.

The Copenhagen summit marks a critical stage on the journey to a low carbon future, and will shape much of how we work together. The road to Copenhagen will not be easy; there is much hard-edged negotiation to go. It has the potential to set the framework for a low carbon economy with innovation and new technology in the driving seat. The opportunity is here and now -we must grasp it.

(Source: http://www.carbontrust.co.uk/about/newsletter/global-low-carbon-future.htm)

On 7th December, in Copenhagen, the long awaited two week international negotiations on climate change commence. It has been billed by Lord Stern as the “most important meeting since the Second World War”. It has the potential to achieve a step change in the world’s ambition to reduce man made carbon emissions and to definitively fire the starting gun on the race to a low carbon economy. Bruce Duguid, Head of Investor Engagement at the Carbon Trust explores the possible outcomes.

The negotiations are complex and have not always gone smoothly over the last 2 years. Specifically at stake are a number of key issues including:

• Setting the level of the overall emissions reduction ambition, such as a global target for 2050
• Agreeing individual developed nation targets to 2020 and 2050 and the nature of developing nations’ low carbon growth plans
• Putting in place new supporting mechanisms to ensure finance flows into low carbon investments including the expansion of the international carbon markets and a potential international fund to help developing nations
• Developing local capacity building for energy efficiency and technology innovation in developing countries

The most important outcome of a strong deal at Copenhagen will be an increase in certainty for business and investors that action to tackle climate change will be rewarded and that a failure to take action will result in poor business performance. It is the private sector, through its investment in new low carbon technologies, which will primarily tackle climate change. Currently, investors and business are not investing at a sufficient rate to successfully limit carbon emissions.

A continuation of today’s level of business practice and investments would result in an ultimate stabilisation level of greenhouse gases of at least 700 parts per million of carbon dioxide or its equivalent (ppm CO2e) or higher, resulting in a likely rise in temperatures of 4 degrees C or higher. The ambition of negotiators at Copenhagen is to achieve stabilisation at 450ppm CO2e and limit the global temperature rise to 2 degrees C.

A deal at Copenhagen will be of specific relevance to business and investors in two ways:

• Some industries will be directly impacted by decisions in Copenhagen, in particular those creating carbon offsets or trading in the carbon markets. In addition, aviation and maritime shipping may potentially come under new international frameworks to reduce emissions, although the nature of these is uncertain.
• Other industries will be affected by changes to national or regional policies to tackle climate change which follow a new level of ambition agreed at Copenhagen. For example, the European Union has announced that with a strong global deal, it will change its 2020 emissions reduction target vs. 1990 levels from 20% to 30%. This will involve a tightening of the cap on emissions in the EU ETS over the period 2005 to 2020 from a 21% reduction to around 30%. In the UK, the Committee on Climate Change has also recommended that with a global deal on climate change, the UK should move to its ‘intended’ budget of a 42% reduction in emissions by 2020 versus 1990 levels, compared to the current 34% ‘interim’ reduction target. This will require a further step change in policy beyond that set out in the Government’s Low Carbon Transition Plan and would particularly impact the non-EU ETS sectors such as buildings, transport, waste and agriculture.

Whilst Copenhagen has the potential to dramatically change the landscape of global climate change policy, it will not be the last word from international climate change negotiations. Even if a strong global deal is agreed, much of the detail will take many months or even years to finalise. And, in time, it is likely that with increased scientific understanding and realisation of the opportunities arising from proactive climate change policy, further tightening of ambition is achieved at further negotiating sessions.

Given the compelling need for the world to rapidly decarbonise, the enormous economic opportunities offered by the low carbon economy will go to those who move boldly and early.

For further information on the Government’s role in the Copenhagen negotiations go tohttp://www.actoncopenhagen.decc.gov.uk/