Implementations of Emission Reduction Strategies as Political Decisions - Research Paper Example

?Implementations of Emission Reduction Strategies as Political Decisions Climate scientists believe that climate stability can only be achieved with atmospheric CO2 concentrations kept well below 450 ppm. Yet, in late 2009 at the Climate Summit in Copenhagen, the world’s political leaders could not even agree on binding emission reduction targets that would have allowed for atmospheric increases up to 550 ppm. Why are emission reductions so difficult to achieve politically, and what does it mean for business that a global agreement on CO2 emissions could not be reached? 7-18 December 2009 were the dates when world leaders gathered in Copenhagen to discuss the problems of climate change (United Nations 2009, 1). The Climate Summit was the fifteenth conference of the global governments and resulted into the announcement of the Copenhagen Accord. This agreement was meant to be reached by the US and a block of BASIC – large developing – countries (China, India, South Africa and Brazil) in regards to the measures world countries should take in order to reduce human impact on the environment and Earth atmosphere in particular. Though the Accord was outlining the major objectives of the counties cooperation with the purpose of fighting climate change, the paper did not even set any emission reduction targets. There was no information indicating a measurable way for determining each country’s impact into the prevention of temperature rise and no peaking emissions target year. Furthermore, the agreement did not even have any legally bounding force and the only results the Climate Summit had was that the representatives of world countries approved taking note of the Copenhagen Accord. Many countries were opposing the methods and objectives the Accord presented (Buxton 2010) so, as a result, the US did not force the participating countries to officially accept the Accord for fulfillment. Though the document acknowledge the fact that temperature rise should be kept below 2 degrees Celsius with the help of emissions reduction, not specific goals were set for the countries to comply with the objective. Another point was that developing countries that are influenced by climate change most of all were to receive financial aid form developed countries in the period of 2010-2012 for adapting to the climate change (United Nations 2009, 3). The Accord also encourages the practice of paying developing countries for reducing emissions from deforestation and degradation (Vidal, Stratton, and Goldenberg 2009). It should also be noted that previously developed proposals that called the countries for limiting temperature rises to 1.5 degrees Celsius and reducing carbon dioxide emissions by 80% by 2050 were abandoned. In addition, the interesting fact is that the United States, who refused to sign the Kyoto Protocol of 1997, was the major contributor to and strongest supporter of the Copenhagen Accord. The country’s motive for objecting to sign documents like the Kyoto Protocol, the purpose of which is worldwide reduction of greenhouse gas emission, is, most likely economic. The USA is one of the largest environment polluters in the world because of the high level of economy development and great volumes of industrial production (Droge and Kemfert 2005, 246). Signing of such an agreement force the US companies to either invest in the development of environment friendly technologies or reduce the levels of production. Either option leads to a decrease in companies’ profit and, consequently, a decrease in the government’s tax income. Fighting the Climate Change: Trade Policies In any case, the outcomes of the Climate Summit can, according to Droge and Kemfert (2005, 235) be explained by the fact that climate change policies are rather political decisions that have a very strong relation to international trade policy and business operations. A study conducted by Droge and Kemfert (2005, 235) is focused on the trade policies related to climate. The researchers attempted to find out whether trade policies can or should be used as effective measures for making world countries follow the climate change policies. The results indicate that the ideal solution would be to design and manage both climate change and international trade policies in such a way that they become mutually beneficial (Droge and Kemfert 2005, 246). While international trade policies may be used as a tool for forcing the US to enter an international climate change coalition, like one formed by the Kyoto Protocol, the calculations show that trade restrictions, such as increased import taxes for US-manufactured products, will have a negative impact on the world economy and, thus, will cause more harm than good. Furthermore, as a large and strong economy, the United States can refer to the regulations of World Trade Organization, which do not require countries to reduce emissions, to justify own position. So the scientists conclude that it is needed to “clarify the relationship of climate-related multilateral trade measures and those exemptions that WTO law allows for environmental purposes” in order to make trade and climate change policies mutually reinforcing (Droge and Kemfert 2005, 247). So it can be seen that while the global society is concerned about environmental problems, the USA, a large and influential economy, is not eager to sacrifice own economic interests for the unprofitable in short-term cause. Though investing in the research and development of advanced technologies would bring positive results in the long run, the amount of investment outweighs the potential of positive outcomes in the future. In addition, even though the majority of world countries are ready to carry out measurable activities for reducing carbon dioxide emissions, the example of the US is likely to reduce the speed of improvements being introduced. Carbon Emission Taxes At the same time, it should be remembered that, as Barth and Hasselmann (2005, 148) outline, that future costs caused by climate change will be increasing. So, in the long run the countries resistant to current investment will have to spend more. A research conducted by Barth and Hasselmann (2005, 160) indicates that imposing carbon emission taxes on world countries would be an effective tool for fighting climate change. As the cost of polluting the air rises, it will become in the governments’ interest to reduce emissions and, therefore, costs associated with the pollution. The money received from such an initiative is recommended to be spent on the development of non-fossil energy supply. However, the limitation of the study is that prices of non-fossil fuels were taken as constant, so the important price dynamics of non-fossil fuels have not been taken into account in the course of the study (Barth and Hasselmann 2005, 161). Nevertheless, though this study takes a different approach to solving the climate change problem, the result is that, again, the researchers’ recommendations are not supported by the largest world economies. Such a solution would, just like the previous suggestion, involve financial factors – the countries and businesses would, thus, receive lower profit. Low Carbon Fuel Standard Another solution to the climate change problem is proposed by Holland, Hughes, and Knittel (2009, 106) - a low carbon fuel standard. This standard is called for reducing emissions of greenhouse gas by means of limiting the carbon intensity of fuels. This approach, according to the authors, allows “fuel producers to achieve a given carbon emissions rate by flexibly altering their production of fuels” (Holland, Hughes, and Knittel 2009, 106). Furthermore, such a standard has a political appeal. Cap and trade policies, for instance, can be undermined with the help of demand shocks for low carbon fuels (Pizer 2005, 17). Nevertheless, as Holland et al outline, though low carbon fuels have a great political appeal, the standards for such fuels are still expensive in terms of efficiency and effectiveness. In addition, there is a risk that such fuels may even raise the carbon dioxide emissions. Still, the researchers recommend low carbon fuel standards to be include in the greenhouse emissions reduction programs since it is will have positive economic effects for the country that introduces them (Holland, Hughes, and Knittel 2009, 139). However, due to a great number of related uncertainties and risks, it is not advised to choose a binding low carbon fuel standard policy. Instead, such a policy should be a part of the greater emission reduction strategy. The findings of the research suggest that “the abatement costs and energy prices are lower under the lower emissions rate.” (Holland, Hughes, and Knittel 2009, 138). So, if a country decides to implement a low carbon fuel standard, it will benefit financially and environmentally, but, again, in the long. Furthermore, such a decision, just like those presented above, will require businesses and, potentially, governments, to increase spending and, as a result, lower profit. So absence of such a standard, just like absence of any measurable and enforced requirements for emission reduction, leaves businesses with an opportunity to continue their traditional modes of operations. As a result, they eliminate a number of threats and risks they would face if accepted the change. Investment into Emissions Reduction Undoubtedly, investment into emissions reduction is likely to slow the growth rate of the participating economies. The spending of a county for dealing with the climate change is estimated at 1 percent of GDP (Stern 2008, 11). However, as Stern (2008, 11) outlines this spending is not likely to slow down medium- or long-term growth rates of the economy. So, it can be concluded that countries and businesses that ignore the need for emissions reduction are simply afraid to take the risk of lowering their growth rates in the short run, even though the results, according to the literature, will be beneficial to both economy and environment in the long run. In addition, investment in the development of new advanced strategies and technologies has a great likelihood of resulting in advanced growth and development of the businesses. This, however, involves changing the current business practices for them to respond to the need of a more environmentally friendly production. Resistance to Change Change, in its turn, is always challenging to both businesses and governments because it involves relatively high risks and, according to Harvey and Broyles (2010, 35), always faces resistance of both businesses and governments, as well as of separate individuals. Furthermore, resistance to change is usually present throughout the whole change implementation life cycle (ibid). The decision to implement a radical change is even more difficult for any system since it involves dealing with a large number of uncertainties, “the possibility that prior investments may be rendered obsolete, and high switching costs in adopting new technologies” (Srinivasan, Lilien, and Rangaswamy 2001, 47). Furthermore, in an attempt to minimize the probability of facing serious risks, both businesses and governments tend to, in some way, manipulate their direct external environments to achieve their objectives (Bourgeois 1984, 587). Therefore, resistance to participate in the global climate change initiatives can be explained by it is not profitable for organizations to comply with certain restrictions at this time. Conclusion Surely, implementing certain changes is inevitable because the overall market conditions change and, thus, organizations and countries have to adequately respond to those changes in order to remaining competitive in the global marketplace. Nevertheless, it can be assumed that they are not willing to change their ways of conducting business because of the high investment requirement, high level of risks and uncertainty, and, of course, high levels of resistance to change caused by the mentioned above factors and strengthened by the focus on short-term goals. At the same time, it should be noted that an organization’s need for changes arises and gets recognized as a response to the visible changes in the market conditions. The influence of climate change on business performance, however, is not as obviously seen. That is why the issue of working in more environmentally-friendly manner does not seem crucial to organizations. On the contrary, absence of control of carbon dioxide emissions is a relief for countries that were monitoring it and for those that were morally bound to do so. On contrast, the third world countries that were receiving aid for dealing with the climate change, will feel the lack of external investment. So the situation is that carbon dioxide emissions control is beneficial for developing countries but disadvantageous for the developed ones since it might have negative impact on the short-term operations of the highly industrialized economies. Therefore, financial interest can be named to be one of the major drivers of resistance to comply with the environmentally friendly practices of conducting business operations. So, since the interests of each county in relation to the global agreement on CO2 emissions are different, it is difficult to achieve emission reductions politically. While scientists have already developed a number of relatively effective strategies for reducing carbon dioxide emissions, businesses and governments are reluctant to adopt them because of high investments, high risk levels and low short-term returns involved. References Barth, Von Volker and Klaus Hasselmann. 2005. “Analysis of Climate Damage Abatement Costs Using a Dynamic Economic Model.” Vierteljahrshefte zur Wirtschaftsforschung, 74 (2): 148–163. Bourgeois, Leonard J. 1984., “Strategic Management and Determinism,” Academy of Management Review, 9 (4): 586-596. Buxton, Nick. 2010. “Bolivia provides resistance and hope at Brokenhagen” Transnational Institute. http://www.tni.org/article/bolivia-provides-resistance-and-hope-brokenhagen Droge, Susanne and Claudia Kemfert. 2005. “Trade Policy to Control Climate Change: Does the Stick Beat the Carrot?” Vierteljahrshefte zur Wirtschaftsforschung, 74 (2): 235–248. Harvey, Thomas R., and Elizabeth A. Broyles. 2010. Resistance to Change: A Guide to Harnessing Its Positive Power. R&L Education. Holland, Stephen P., Jonathan E. Hughes, and Christopher R. Knittel. 2009. “Greenhouse Gas Reductions under Low Carbon Fuel Standards?” American Economic Journal: Economic Policy 2009, 1 (1): 106–146. Pizer, William. 2005. “The Case for Intensity Targets.” Climate Policy, 5(4): 455–62. Srinivasan, Raji, Gary L. Lilien, and Arvind Rangaswamy. 2002. “Technological Opportunism and Radical Technology Adoption: An Application to E-Business.” Journal of Marketing, 66 (July 2002): 47–60. Stern, Nicholas. 2008. “The Economics of Climate Change.” American Economic Review: Papers & Proceedings, 98 (2), 1–37. United Nations. 2009. “Copenhagen Accord.” Draft decision -/CP.15. Proposal by the President. FCCC/CP/2009/L.7. http://unfccc.int/resource/docs/2009/cop15/eng/l07.pdf Vidal, John Allegra Stratton, and Suzanne Goldenberg. 2009. “Low targets, goals dropped: Copenhagen ends in failure.” The Guardian, December 19. 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