I want to start by saying our Cabinet Government has made a decision that at every specific location we would give the view that it is essential to ratify the referendum treaty. I have seen work happening in the European energy area especially on climate change proposals. In my mind, if we do not progress and have a reform treaty in place, we will do ill to the process and this will have dire consequences for the future of this country and of Europe. I will canvass for a Yes vote, for a number of reasons.
I am not going to explain the science of climate change. I assume by the very presence of people here today that there is a recognition and understanding of the scale of the challenge before us. I always refer people to the scientists on this issue – people like James Lovelock – whose Gaia theory is a remarkable and scary explanation of what is possible, but is nevertheless an outline of the science.
We are now moving on from considering or debating the science to considering the solutions and the politics because to get solutions you have to work through politics, broad politics. I want to set out the broad context to the political background of what is happening in this area.
The European Union has taken the lead in the response to climate change. The European Commission set out a number of proposals in January 2007 called the 20 20 20 proposals. People might say that this is a very simple approach – 20% emissions reduction by 2020, 20% increase in energy efficiency by 2020 and 20% of our energy sourced from renewables by 2020.
And such targets are fairly broad and simple, but I believe they are ballpark the right targets – they have the right level of ambition and the right level of possibility.
The Commission says that if we get international agreement in the United Nations process, we can increase the first 20% target in emissions to 30% - if we get America, China and other countries involved in the UN set of proposals.
The Heads of Government agreed this set of targets in March 2007 and in January this year; the Commission outlined detailed measures as to how the European Union would achieve such targets.
Our former Taoiseach Bertie Ahern, in advance of the Spring Council of Heads of Government this March said that by and large, his assessment was that the targets would be agreed. Probably this year in the French presidency, but at the very latest early next year as we have to get them agreed by the European Parliament before the Parliament is dissolved in advance of the European elections.
Also, we have agreed in advance of the United Nations process which was continued at a meeting in Bali last year (roadmap to Bali). That roadmap is leading through negotiations that occurred in Bonn, with a specific strand in Dublin in October and in Poland next year, but ultimately to the meeting of parties to the UN Protocol on Climate Change in Copenhagen in autumn or November 2009. That’s a tight deadline to get international agreement to the best approach to take on this climate change issue. The reason we need this in 2009 is that we have to agree a new protocol for the continuation and expansion of the Kyoto Protocol, which expires in 2012 (it runs from 2008 – 2012)
In politics, that’s a very tight timeline. We cannot just negotiate at the end of 2011, because we need a carryover period to ensure that market mechanisms are stitched in to the protocol as well as clean development mechanisms and trading arrangements. We need to have a two or three year period where we can manage the transition from, and the continuation of the Kyoto Protocol.
I just wanted to outline the political background to what is happening – that is the timetable.
My sense is that we have every chance of reaching agreement in Copenhagen. It will be a huge challenge and I think will be the most significant and difficult negotiations to ever have taken place in the history of this planet. But I believe that a change in presidency will bring a different political direction in the United States, no matter which candidate is victorious. Governments like China and elsewhere are starting to see, as food prices rise on the back of climate change as well as other issues – those governments are very sensitive to change, and are starting to see the necessity and urgency of achieving positive change.
John Ashton, the UK advisor on climate change came over and spoke to our own Cabinet sub-Committee on Climate Change and Energy Security two months ago. He made an interesting point saying that the solution to climate change will be determined by three economies – America, Europe and China – because those three economies in the sense of the scale of the productive capacity, market strength can actually deliver the solutions. The technologies they take up in response to this challenge will have the scale and the marketing back up to have a global effect.
I want to bring in one more international aspect – I was talking to Tom earlier about the price of diesel and the availability of fuel in this country – I think it’s always correct to bring the issue of peak oil into our consideration of trying to tackle and reduce the effects of climate change.
The exact year or date of peak oil is not the issue but the concept is that rather than having a world which we’ve had for the last 100 years of continuing supply, we have to prepare for a world where that oil supply, particularly light crudest that have run our transport systems, that have run our agricultural systems, that have provided us heating – those supplies will start to contract rather than expand. And we’re already seeing the effect of price as those supplies find it difficult to grow to meet increasing demand. We, as a country which is dependent on oil (imports) for 60% of our energy needs have a crucial and urgent need to reduce our use of such oil, to reduce our dependence on it and to start developing other alternatives in energy efficiency and other alternative fuel supplies.
That gives us a real economic motive as well as a moral imperative to reduce our use of fossil fuels to become a far more energy efficient nation, and to become far more energy clever in everything we do.
The key response I think is going to have to come from the business community and I think that as well as being a challenge, it provides huge opportunities for the business community – it’s a cliché but it’s worth repeating.
The major economies – Europe, America, and China are going to go in this direction. We will not be able to buck the system, buck the trend and it’s not in our interest to hide or ignore that change that is occurring.
I’ve started to see it in my own meetings. I had a really interesting meeting late last year with a leading Irish food company and they said that the business world has changed completely in the last six months for them. Their experience in going to their main UK customers and multiple supermarket stores was that they were being questioned not only about their prices and supplies but they were also being asked, “What is your carbon footprint? What are you doing to reduce your emissions?” Because now increasingly in each of those main retail outlets, a key component of their marketing and branding is the question of what their emissions are, what sort of products they are carrying and what is the environmental effect.
It is not going to be easy. There was another event I was at in recent weeks. McKinsey organised an event here in Dublin for CEOs on the issue of climate change and there was interesting debate and discussion around it. One individual was also making the point that businesses are under real pressure to start measuring what the emissions are on their products and having a label on their packaging which shows exactly what the carbon footprint is. They were saying that this is having a real effect and even creating difficulties. It was a welcome addition to the debate, because it’s very easy to be pious and to kind of, pretend that it’s going to be easy – they said they have looked at this and said that it could possibly halve their profits and really cripple them. But I suppose what was also said was that it’s what their customers are looking for – that to a certain extent, their clear thought was “what’s the alternative, what’s the choice, can we say well no, we’re not going to do that?”
And I don’t think that’s feasible in a globalised market where there are other alternatives and people will turn to them if we in Ireland are not able, if we are not leaders in how we reduce emissions.
Today is very useful and I commend IBEC for organising this conference because I think throughout the course of the day you are going to hear an excellent mix of speakers who have real expertise, who understand the context of the problem, who have an understanding of calculation of the scale of emissions and so on, verification issues, communication issues, marketing issues etc. So you have in this conference today, a continuum of various different issues that businesses are going to have to consider as we move towards a new marketing, a new business model which has emissions reduction at the very centre of the strategy.
I am particularly glad to see representatives here today from the World Resource Institute who have been providing extremely useful guides for measuring greenhouse gas emissions (GHG). They’ve helped pioneer what’s known as a GHG Protocol which is the most widely used international accounting tool for Governments and business leaders in understanding, quantifying and managing GHG emissions and which provides us with an accounting framework for nearly every GHG standard or programme in the world.
I am also glad to see people from the Carbon Disclosure Project here today, which is also taking a leading role in bringing this message to the fore. They provide a coordinated secretariat for institutional investors with combined assets of over 57 trillion USD and on their behalf, we will be given information on the business risks and opportunities presented by climate change and GHG emissions. They work with data from the world’s largest companies – 3000 of them in 2008.
Getting an understanding of carbon footprinting is at the very centre of what each company and each individual has to do. I very much welcome the Department of the Environment and Local Government’s new Change campaign, which starts with the sense that this is a national issue to take on, but moves on to the crucial second step is the need for people to know their number. In the absence of knowing what we’re actually contributing and doing, the aspiration to take on this issue has no concrete foundation, has no basis in reality or in the common understanding of what’s going on.
I think this Conference allows us to make that link from understanding the issue and then looking at means of trying to reduce emissions. It’s only after looking at a systems approach of decreasing emissions at source, in design framework policies – once that is established and the carbon footprint is reduced, then we look further down the line at whether we use renewable power generation, purchase green electricity, offsetting etc. These tend to be the first things on peoples’ minds but they’re not –they’re the last measure, the top-up. The first measure has to come from systems thinking of how we run our businesses.
Energy efficiency is going to be at the very heart of our reduction policies and energy efficiency is also going to be a key response to a less secure future for fossil fuels. It’s a difficult area because what you have to do is sometimes completely rethink the way we do business – put together processing systems in different ways to make real and radical reductions, and radical improvements in energy efficiency.
I was down on Monday in Limerick visiting a number of differing firms, visiting UL and talking to SFI. I also brought in a trip to Vistakon (a Johnson and Johnsons subsidiary). It was interesting to see one example of a company which is already involved in this process. They’re working with Sustainable Energy Ireland and the IS393 standard – which is a very good standard I believe, in improving energy efficiency. I didn’t realise - until I got the impression from the company executives - the pressures companies are under (particularly international companies or companies with international connections). There is a really strong drive each year to bring cost down and to bring efficiencies into business.
I left thinking, “They’ve a really tough job of it”, but I suppose if we can marry that pressure of the ongoing correct business imperative to be efficient, with our desire to reduce our emissions and our dependency on fossil fuels, we possibly have a marketing tool for this country, a future for our business community. This is about maintaining our competitiveness, as well as reducing our emissions and playing our part in the crucial challenge for these days.