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May 17, 2009 / Mridul

Economic Crisis A Hurdle In Climate Change Treaty Negotiations

Lack of credit supply in world markets, high unemployment rates and plummeting economic growth rates are keeping nations from taking bold measures to protect the environment, noted the Swedish environment minister Andreas Carlgren.

Countries around the world are worried that financially intensive schemes to protect environment could take away the much needed financial resources from the core and growth driving sectors of their economies. Putting restrictions on manufacturing and public utilities could not only slow down any economic recovery but also put extra burden on the common people who are already facing problems of reduced incomes and lost jobs. 

European Union has been the most aggressive in setting ambitious renewable energy and emission reduction goals but some of its own members are in poor economic state to commit to any kind of emission targets. Poland has made it clear that it will not give up its right to use indigenous coal reserves in order to power its economic growth.

The EU has also committed itself to an additional 10 percent reduction in carbon emissions, that is, from current 20 percent to 30 percent emission reduction by 2020 if the a consensus over the next climate treaty is reached among other countries during the Copenhagen talks scheduled for December this year. 

Europe will have to bring its automakers, airlines and shipping companies in line and make them reduce their emissions, something which is bound to affect the profit margins of these companies since they are already suffering from reduced auto sales, reduced air travel and thinning import-export around the world. Member nations like Germany, France and Italy have already voiced concerns about the future of the automakers as they will be required to manufacture more fuel efficient but costly cars under the new emissions rules.

In order to meet the renewable energy targets revamping EU member nations will have to invest huge amounts of money something which is in short supply. Private companies like Shell and British Petroleum have walked out of the London Array offshore wind energy and the British government had to sell stakes the project to foreign countries in order to raise funds for its completion. 

Credit intensive efforts to revamp the grid in order to make it compatible with the renewable energy sources is yet another problem. It is hard to run away from this problem for long and the other alternative, small scale renewable energy systems for homes, will again require great amounts of subsidies from the government. 

The developing countries are calling on the EU and other developed nations to set up adaptation funds so that the process of technology transfer could be smoothed. But since the EU itself not in a position to secure monetary resources it is struggling to push for the international fund. EU recently failed to commit to pumping money into the fund adopting a ‘wait & watch’ approach to see if the United States is willing to commit to the fund a part of the revenues it generates from the proposed Cap and Trade scheme.

There is no doubt that the dire economic conditions will hamper any efforts to aggressively push for bold measures. Hopefully the conditions will improve soon and a combined effort by the developed and developing countries could result in substantial reduction in carbon emissions across the world.

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4 Comments

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  1. climatesight / May 17 2009 10:58 pm

    It’s really too bad that these two problems seem to work against each other. I like the idea of giving carbon emissions a price – people will make money off sustainable practices.

    Have you seen my blog? It has to do with how climate change relates to ideas such as credibility, responsible journalism, and risk management.

    You can probably just click on my name and it’ll take you there.

    Thanks!

  2. Jaysh / May 18 2009 2:59 pm

    Nice post.
    Incidentally there is an interesting website that is specifically dedicated to recession victims.It offers help and discusses all issues related to recession- http://www.angstcorner.com. It’s worth a visit!

  3. Reverse Merger / Jun 9 2009 6:06 am

    I will be linking to your site great article.

  4. Extenze / Aug 3 2009 11:09 pm

    I usually don’t post in Blogs but your blog forced me to, amazing work.. beautiful …

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