Sustainablog

This blog will cover some news items related to Sustainability: Corporate Social Responsibility, Stewardship, Environmental management, etc.

16.7.05

Curtain set to rise again on Kyoto ballet

Curtain set to rise again on Kyoto ballet
Agence France Presse, 10 July 2005 - The G8's initiative on climate change
has started a momentum that may profoundly influence the effort to forge
the next global deal on curbing greenhouse gases.
Greens and scientists alike are shaking their heads at the bland
Declaration and self-described "Plan of Action" delivered by the Group of
Eight at their three-day summit in Gleneagles.
Politicians, though, are more optimistic.
They say Gleneagles offers a new spark of life for global cooperation on
climate change, in limbo ever since George W. Bush entered the Oval
Office.
One of President Bush's very first decisions was to walk away from the
UN's Kyoto Protocol, which requires industrialised countries to trim
emissions of carbon dioxide (CO2), the byproduct of burning oil, gas and
coal, by a deadline of 2010.
Bush's move inflicted lasting damage to the US image and crippled the
global cleanup effort by depriving it of the support of the world's
biggest polluter.
Gleneagles has gently eased the blockage.
Bush, pushed by his Iraq War ally Tony Blair, has now been forced to admit
that climate change is a "serious and long-term" phenomenon, that fossil
fuels are part of the problem and action to fix it must be launched
urgently.
The G8's cornerstone measure is a "dialogue" with emerging economies,
mainly on how poorer countries can adopt cleaner energy technology to
avoid becoming gigantic C02 polluters.
The first "dialogue" meeting takes place in Britain on November 1, and
although its agenda and participants at this early stage are unknown, the
timing is important.
It will take place just a few weeks ahead of the first round of
negotiations, in Montreal, on what happens after the Kyoto Protocol runs
out in 2012.
One of the US arguments against the present Kyoto format is that it does
not require big developing countries such as China and India to make
targeted emissions cuts -- an absence that Bush says is unfair and
illogical.
But developing countries say historical responsibility for global warming
lies with nations which industrialised first, and primarily with the
United States, which by itself accounts for a quarter of all global
greenhouse-gas pollution.
"Up to now, the US has blocked all discussion about a follow-on to Kyoto,
and this has given developing countries the perfect excuse to do the
same," the British business daily the Financial Times noted on Saturday.
"The latter argue that they will never join anything like Kyoto until
industrialised countries, the US very much included, take the lead in
cleaning up the mess primarily they have created."
Blair's goal seems to be that the "dialogue" may encourage the United
States into the post-Kyoto fold, if Washington can be convinced that these
big countries will sign up to emissions targets, or something similar to
them.
Lord Browne, boss of BP, which was one of the first oil majors to
acknowledge that climate change is a problem, said Gleneagles was an
advance, "a beachhead on which you can go forward."
How far, though, is the big question.
Right now, the different positions of the United States (voluntary curbs
on emissions), of Europe (binding targets) and of the developing world
(adherence to Kyoto's present format in which only industrialised
countries cut pollution) are very far apart.
And Bush will be watched closely to see if he matches words with deeds and
money when it comes to technology transfer.
Everyone agrees that Kyoto 2 must have far deeper cuts than Kyoto 1 in
order to make headway against greenhouse gases. If the first Kyoto
Protocol is any guide, a long and agonising political ballet is in store.
For climate experts, today's political actions are pathetically little and
almostly laughably late.
A common view is that if annual emissions are not halved by around the
middle of the century, Earth's climate system will be durably damaged,
resulting in more droughts, floods and vicious storms -- just for
starters.
On present trends, emissions will surge by 63 percent by 2030 compared
with 2002, according to International Energy Agency (IEA) estimates.
And the technological fixes so beloved by Bush for addressing climate
change -- hydrogen cars, fuel cells, "clean" coal and carbon sequestration
-- are either untested or in their infancy and face a near-monopoly by
fossil fuels.
Lord May, president of Britain's de-facto academy of science, the Royal
Society, branded Gleneagles a "disappointing failure."
"Make no mistake, the science already justifies reversing -- not merely
slowing -- the global growth of greenhouse-gas emissions," he warned.
Copyright 2005 Agence France Presse

There are many ways to make a difference on climate change

There are many ways to make a difference on climate change
Financial Times, 12 July 2005 - Last week's agreement on climate change at
the meeting of the Group of Eight industrialised nations was a great piece
of progress. Having climate change on the agenda was remarkable in its own
right and helped raise the profile of this enormously important subject.
Now the G8 nations have agreed to a dialogue with developing nations on
how to tackle the problem of increasing carbon dioxide emissions.
The agreement illustrates how far we have come in the past 10 years in the
environmental debate. Getting enough countries signed up to the Kyoto
protocol to bring it into force - which happened on February 16 - was a
huge achievement. Global warming is now foremost in people's minds,
wherever they are in the world. The US has not ratified the Kyoto treaty
but people are more aware than ever before of our planet's environmental
problems.
Steps have been taken by industries all over the world to make them more
energy efficient, and were taken even before oil prices rose to the level
they are at today. In the oil industry, these steps can be as simple as
tightening up valves or mending leaks and stopping the emissions of
methane and other harmful gases into the atmosphere. As well as benefiting
the environment, these measures can save money.
When BP started to put such measures into place about eight years ago,
other companies in our industry were incredulous. They regarded us as
heretics for embracing an environmentally sound viewpoint. Today, almost
all the leading oil companies have begun attempts to reduce their
environmental impact. Many of them even see it as a competitive advantage
and are striving to be seen as more environmentally sound than their
competitors.
Although we have come a long way, much more remains to be done. Emissions
of greenhouse gases around the world are rising. The scientific evidence
for global warming and its ill effects has strengthened. There is growing
political will to bring down emissions of greenhouse gases.
If we are to tackle climate change, we must go about it in the right way.
Let us start with the measures that are easiest to implement before we
move on to the really difficult problems. Take transportation. That is
probably the hardest problem to solve because it involves so many points
of emissions that generate large amounts of carbon dioxide. Imagine trying
to devise an emissions reduction strategy that covers every driver of
every car, every farmer on his tractor, every delivery truck, every bus
and train.
So let us put that to one side for the time being and focus instead on
areas where we can bring down emissions fastest. BP is pioneering a
technology that we think holds enormous promise for curbing large amounts
of emissions: carbon capture and storage. The idea is to capture carbon
dioxide where it emerges in vast quantities - from power stations. As the
gas is produced, it can be trapped and then held before pumping it
underground to stay there indefinitely. Underground fields have stored oil
and gas for millennia, so there is no reason to think there should be any
problem with storing carbon dioxide in this way.
At a site in Algeria, we began work last year on storing the carbon
dioxide produced at the Salah gas field, under a joint venture with
Statoil, the Norwegian oil and gas company, and Sonatrach, the Algerian
national energy company. About 10 per cent of the gas in the Salah
reservoir is made up of carbon dioxide. Rather than venting the carbon
dioxide - the accepted practice on other projects of this type - we
compress the gas and inject it into wells 1,800 metres deep, at a point
where the field is filled with water. More than 1m tonnes of carbon
dioxide will be injected into the reservoir each year, reducing greenhouse
gas emissions by the equivalent of taking 250,000 cars off the road
forever.
In Scotland, with Scottish & Southern Energy, we are looking at building a
power plant that will convert natural gas into carbon dioxide and
hydrogen. The latter will be used to generate electricity while the carbon
dioxide is stored underground in the Miller oil field in the North Sea,
which is coming to the end of its life. This has never been done before,
and the power plant will prevent as much carbon dioxide entering the
atmosphere as if you took 300,000 cars off the road. It will produce more
carbon-free electricity than all of the UK's wind farms combined.
But if carbon capture and storage is to succeed, we are going to need
subsidies to encourage companies to take up the technology. We will make
only a moderate return from our investments in carbon capture and storage.
Generating electricity in this way is more expensive than conventional
methods, so it needs a government subsidy to be able to compete - just as
wind and other renewable energy sources do.
Another remarkable step forward this year has been the European Union's
greenhouse gas emissions trading scheme, which issues industries with
tradeable permits for the carbon dioxide they are allowed to produce. This
could be an effective way of reducing emissions but the scheme has one big
potential drawback. If businesses accept that they have to pay for carbon
emissions allowances, they will start to see the scheme as a tax on
carbon. But if carbon trading goes the way of the tax on petrol, you will
not change people's behaviour - raising the tax on petrol does not get
people out of their cars. It becomes simply a revenue-raising instrument.
To ensure a change in behaviour, the scheme should include a system of
benchmarks on carbon efficiency by which companies in different industries
can be judged. These benchmarks should be made tougher each year to
encourage businesses to find new ways of reducing their emissions.
Finally, the G8 rightly placed great emphasis on sharing "clean"
technology, which lowers carbon emissions, with developing countries.
Private enterprise has an important role to play in this process. We
should be looking at how to transfer knowhow to poorer nations, which
cannot afford the same investment in intellectual property. Without this
technology transfer, poorer nations will be doomed to satisfy their
increasing energy needs by using the old, dirty technologies now
superseded in the developed world.
Of course, there are limits to this knowledge transfer, especially with
regard to the newer technologies now coming on to the market. No one would
give away the intellectual property rights on a turbine to burn hydrogen,
for instance, as it is just too expensive. But one day this technology,
too, will become commonplace and should be shared wherever it can be
useful.
Lord Browne is chief executive of BP

15.7.05

A new way to look at the problem of global poverty: there's more money to be made in millions of niche markets than from a few mega hits at the high end.

A new way to look at the problem of global poverty
The Ottawa Citizen, 10 July 2005 - At the Group of Eight summit this week
in Gleneagles, Scotland, the leaders of rich countries talked about how
they can aid poor countries. That's a noble mission, but a remarkable new
book argues that it misses the point. Treating the poor as wards of the
global economy ignores the fact that they are a vast market -- and that
companies can profit right now by serving their needs.
"If we stop thinking of the poor as victims or as a burden and start
recognizing them as resilient and creative entrepreneurs and
value-conscious consumers, a whole new world of opportunity will open up,"
writes C.K. Prahalad, a professor at the University of Michigan Business
School, in his new study, The Fortune at the Bottom of the Pyramid:
Eradicating Poverty Through Profits.
Prahalad turns the usual view of the global economy upside down. He argues
that the four billion people who live on less than $2 a day (all figures
in U.S. dollars) make up a huge, underserved market. Companies that learn
how to make and distribute good products cheaply for these consumers can
be very successful. They may earn their money a penny or a fraction of a
penny at a time, but when you have four billion potential consumers, those
pennies can add up.
"Four billion poor can be the engine of the next round of global trade and
prosperity," argues Prahalad. He calculates that the purchasing power of
nine big developing countries -- China, India, Brazil, Mexico, Russia,
Indonesia, Turkey, South Africa and Thailand -- is equivalent to $12.5
trillion. "This is not a market to be ignored."
What makes Prahalad's book a revelation is that he includes case studies
of companies that are serving this "Bottom of the Pyramid" market. These
success stories begin with a recognition that poor people are like
everyone else -- they just have less money. They're brand conscious, for
example, and when they want shampoo, they are just as eager as anyone else
to buy a high-end product such as Procter & Gamble's Pantene. The problem
is, they can't afford to buy a whole bottle. But P&G learned it could make
good money selling shampoo in India in single-serve sachets.
Prahalad argues that "a single-serve revolution" is sweeping poor
countries, as companies learn to sell small packets of shampoo, ketchup,
tea, coffee or Aspirin. In India, a single serving of shampoo or tea might
cost the equivalent of a penny; a serving of ketchup or fruit juice might
cost two cents; detergent or cookies might cost four cents. The margins
might be low for each unit, but we're talking volume here, on an
unprecedented scale.
One of Prahalad's case studies involves marketing of hand soap in India by
Hindustan Lever Ltd., a unit of the global giant Unilever. The company
realized it couldn't sell to the bottom of the pyramid unless it found
cheap ways to distribute its products. So it created a network of hundreds
of thousands of Shakti Amma (which means "empowered mothers") who sell
Lifebuoy soap and other products in their villages through an Indian
version of Tupperware parties.
Another case study is a Brazilian company called Casas Bahia, which sells
high-quality appliances to poor people. Through innovative financing and
credit-rating strategies, the company has achieved a very low default rate
-- just 8.5 per cent compared to 15 per cent for its competitors,
according to Prahalad. Poor Brazilian consumers are intensely loyal to
Casas Bahia because they feel the company cares about them.
Some of Prahalad's most startling examples involve innovations in health
care. An Indian company called Jaipur Foot makes artificial limbs for poor
villagers. Such prosthetic devices can cost $8,000 each in the United
States; Jaipur Foot manages to create them for $30 each. A company called
Aravind Eye Care System has used specialization and mass marketing to cut
the cost of state-of-the-art cataract surgery to $25, compared to the
$3,000 often charged in the U.S.
Prahalad's book is mind-blowing because it makes you think about markets
in a different way. It's a developing world version of Chris Anderson's
much discussed article, "The Long Tail," in Wired magazine last year about
e-commerce, in which he argued that there's more money to be made in
millions of niche markets than from a few mega hits at the high end.
The top of the global pyramid is a mature market, saturated with competing
companies and products. I suspect Prahalad is right that the big money
will be made in serving the bottom of pyramid with its billions of eager
consumers. If the G8 summiteers have any spare time for reading after this
week, they might take a look at Prahalad's path-breaking book.
David Ignatius is a columnist for The Washington Post