The South African Civil Society Information Service

Its Business as Usual as Climate Trade Trumps Climate Change

By Michelle Pressend · 5 May 2008

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It’s business as usual for Northern countries that have made the quick connection between climate change and climate trade. These days even pollution has a price, rather than a cost. Carbon dioxide (CO2) emissions are trading at about €20 per ton and are forecast to increase to €24-30 per ton in trading emission schemes.

This picture gets bleaker still as proposals to deal with the ecological crisis facing our planet are decidedly more business-friendly than they are people or planet-friendly. Trade-led and market-driven solutions proffering first world technology as the panacea for our ecological woes are being punted by Northern pundits who fail to recognise the origins of the crisis, which in the first place, is our global economic system.

These solutions bolster the competitive advantage of Northern countries that are making major investments in eco-friendly technologies, which of course exacerbates North-South polarization and maintains the status quo where underdeveloped countries of the South remain dependent on the North.

In the international climate change regime, the North sees its role in developing the technology and “transferring” it to the South. Most European countries have developed or are in the process of developing their competitiveness in cleaner, environmentally-sound technology and energy efficiency. On the demand side, housing insulation, building codes and energy-efficient appliances are now available. On the supply side, technology available for CO2-free power generation, such as nuclear, wind power and hydro energy, as well as carbon capture and storage technologies have been developed.

The environmental crisis facing our planet is largely caused by the unsustainable consumption and production patterns of countries from the North. Governments in the North and their multinational companies recognise that they are responsible for global warming and are obligated to provide the countries of the South with appropriate technology and financial resources. However, adding insult to injury, they argue that this can only be done within the “right” investment framework favouring a maximum return on their investment.

At the recent Delhi Summit on Sustainable Development, which took place in India from 7-9 February 2008, Mr Björn Stigson, President of the World Business Council for Sustainable Development, emphasized that 85% of global financial flows come from the private sector. A staggering 180 billion American Dollars is needed annually to keep electricity flowing and approximately 100 billion American Dollars is needed to make these investments in developing countries. If the right investment conditions are in place, the money can be made available, suggested Stigson.

This means a return for their investment, a carbon emissions value and price caps on emissions, production standards regulation, policies that are predicable, subsidies for renewable energy and joint funds between government and business so that they can make the investments. While some aspects of these investment conditions are necessary for appropriate policies from governments and caps on emissions, by and large, these market driven conditions will provide little benefits to the poor, nor support effective locally driven actions.

While the West develops its competitive advantage, some developing countries of the South, such as our very own South Africa, marginalise investment in renewable energy, and is lagging behind. A loose estimate of South Africa’s renewable investment, indicated by Saliem Fakir, Senior Lecturer at the School of Public Administration and Planning at the University of Stellenbosch, is a meagre 300 million American Dollars compared to 38 billion American Dollars invested globally in 2005

The Department of Minerals and Energy has committed to a meagre target of renewable energy to contribute 10,000 GWh to the final energy demand by 2013. South Africa’s renewable energy mix consists of wind, solar, hydro and bioenergy. However, renewable energy projects such as solar lamps and stoves are largely targeted at poor communities who regard this technology as second rate, so many of these initiatives remain pilot and experimental projects, which do not create the impetus for a transition towards a low-carbon society.

To avoid this troublesome scenario, the South African government should be prioritising public investment in the creation of domestic scientific capacity targeting renewable energy. Taking more positive initiatives, India for example, has created a Ministry for Renewable Energy and identified key knowledge institutions that will become centres of excellence for climate change research.

At the same time, the South African public should be questioning why their taxes are being used to fund predominately non-renewable energy and electricity generation, such as coal and nuclear energy, in the coming years. Public pressure is critical to steer government policy towards a low carbon society, as market-based initiatives alone will not be sufficient to reduce emissions and save our future.

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