All posts tagged 'Copenhagen'

CANCUN AND COP 16 - TIME FOR A NEW APPROACH?

November 30, 2010 07:34
by J. Wylie Donald
There are a variety of metrics one could use to test the world's interest in the discussions being held by climate change policymakers gathering in Cancun this week. I will use a very personal one. As the Conference of the Parties came together in Copenhagen last year (COP 15), I was often on the phone with news organizations seeking perspective on the Kyoto Protocol, clean development mechanisms, carbon taxes, cap-and-trade and anything else that might be relevant to discussions of climate change and the world's response to it. This year in the run up to COP 16 not a single journalist has called, or even emailed. Taking a less parochial view, if you go to the United Nations Framework Convention on Climate Change "Essential Background" webpage, you will learn right in the middle of the page that Somalia is the 193rd party to the Kyoto Protocol, a fact that I feel confident in concluding will have absolutely no impact on any climate change response anywhere (even in Somalia), but which the UNFCCC functionaries conclude is essential background.So I join in the cynics that conclude little will come out of Cancun. Some are calling for a completely new attitude to climate talks. Yesterday's Wall Street Journal for example stakes out four new positions in an article styled: How to Change the Global Energy Conversation. Briefly, the authors posit that the approach that has been tried for two decades, and failed for two decades, has it all wrong. Rather than trying to raise the cost of fossil fuels, governments would be focusing on lowering the cost of renewable energy by spurring innovation. They point out that the U.S. military's support of chip technology innovation in the 50s drove those prices down 50-fold over the course of a decade. While those clean technologies are developing, greenhouse gases should be reined in through the easy fixes, such as replacing old inefficient diesel generators throughout the less developed world and focusing on capturing methane emissions from landfills. And while we are involved in less-developed countries, we should jettison the idea that there needs to be a massive transfer of wealth from rich states to poor states to help stave off the negative effects of climate change. Instead, let's recognize that a flood or earthquake or hurricane is devastating regardless of the cause and focus on building more disaster resilient infrastructure. More importantly, wealthier societies are better able to handle disasters and thus the ultimate goal must be to increase the wealth of poorer countries and to do that poorer countries need cheap energy, which brings us back to the innovation goal. Last, the authors reject universal consensus and point out that 80% of all emissions, 85% of GDP, 80% of world trade and 2/3 of the world's population are in the G-20 nations. Those nations should get together and pick their strategy.I have written before (and no doubt will write again) that what business needs is guidance. Whether it is a conference of 193 parties, or a group of 20, there needs to be a roadmap on where climate change policy is going, so business can plan. I have not seen the analysis that calculates the economic loss caused by climate change policy paralysis. Undoubtedly it is huge. What national policymakers need to figure out at and after Cancun is whether the Kyoto process can work. If not, it is time to do something else.

Carbon Dioxide | Carbon Emissions | Climate Change

Needed: Action at Copenhagen

December 6, 2009 18:05
by J. Wylie Donald
What is it about Denmark?  Several hundred years ago a Danish prince couldn't make up his mind about a certain King Claudius and there was hell to pay.  Tomorrow, the leaders of the world (or their representatives) will gather in Copenhagen, and, if everything I read is correct, won't be able to make up their collective minds and there will be hell to pay.   Humankind has set loose on the world's stage a specter, Climate Change, impossible to grasp, subject to many disagreements, and of violent character.  To tame it, an army of diplomats gathered and played out Scene I, where the Kyoto Protocol was conceived, delivered, and is now nearing its final rest.  Now the curtain rises on Scene II in Copenhagen, where all await bold and decisive action.  Or even any action.  Let's look at one sector of the world's economy:  insurance.  In the run-up to Copenhagen, Allianz and the World Wide Fund for Nature teamed to produce a report that identifies four tipping points, where rapid change can be expected with just a small additional change in global average temperatures.  See Allianz SE, World Wide Fund for Nature, Major Tipping Points in the Earth's Climate System and Consequences for the Insurance Sector (November 2009).  Those tipping point scenarios are: 1. rising sea levels and accompanying flooding, with a heightened increase in the Northeast United States; 2. droughts as the Indian monsoons falter, 3.  die-back of the Amazon rainforest, and 4. a shift to a very arid Southwest North America. The Tipping Point report identifies the impacts each of these scenarios will have on insurance.  For example, for rising sea levels "[t]he critical issue is the impact that a hurricane in the New York region would have.  Potentially the cost could be 1 trillion dollars at present, rising to over 5 trillion dollars by mid-century.  Although much of this would be uninsured, insurers are heavily exposed through hurricane insurance, flood insurance of commercial property, and as investors in real estate and public sector securities."  There are several important points in these three sentences.  First, the size of the risk:  trillions of dollars.  Second, the insurance sector has a substantial exposure.  Third, much of the loss would be uninsured, meaning that the non-insurance sector (everybody else?) would bear the bulk of the loss. We blogged last month about the amount of money washing around in insurance company coffers - $4 trillion in premium and nearly $20 trillion under management.  Climate change threatens all of that.  If hurricanes and floods drive loss ratios up, insurance companies will falter.  If real estate investments and public infrastructure are literally under water, the financial debacle will make the demise of Bear Stearns and Lehman Brothers (mere tens of billions of dollars) seem quaint.  Accordingly, insurance companies (and other businesses) are looking for action at Copenhagen so they can start planning where to put their assets and make their business plans. That is why we need action at Copenhagen.  Business and industry need to plan; they can't do that if our leaders do not lead.  To paraphrase that Danish prince, "to lead, or not to lead, that is not the question."

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