California and Guangdong are exciting new grounds for potential climate change laws, says Emily Farnworth

One of the clearest messages from businesses on climate change is the need for “long, loud and legal” action from governments. Such action would provide the necessary platform for companies to adopt the strategies and investments to deliver the step changes needed to create a low-carbon economy. So how did the latest UN convention in Bali bring this closer to reality?

The main focus at Bali last month was to keep existing runners in the race and try to recruit some of the more sceptical spectators to join in. As with any global negotiation, economic arguments and political positioning were rife. At a national level, those countries that have not yet ratified the Kyoto Protocol continued to feel the heat. And with Kevin Rudd’s recent signature, the thermostat was ratcheted up a notch.

But realistically, Australia’s progress is unlikely to have any marked effect on either the US or China which hold the key to a meaningful global deal on carbon emission reductions post 2012. While discussions in Bali added pressure to keep these two superpowers at the table, with the US eventually signing up to the “roadmap”, it may be that activities closer to their respective homes that play the biggest role in encouraging them to act.

California leads

A recent report from the Climate Group shows that regions are in a better position to move fast because they can develop a test-bed for national climate change policy. Many US states, for example, are already taking a leading role in combating climate change.

California has introduced caps on all greenhouse gas emissions from major industries in the state, under the Global Warming Solutions Act (AB 32) 2006. It has also introduced aggressive targets to reduce GHG emissions to 2000 levels by 2010 and to cut them dramatically – to 80 per cent below 1990 levels – by 2050. Ten north-eastern and mid-Atlantic states have introduced the Regional Greenhouse Gas Initiative, which aims to cut regional emissions from power generation to 10 per cent below 1990 levels by 2019. This is particularly promising as many policy experts in the US indicate that it will be internal pressure that provides the most effective driver for action.

States demonstrating that carbon policies can work with minimum impact on the economy will send a powerful message to the White House. Regional experiments in some cases are showing that carbon laws can in fact deliver economic benefits: California expects to generate an estimated $4 billion in income by 2020 from AB 32 measures.

China has already set internal targets for energy efficiency. Before 2010, the country aims to improve its energy efficiency per unit of GDP by 20 per cent compared with 2005. It has also set national targets to increase its use of renewable energy by 10 per cent by 2010 and 20 per cent by 2020. To enable the implementation of China’s recent climate change policy, mayors across each province are required to develop local plans and their performance against implementing these will be measured.

An interesting test-bed is Guangdong. The richest and second most populated province in China, it has faced severe energy shortages over the past decade. In response to this, it has developed a “mid- and long-term energy conservation plan” and established ten major programmes aiming to save 45 million tonnes of carbon dioxide emissions between 2005 and 2010.

Guangdong plans

Judging from a recent trip to China, there does seem to be an undercurrent of action – although pollution is still very visible. Energy-efficient light bulbs were in place in the hotel and several meetings with Chinese entrepreneurs indicated a bubbling enthusiasm for low-carbon innovations. For these businesses, the countries energy-efficiency targets are a clear sign there is money in saving energy through the need for building energy-efficient homes, offices and factories.

Bali could not seem further away from the currently cold climes of Beijing and Washington DC, but discussions there have been felt in both places. Global targets for both developed and developing countries are essential for sound regulation and economic mechanisms to come into play and enable businesses to make the long-term investment decisions that lock us into a low-carbon future.

Looking ahead, international discussions will continue to move slowly. But regional target-setting and positive responses from an enlightened business community can provide the incentives governments need to take the bold steps required to avoid dangerous climate change.

Emily Farnworth is director of the corporate leadership programme at The Climate Group.

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