Post-Copenhagen, big chance for North

Dec 15 2009 by Sarah Green, The Journal

AS the United Nations' Climate Change Conference in Copenhagen continues into its second week, the CBI has put forward UK business views on emissions trading schemes.

Business needs a scheme which caps emissions and allows firms to buy permits for carbon. This could work in a similar way to the EU Emissions Trading Scheme (EU ETS), which should form the basis for a global carbon market.

British business is committed to effective action to cut carbon emissions and reduce the risk of climate change. Cutting emissions brings business opportunities, but also incurs costs for business and consumers.

The need to combine emissions cuts with cost-effectiveness is at the heart of the CBI’s support for emissions trading. Over the last year, debate has grown over how effective the EU ETS is, whether it should remain the cornerstone of UK climate change policy, and whether it should provide a model for other major economies. The CBI believes that it should, despite the fact it does bring with it some limitations to trading.

However, there are several steps that can be taken to combat these limitations. They include ensuring the cap is set at the right level, expanding emissions trading to include aviation and shipping – ideally through a global scheme for those sectors – and protecting firms at risk of carbon leakage, while ensuring measures are focused on those sectors which genuinely need protection.

UK firms have a strong interest in a successful outcome at Copenhagen. After all, it will be business that delivers the new infrastructure and develops the products and services needed for the shift to a low-carbon economy. The last thing we want is a disorderly transition with countries making their own arrangements and moving at different paces.

CBI is calling for all nations to deliver a strong commitment to the reduction of emissions at the conference. The foundations should be laid for a global market for carbon by developing schemes that not only cap emissions, but also create a market for trading in carbon permits.

Furthermore, there needs to be broad agreement about how the wealthier nations will share the bill for helping the developing world make the move to a low-carbon economy. With the right deal at Copenhagen, there could be huge opportunities for the UK and the North East especially. Sectors where the region could build a real advantage and create jobs include offshore wind, low-carbon vehicles and clean coal.

Finally, it is vital that a level playing field should exist when a scheme is put in place. Without this, UK companies could find themselves at a serious disadvantage as manufacturers of commodities such as steel or cement shift production to countries where emissions targets aren’t as tough.

Sarah Green is regional director of CBI North East