China dictates "climate change price"

In a positive development China appear to have embraced the difficulties between rich and poor countries when deciding who is to blame and who has to pay to tackle climate change into the future.

The problem is such that no multilateral agreement is ever likely and the son of Kyoto is doomed to fail unless one side changes their current stance.

At least China is now putting a price on their cooperation. The plan to "spread green technologies" is also an excellent one and links back to my recent work on environmental spillovers where we argue that MNCs have an incentive to spread good environmental practices. The issue is whether more encouragement is required to speed up this process.

Obviously the idea of rich countries giving 1% of GDP to poor countries is a none starter I am sure but there is no doubt that it would work (certainly help). This is at least somewhere to start from. It is these sorts of amounts that are required to really make a difference.

China Sets Price For Cooperation On Climate Change[PlanetArk]

BEIJING - China wants rich countries to commit 1 percent of their economic worth to help poor nations fight global warming, and will press for a new international mechanism to spread "green" technology worldwide.

Unveiling the demands on Tuesday, a senior Chinese official for climate change policy, Gao Guangsheng, said the financial turmoil rattling the global economy should not deter a big increase in funds and technology to poor nations.

"Developing countries should take action, but a prerequisite for this action is that developed countries provide funds and transfer technology," Gao told a news conference.

"Developed countries' funding to support developing countries response to climate change should reach 1 percent of the developed countries' GDP."

Gao said current funds to help fight climate change were "virtually nothing". China will detail its proposal at a conference next week that will assemble representatives from the United States, Europe and many rich and poor countries, he said.

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Nike does the "green shoe" shuffle

In another example of how large multinational are embracing the cachet of "green products" Nike today announced an increase in their "green shoe" range.

Clearly this is part of a profit maximising strategy but equally it shows how individuals and green pressure groups and encourage producers to change.

One fear is that the global recession will make consumers a lot more cost conscious.

The rather depressing aspect of this press release is that it is really just spin. Nike acknowledge that "Going Green" will INCREASE costs and that any increase in margins is just a result of cutting costs elsewhere. Sigh.

Nike Unveils New Products In Environmental Push [PlanetArk]

NEW YORK - Nike Inc unveiled a line of more eco-friendly products on Tuesday which aim to use more sustainable, recyclable materials that should also translate into better profit margins for the future.

That strategy will help the world's largest maker of athletic shoes and apparel keep its stride as consumers worldwide cut back on spending on worries about a deepening financial crisis, its top executive told Reuters.

The new "Nike Considered" products are made with more efficient design patterns that use less material and are easier to recycle, adhesives made from water instead of toxic chemicals, and sustainable items like cork and organic cotton.

There is still a problem here - surely environmentally friendly inputs mean expenses and costs will go up? Now we learn that this entire press release is just spin and that the real cost cutting comes from supply chain changes.

We're trying to reduce costs and improve margins," said Chief Executive Mark Parker in an interview. "To make the company more profitable while reducing the footprint we have on the planet."

Parker said streamlining the supply chain will offset increased costs from the environmentally-preferred materials, which tend to be more expensive.

As a result, sustainably-designed shoes and clothes will carry the same price tags and profit margins as others, he said, noting that over time, margins will improve.

This is just bad economics. Why will margins improve over time? What if supply costs cannot be stripped out? Then green shoes are more expensive. Green shoes are only 15% of Nike's range. Does this mean the supply costs will translate into CHEAPER mainstream shoes? This means that the green shoes will be RELATIVELY more expensive.

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"Green to Gold": Esty interviews on Colbert Rerport

Dan Esty interviewed on the Colbert Report. An interesting example of why the media is worth avoiding even if one has a book to sell.

The bigger picture is why business needs to embrace environmentally friendly practices and is something we are currently working on here at Birmingham.

Full episode


The interview is in the third section of the "full episode".

The environmental performance of firms

In the latest edition of Ecological Economics (out this week) we analyses the relationship between multinationals and the environmental performance of firms.

The unique selling point of this paper is that we are able to take into account knowledge spillovers from human capital to see whether owners of firms that were trained or worked in a multinational take with them better knowledge of environmental management practices and energy efficiency.

This is globalisation and the environment in action.

The environmental performance of firms: The role of foreign ownership, training, and experience

Matthew A. Cole University of Birmingham, United Kingdom
Robert J.R. Elliott University of Birmingham, United Kingdom
Eric Strobl Ecole Polytechnique Paris and SALISES, France

Abstract

In this paper we extend the debate on the environmental implications of foreign direct investment in developing countries by examining a new mechanism through which foreign influence can affect the environmental performance of firms. We focus on the extent to which key workers who have had previous training or experience in a foreign owned firm transfer and utilise their knowledge gained to the benefit of the local previous termenvironment.next term To this end we use detailed firm-level data on manufacturing firms in Ghana. Our econometric results suggest that the foreign training of a firm's decision maker does reduce fuel use, particularly so in foreign owned firms. Foreign ownership per se does not influence fuel use or total energy use but is found to increase electricity use, perhaps the cleanest form of energy used by Ghanaian firms.

Jel classification: Q56; Q52; F21; F23
Keywords: previous termEnvironmentnext term; Spillovers; Foreign Direct Investment

I have a feeling I might have posted on this when the working paper came out - apologies.

US to lead the "clean" world

The US have always insisted that the solution to climate change is not regulations and protocols named after various cities but the application of US brains and business acumen.

When the need is great enough (and the profits large enough) the idea is that US firms and Universities will step up to the plate (even got baseball in this post) and deliver.

This post is really a criticism of Europe's ability to turn invention into profit. It is the US money men that are running the show and not the Universities. However, as long as it happens should it matter where the money comes from?

Perhaps Bush was right all along?

US threatens to take Europe’s ‘clean’ lead[FT]

A US investment boom in alternative energy and other new “clean” technologies is threatening to put Europe in the shade in a field it has traditionally dominated.

The wave of money could hand the US a lead in environmentally important technologies, as some of Silicon Valley’s leading venture capitalists scour European universities and research institutions for the next big ideas in fields from solar power to waste management.

“Europe is like a rich vein of unmined stuff that hasn’t been put into the world, even given the emphasis on ‘green’ in Europe,” said Bill Joy, a founder of Sun Microsystems and now a partner at Kleiner Perkins Caufield & Byers, which has led the charge by US tech financiers into the area.

European investment in clean technology companies last year was only a third of the $3.7bn ploughed into the field in the US, according to Cleantech Group, a specialist US research firm. That is a big swing from two years before, when Europe mustered nearly two-thirds as much investment as the US.

Clean technology spans a range of industries including alternative energy, energy storage, recycling and waste management and advanced new “clean” materials.

Europe laid the groundwork for many of these technologies thanks to government policies supporting investment and still has a strong scientific presence. But “the financial engine has swung back heavily over the past couple of years” to the US, said John Balbach, a partner at Cleantech.

The US push reflects a stampede by venture capitalists centred on both San Francisco and Boston, who are seeking to apply an approach to building up new technology industries that was honed in the PC and internet businesses.

Clean technology “re­quires the kind of innovation that we have seen in [Silicon] Valley,” said Mr Joy. “That’s the perfect place for venture investment behind scientific discovery.”

The US financing boom has already started to attract specialists from other countries. They include Ausra, the solar power company, which was based on technology developed at Sydney University but moved to California after raising money from Kleiner Perkins and Khosla Ventures.

However, the rush of venture capital money is already prompting warnings of a coming bubble in the US, particularly in the field of solar energy. Nearly $1bn was poured into alternative energy ventures in California alone last year, according to Cleantech, as investors raced to harness technologies from the chip industry to try to find the next breakthroughs in photovoltaic cells.

“There are lots of methods, but none of them [has] been proven,” warned Ray Rothrock, a partner at venture capital firm Venrock.

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US Manufacturing and Pollution: Abatement or Displacement

Arik Levinson has written a good summary piece on the clean-up of US manufacturinga nd the relationship between trade and technology on the reduction in pollution experienced in the US.

Matt Cole and I have done some work in this area and Matt even manages to sneaks in with a citation in the Levinson article.

This paper of ours covers a similar topic:

Why the Grass is Not Always Greener: The Competing Effects of Environmental Regulations and Factor Intensities on US Specialization

Abstract
The global decline in trade barriers means that environmental regulations now potentially play an increasingly important role in shaping a country’s comparative advantage. This raises the possibility that pollution intensive industries will relocate from high regulation countries to developing regions where environmental regulations may be less stringent. We assess the evidence for this possibility by examining the USA’s revealed comparative advantage (RCA) and other measures of specialization. We demonstrate that US specialization in pollution intensive sectors is neither lower, nor falling more rapidly (or rising more slowly) than in any other manufacturing sector. We offer an explanation for this finding. Our analysis suggests that pollution intensive industries have certain characteristics - specifically they are intensive in the use of physical and human capital - that makes developing countries less attractive as a target for relocation. We demonstrate econometrically the economic and statistical significance of these factors and illustrate how they appear to oppose the effects of environmental regulations as determinants of US specialization.

Suggested Citation

Matthew A. Cole, Robert J.R. Elliott, and Kenichi Shimamoto. "Why the Grass is Not Always Greener: The Competing Effects of Environmental Regulations and Factor Intensities on US Specialization" Ecological Economics 54.1 (2005): 95-109.

Here is the link to the Levinson article. It is worth reading in full. His findings fit well within the literature and his results are intuitive and most importantly plausible (which always helps).

What accounts for the clean-up of US manufacturing: technology or international trade? [Vox]

Since the 1970s, US manufacturing output has risen by 70% but air pollution has fallen by 58%. Was this due to improved abatement technology or shifting dirty production abroad?

Antiglobalisation protesters display signs denouncing international trade's role in polluting the environment.1 Pundits write Op-Ed pieces cautioning that increased trade has environmental costs.2 And a majority of Americans agree that "freer trade puts the United States at a disadvantage because of our high ... environmental standards".3

Are they correct? Over the past thirty years, while the real value of US manufacturing output has increased by more than 70 percent, the total annual air pollution emitted by US manufacturers declined substantially, by 58 percent for the sum of four common air pollutants.4

One explanation for the clean-up of US manufacturing is that the protesters are correct, and that thanks to freer trade, the US now imports polluting goods it once produced domestically, and concentrates domestic manufacturing on goods less likely to incur environmental regulatory costs. Of course, there is an alternative explanation: thanks to improved technology (cleaner fuels, end-of-pipe abatement, process changes, etc.) US manufacturers may now be able to produce more output using less pollution. Which of these explanations, trade or technology, accounts for the dramatic clean-up of US manufacturing pollution?

Conclusion:

What is the bottom line? Increased net imports of polluting goods account for about 70 percent of the composition-related decline in US manufacturing pollution. The composition effect in turn explains about 40 percent of the overall decline in pollution from US manufacturing. Putting these two findings together, international trade can explain at most 28 percent of the clean-up of US manufacturing.

Why should we care?

If the 75% reduction in pollution from US manufacturing resulted from increased international trade, the pundits and protestors might have a case. Environmental improvements might be said to have imposed large, unmeasured environmental costs on the countries from which those goods are imported. And more importantly, the improvements in the US would not be replicable by all countries indefinitely, because the poorest countries in the world will never have even poorer countries from which to import their pollution-intensive goods. The US clean-up would simply have been the result of the US coming out ahead in an environmental zero-sum game, merely shifting pollution to different locations. However, if the US pollution reductions come from technology, nothing suggests those improvements cannot continue indefinitely and be repeated around the world. The analyses here suggest that most the pollution reductions have come from improved technology, that the environmental concerns of antiglobalization protesters have been overblown, and that the pollution reduction achieved by US manufacturing will replicable by other countries in the future.

Our own composition/scale/technique effect paper came out a few years ago in JEEM:

Determining the Trade-Environment Composition Effect: The Role of Capital, Labour and Environmental Regulations

Matthew A. Cole, University of Birmingham
Robert J.R. Elliott, University of Birmingham

Abstract

This paper argues that pollution intensive sectors may be subject to opposing forces of comparative advantage since these sectors are also typically capital intensive, yet regions with low environmental regulations tend to be those that are the least capital abundant. We examine therefore, whether compositional changes in pollution arising from trade liberalization originate due to differences in capital-labor endowments and/or differences in environmental regulations. The contribution of the paper is threefold; first, we provide a comprehensive empirical analysis of the determinants of four common pollutants, paying particular attention to the nature of the trade-induced composition effect; second, we investigate whether the result of Antweiler et al. (2001), who find evidence that both environmental regulations and capital-labor endowments determine sulfur dioxide concentrations, also holds for sulfur dioxide emissions; third, we examine whether this result holds for altogether different pollutants. Our results, while providing partial support for Antweiler et al., also raise a number of points for discussion.
Suggested Citation

Matthew A. Cole and Robert J.R. Elliott. "Determining the Trade-Environment Composition Effect: The Role of Capital, Labour and Environmental Regulations" Journal of Environmental Economics and Management 46.3 (2003): 363-383.

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Trade barriers on climate-friendly prodcuts to be removed?

The premise for this blog is to relate the forces of globalisation to changes in the environment. The following is therefore a classic "globalisation and the environment" story.

Of course, the removal of "trade barriers" relating to "climate-friendly technologies" will account for only a tiny fraction of trade and the removal, whilst undoubtedly a positive move, will not make any drastic difference to the diffusion of clean technologies most of which are intra-firm.

This is not to say that this is not a welcome development. In recent work (to be posted on soon) we find that the two main obstacles to a firm implementing environmental management practices were (1) Cost and (2) information. This may help on both counts.

US, EU Propose Trade Plan to Counter Climate Change [PlanetArk]

WASHINGTON - The United States and European Union launched a proposal in world trade talks on Friday aimed at countering global climate change by removing barriers to trade to climate-friendly technologies.

"WTO (World Trade Organization) members have an unprecedented opportunity to address in a concrete and meaningful way the global environmental challenge of climate change," US Trade Representative Susan Schwab said in a statement.

"By eliminating tariff and nontariff barriers to environmental goods and services, particularly clean energy technologies, we can lower their costs and increase global access to and use of these important products," Schwab said.

The push in the long-running Doha round of world trade talks came as delegates from about 190 nations were preparing to meet in Bali, Indonesia, from Dec. 3 to 14 to try to launch separate negotiations on a new pact to deal with climate change.

The goal is craft a successor to the United Nations' Kyoto Protocol, which binds 36 industrial nations to cut greenhouse gas emissions by 5 percent below 1990 levels by 2008-12.

EU officials called the joint proposal "an important part of the EU and the US' contribution" to a Dec. 8-9 trade ministers meeting also being held in Bali in conjunction with the broader climate change talks.

President George W. Bush announced shortly after taking office in 2001 that the United States would not join the Kyoto pact because it excluded major developing countries like India and China that are a growing source of greenhouse gas emissions.

Bush said on Wednesday the United States' guiding principle in the Bali talks would be to find a way to reduce greenhouse gases "that does not undermine economic growth or prevent nations from delivering greater prosperity for their people."

Global trade in the environmental goods covered by the US-EU proposal totalled about US$613 billion in 2006, with exports increasing about 15 percent annually, US trade officials said.

The World Bank has estimated removing tariffs and nontariff barriers on key climate and clean energy technologies could increase trade in those goods by 7-14 percent a year and help to cut greenhouse gas emissions, US trade officials said.

The US-EU proposal calls for all WTO members to eliminate tariffs on 43 climate friendly technologies identified by the World Bank, such as solar panels and wind turbines.

A smaller group of developed and advanced developing countries would negotiate a broader "environmental goods and services agreement," that would include goods related to air pollution control, hazardous waste management, clean water and other environment goals, a US trade official said.

The plan would liberalize trade in environmental services like pollution monitoring, cleaning up hazardous waste sites and production of renewable energy, the official said.

The United States and the European Union are leading exporters of environmental goods and services, but India and China are also developing strong capacity, US and EU officials said.

The six-year-old Doha round of world trade negotiations has showed some signs of progress in recent months, but many experts remain sceptical a deal will reached.

However, it is possible that countries could still reach an agreement to liberalize trade in environmental goods and services even if the overall Doha talks flounder, the US trade official said.

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CBI backs Green Taxes

The extent to which business is facing up to its environmental responsibilities is shown clearly by the news that the CBI (confederation of British Industry) is in favour of new green taxes and increases in the price of carbon.

CBI backs new UK green taxes [FT]

The newspapers editorial also comments and seems to have it worked out.

In the hothouse [FT]

Two messages leap from the pages of a report on climate change by the CBI, the British employers' group. The first is that business gets it: global warming poses risks to -society and the economy. The second is that action is needed now.

These conclusions are self-evident. To most people, they are accepted current thinking. The real problem lies in what to do about climate change. Some critics may be tempted to dismiss the report as the glossy progeny of consultants. Indeed, McKinsey, as the appendix makes clear, was heavily involved.

But to see the findings in that light would be unfair. The consultants have earned their fees, producing original analysis on government measures, the development of new low-carbon technology and steps to boost energy efficiency. A key conclusion, surprising given the CBI's role as business lobbyist, is the high price the report puts on emitting greenhouse gases. By 2030 a price of €40 ($59) a tonne for carbon dioxide will be needed, it says, double the present phase-two price in Europe's emissions trading scheme.

This, more than anything else, shows how far business has moved. A report of this kind five years ago would have been unthinkable. Then the sole worry of UK industry would have been its competitive vulnerability vis a vis overseas rivals. Those concerns remain but the emphasis has moved to resisting increases in so-called "green" taxes.

For now, carbon taxes are not on the agenda. Momentum is building behind cap-and-trade schemes. A high projected price for carbon, and the tight limits on emissions that implies, will add to manufacturers' costs. But they are essential for such schemes to be credible. Clear business support should be a spur to world leaders about to discuss a possible successor to the Kyoto -climate change protocol.

The report is optimistic, too, that ambitious targets to cut carbon emissions can be achieved. It argues much can be done in the short term at relatively low cost to meet those goals. More insulation, condensing boilers and low-energy lighting are among steps that could contribute 30 per cent of the necessary savings. Industry, transport and power generation would provide the rest.

Without incentives, this is unrealistic. Despite pledges by big companies, there is little evidence that they have become more energy -efficient. Any well-run business will take basic energy saving measures, but the paybacks from more ambitious schemes take longer than most companies' planning horizons. To vanquish the climate change demon and slash emissions, corporate goodwill is not enough.

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The Environmental Performance of Firms

NEP: New Economics Papers Environmental Economics list the following paper in their new releases now forthcoming in Ecological Economics.

Getting environment and labour data for a country such as Ghana required some serious leg work but inevitably the quality of data prevented us getting a better grip on this important (at least to us) topic. Quality of data can be crucial to the eventual journal destination.

---------------------------

The Environmental Performance of Firms: The Role of Foreign Ownership, Training, and Experience

Date: 2007-08

By: Matthew A Cole
Robert R J Elliott
Eric Strobl

URL: http://d.repec.org/n?u=RePEc:bir:birmec:07-08&r=env [PDF]

In this paper we extend the debate on the environmental implications of foreign direct investment in developing countries by examining a new mechanism through which foreign influence can affect the environmental performance of firms. We focus on the extent to which key workers who have had previous training or experience in a foreign owned firm transfer and utilise their knowledge gained to the benefit of the local environment. To this end we use detailed firm-level data on manufacturing firms in Ghana. Our econometric results sugggest that the foreign training of a firm's decision maker does reduce fuel use, particularly so in foreign owned firms. Foreign ownership per se does not influence fuel use or total energy use but is found to increase electricity use, perhaps the cleanest form of energy used by Ghanaian firms.
Keywords: Environment, Spillovers, FOreign Direct Investment
JEL: Q56 Q52 F21 F23

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Zoellick: Development - Environment trade off

An underlying theme of this blog is the trade off between development economics on the one hand and environmental economics on the other. We could not agree more with the following quote:

"This is all about integrating climate change economics with development economics," Mr Zoellick said. "They are not separate."

The question that motivated us to set up this blog in the first place touches on the same theme:

"Is globalisation good for the environment"

We have subsequently published numerous papers trying to answer that very question.

It is interesting therefore to read this piece from Robert Zoellick (Director of the World Bank) addressing this issue in a recent interview with the Guardian's Larry Elliott.

Whilst Zoellick is saying nothing earth shattering it is reassuring to know that the head of the World Bank is willing to make this point clearly and powerfully in the world's press.

What Zoellick does need to be aware of though is that those in the rich west are going to become less enthusiastic about giving money to the World bank for development projects that involve damaging the environment. Deforestation in the Amazon is a classic example. Creating jobs is one thing, but when those jobs are in the logging industry the World Bank does need to consider the inclusion of environmental impact studies in its poverty reduction project planning.

Aside: Amazon Loggers Hold Greenpeace Activists Captive

Article:

Don't neglect poor for sake of the environment, says World Bank boss

The west will fail to combat global warming unless it can convince deeply sceptical poor nations that the fight to reduce carbon emissions will not come at the expense of poverty reduction, the president of the World Bank, Robert Zoellick, said last night.

In an interview with the Guardian to mark his first 100 days in the job, Mr Zoellick warned the Bank's rich-country shareholders that "they would not be successful" if they tried to change the focus of the Washington-based institution from development to cutting greenhouse gas emissions.

"This is all about integrating climate change economics with development economics," Mr Zoellick said. "They are not separate."

The World Bank president added that he had been travelling at the time of this summer's G8 summit in Germany, which had climate change at the top of the agenda, and that he had "picked up a lot of nervousness among Africans that the big developed countries would move the Bank away from its traditional development agenda to focus on climate change".

His experience as the US trade representative had shown him the dangers of creating the impression that rich countries were foisting something on poor countries. "In my consultations with developed countries my message to them is to please be sensitive. If the impression is given that it [climate change] is a rich country project, you are going to have the devil of trouble getting a turnaround."

He said the Bank was well placed to help integrate adaptation and mitigation strategies to fight global warming into development programmes for poor nations, that it could help set up innovative funding tools, facilitate technology transfer, and act as the catalyst for private sector initiatives. He insisted that the Bank's main focus would remain on poverty reduction.

The Bank is asking rich-country donors to come forward with money for the International Development Association - the body that provides soft loans for the world's poorest countries. Mr Zoellick said he had more than doubled the Bank's contribution to the next round of IDA funding in an attempt to force the hands of reluctant countries in the developed world to provide a $26bn pot of new money.

"It strengthens my hand. It means I can go to developed countries and say 'I've increased the Bank's funding by 100%, what about you?'" Mr Zoellick made it clear that if rich countries wanted the Bank to do more on climate change they would have to stump up additional funds, and insisted it was time for the G8 to fulfil pledges made to poor countries. "The G8 made commitments at Gleneagles, but it is one thing having words in a communiqué, it is another thing to have money in the bank."

He expressed concern that the official aid figures for 2006 showed the first fall since 1997, and that the $11bn reported increase in aid for sub-Saharan Africa since 2004 amounted to $3.5bn when debt relief to Nigeria was excluded.

The World Bank president said he understood the need to build support in developed countries for higher aid, but the proliferation of funds designed to address specific causes popular in the west - such as HIV/AIDS - ran the risk of overwhelming poor countries.

He admitted his job had been tough following the departure of his predecessor, Paul Wolfowitz, who resigned in the summer after a scandal involving the promotion of his girlfriend. "It's demanding. There is a lot to do. Part of my purpose in coming here was to calm the waters, but also to navigate a course for the future. I've been able to do that."

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Economics of the Environment in China update

Two articles of note from China Economics Blog.

A Green Awakening in Red China

Green Economics in Red China [Washington Post]

Both articles draw on material from a long post we wrote here on E. Economy's piece on environmental degradation in China.

Elizabeth C. Economy on "The great leap backward?"


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Climate Change and Industrial Restructuring

I am skeptical that concerns over climate change are leading to widespread industrial restructuring but here are the results from a "investor survey". Not particularly convincin but does shed some light on the behavior of large multnationals (a topic we are interested in researching).

Climate Change Spurs Industry Restructuring - Survey [Planet Ark]

OSLO - Climate change is spurring a "worldwide economic and industrial restructuring" as more and more of the world's largest companies seek to confront global warming, an investor survey said on Monday.

Even so, some big firms were still doing far too little to identify risks and opportunities from climate change, according to the Carbon Disclosure Project (CDP), representing 315 institutional investors managing US$41 trillion in assets.

A record 77 percent of the world's top 500 firms, rated by market capitalisation in the FT500, answered a request for information about their responses to global warming, up from 72 percent in 2006, it said.

"One trend above all is becoming increasingly clear: climate change and the various regulatory, policy and business responses to it are driving what amounts to a worldwide economic and industrial restructuring," a 92-page survey said.

"That restructuring has already begun to redefine the very basis of competitive advantage and financial performance for both companies and their investors," it said.

The project, in its fifth year, seeks to guide investors by getting companies to give details of their greenhouse gases and strategies for everything from energy efficiency to recycling.

"Seventy-six percent of responding companies reported implementing a greenhouse gas emissions reduction initiative", up from 48 percent in the previous FT500 survey, it said.

UN climate experts say that warming, blamed mainly on greenhouse gases emitted by burning fossil fuels, will bring more droughts, heatwaves, floods, rising seas.

CROPS, CARS

In a series of examples of change, the survey said brewer Anheuser-Busch was trying to develop crops resistant to extreme weather. Oil group Total aimed to cut flaring of associated gas 50 percent by 2012 compared to 2005.

Alcoa had increased its purchase of recycled aluminum by 20 percent in 2006 while a range of carmakers was working to develop more hybrid electric-petrol vehicles.

"Investors are looking for the next big thing. If the company is part of the problem on climate change it hasn't a clear run at the markets of the 21st century," Paul Dickinson, chief exective officer of the CDP, told Reuters.

The CDP sent requests in total to 2,400 companies around the world and got 1,300 responses. In the FT500, Europe-based companies led in response rates. US-based firms lagged and none of seven Chinese companies replied.

The CDP also published a first index of firms with what it said were best carbon disclosure practices, including mining group Rio Tinto, energy firm Iberdrola, computer firm Hewlett Packard or Westpac Banking.

Still, it said too many firms failed to reply, such as Apple Computer, Bank of China, Berkshire Hathaway, Gazprom or Philips Electronics.

"We find it absolutely incomprehensible why a company will fail to respond to a legitimate request from its shareholders," said Dickinson. "Have they got something to hide? Do they think they operate in a complete vacuum?"

In a linked survey of top US companies in the SP500, response rates were 56 percent -- a majority for a first time and up from 47 percent a year earlier. The United States is outside the UN's Kyoto Protocol for curbing emissions.

Japan blames China for increased pollution: Transboundary effects

The news that there is pollution in Japan is nothing new but today's article from PlanetArk is interesting from two angles.

First, there is the standard "transboundary pollution" effect that rams home the fact that pollution is a global phenomenon and not just a problem of the developing countries of China and India.

Also of interest is the line that "Japan has not faced pollution levels like this for 30 years". This clearly shows the "Kuznets curve" effect where countries grow out of pollution and as incomes increase so does the demand for a cleaner environment.

Of course this the same effect will surely happen in China and India. The question is whether the massive environmental damage caused by China's current growth will push the environment past some manageable limit (a tipping point) from which there is no return.

The other issue is that whilst Japan may be "up in arms" about all this pollution that originates in China a careful examination would probably show that a lot of the firms in China that are causing the pollution are owned by Japanese multinationals. Likewise a large percentage of manufacturing from developed countries has been moved to China to take advantage of low wages (and low environmental regulations).

So should China really take all the blame?

Smog Smothers Japan, Experts Point to China

TOKYO - Smog is menacing Japanese cities for the first time in 30 years and cropping up in rural areas for the first time ever, alarming the government and prompting experts to point the finger at neighbouring China. Warnings for high levels of hazardous smog have been issued in a record 28 prefectures so far this year, from sparsely populated isles in southern Japan to Niigata, western Japan, where 350 people have suffered stinging eyes and throats.

While the government is cautious about placing blame, experts say much of the rise in pollution is coming from China, where air quality is a focus ahead of the Beijing Olympics next year.

The type of smog -- called "photochemical smog" because it is created when sunlight reacts with exhaust from cars and factories -- is made up of photochemical oxidant particles such as ozone. These particles can cause breathing difficulties and headaches.

"In terms of average levels of photochemical oxidants measured annually across Japan, there has been quite a rise since the 1990s," said Toshimasa Ohara, head of the National Institute of Environmental Studies' regional atmospheric modeling section. "We believe a substantial part of that rise has come from increasing emissions in China. We're looking into what percentage this factor has accounted for."

Smog adds to a string of environmental concerns that experts say originate in China, including acid rain and sandstorms that gain toxicity as they pass over its industrial regions.

But academics say Japan may find it hard to put pressure on China to cut emissions, with studies yet to show a precise figure on how much of Japan's smog is caused by cross-border pollution.

"If we are going to take action against other countries, we can't be vague," said Atsuko Mori, senior researcher at the Institute for Environmental Research and Public Health in Nagasaki, southern Japan. "There needs to be a thorough, scientific study into the causes."

RESEARCH COMPLICATED

Mori and other experts say research is complicated because domestic factors are also to blame for the recent rise in smog across Japan, which has taken pride in its efforts to cut emissions since its days of rapid economic growth in the 1970s.

For example, while emissions from cars have been restricted, those from paint and gasoline vapours, which also contribute to smog, have been harder to control. Smog can also be exacerbated by strong sunlight.

The Environment Ministry asked a group of academics and local health officials last month to carry out a study on pollution trends, but detailed research into the causes could take years.

"Research to base environmental policies on requires a lot of time and money," said Hajime Akimoto, programme director at the Japan Agency for Marine-Earth Science and Technology, noting that the United States spent a decade on research before it took steps against cross-border pollution.

"Research like that in Japan could take another five years."

As a first step, government officials say Japan is working together with China to measure its pollution, although the country still lacks high-tech equipment to analyse some pollutants such as ozone.

Ohara at the National Institute of Environmental Studies said the region could in future look to the example of the Convention on Long-Range Transboundary Air Pollution, an agreement to cut pollution under the UN Economic Commission for Europe signed by countries such as the United States and Canada.

"If it becomes clear that the effects of cross-border pollution are big, then it will be imperative to create international regulatory rules within East Asia, similar to Europe," he said.

US-China relations: Paulson Eyes Debate Shift to Environment

For Europe and the rest of the world it must seem strange that the US has now decided to bring the environment into the picture as a way of "reducing tensions". Those NGOs and governments that have spent years attempting to get the US government to get its own house in order cannot fail to see the irony of the US now (indirectly) lecturing China on its environmental record.

Paulson's argument is that there is so much tension relating to the trade negotiations why not start with something that concerns both countries - the environment. The idea is that there is "less" tension surrounding this subject. I can see that situation changing quite rapidly.

The fact that neither country signed up to Kyoto does, I suppose, give them some common ground. China's defence as always will be:

1. China's per capita CO2 emissions are way way below those of the US.
2. Any climate change happening now was a result of Western industrialisation and not the current Chinese growth.
3. Why should China not be allowed to grow as the West did?
4. A good percentage of China's pollution is a result of producing goods to sell in the West - meaning the West has effectively exported its pollution to China either directly (via foreign Multinational) or indirectly.

In China, Paulson Eyes Debate Shift to Environment [PlantetArk]

XINING - US Treasury Secretary Henry Paulson on Sunday acknowledged high trade tensions with China and said he would start a four-day visit by focusing on an issue with more common ground: the environment.

Aiming to keep his strategic economic dialogue with China on track amid controversies over Chinese product and food safety and currency legislation gaining momentum in the US Congress, Paulson will visit Qinghai lake in western China on Monday before meeting President Hu Jintao and Vice Premier Wu Yi on Tuesday and Wednesday.
The lake and surrounding glacial watershed are threatened by global warming and encroaching desert, with Paulson saying the area was a strong symbol of the need for US-China cooperation on environmental issues.

"There is much more tension in the trade area, so this is an important area where there is less tension and I think it's a good place to start this trip," Paulson told reporters on his plane on the way to China.

He said he would again press Hu and other top officials for faster appreciation of China's yuan currency and other reforms, such as moves to rebalance the Chinese economy away from exports and toward more domestic consumption and to increase foreign access to China's financial services sector.

Paulson's visit comes as US lawmakers, frustrated with slow progress in reducing US trade deficits with China, are advancing legislation aimed at pressuring Beijing to allow open markets to set the yuan's value.

The US Senate Finance Committee last week passed a bill that would allow companies to seek anti-dumping duties against products from countries that have "fundamentally misaligned" currencies and eventually intervention by the Federal Reserve.

Many US lawmakers and manufacturers believe the yuan is deliberately undervalued by 25 to 40 percent, keeping Chinese products cheap in US consumer markets. Sen. Charles Grassley of Iowa, a Republican, said the bill would end the Bush administration's "pussyfooting" over the currency issue.

SOME SUCCESSES CLAIMED

Paulson sought to rebut criticism that the strategic dialogue with China, launched in December 2006 to link top officials, had achieved little so far, citing a more than 9 percent appreciation in the yuan against the dollar since July 2005 and increased access to China for US airlines.

"We are getting results through this process we wouldn't have achieved without it," he said.

But he reiterated that the Chinese needed to allow the yuan to appreciate more quickly and said tensions over trade and currencies were likely to continue, adding that the dialogue "wouldn't make the problems go away."

Chinese officials "may not be pleased" about the US currency legislation but should not be surprised after receiving warnings from lawmakers since the last dialogue meeting in May, Paulson said.

Environmental and energy issues were among the most productive areas of the May meeting. The two sides agreed to further talks on eliminating tariffs on environmental goods and services and announced clean coal technology projects.

China's booming economy has put a severe strain on its environment, with air and water pollution reaching critical levels in heavily populated areas and sparking protests.

China is expected to soon overtake the United States as the world's largest source of greenhouse gas emissions.

Neither country has signed the Kyoto protocols for reducing carbon emissions, although US President George W. Bush is trying to form his own coalition of the 15 largest carbon emitters among industrialized and developing countries.

Paulson said "air and water don't know national boundaries" and added that he believes Hu wants to address China's environmental problems.

In Qinghai province, Paulson saw an opportunity to keep the dialogue going on the environmental front in the hopes of solidifying his relationship with Chinese officials.

"Do I think that working together on the environment is going to make it easier to work together on the currency and other things? Not necessarily," Paulson said.

"What's important to making progress on all of them is building the relationships, the trust that lets us manage our discussions, a respectful and a mature and a professional manner to keep the relationship on an even keel."

Paulson said the Qinghai lake region illustrated the problems of greenhouse gas emissions and climate change because rising temperatures are causing the lake to shrink and glaciers to melt, which could threaten the source of several major rivers in Asia.

Story by David Lawder

Economist on Climate Change

Press release from the Economist dated 31st May. An interesting piece and useful to contrast the view that "business caused climate change and can also solve it" with the previous article on China.

As White House unveils climate strategy, The Economist argues that, given incentives, business can solve climate change

As the White House unveiled a long-term strategy on climate change Thursday, The Economist unveiled a special report on the subject that will appear in tomorrow's issue. Written by Deputy Editor Emma Duncan, the report argues that business’s conversion to combatting climate change is real and substantial. It is bringing forth serious investment in the technologies needed to produce clean energy. That is a big change, and a reason for optimism. However, the investment is not yet on a scale large enough to avert climate change.

But, The Economist notes, the world cannot expect business to combat climate change by itself. It needs the right incentives. Consumers won’t provide them: governments must. They have to make polluters pay for the damage caused by the carbon dioxide they produce. And they have to do so globally—which is why next month’s G8 summit is so crucial to this issue.

It can be done. The technologies are available. And the costs of bringing them to market and thus stabilising greenhouse gas concentrations at a safe level look reasonable. Doing so would probably mean cutting global growth by 0.1% a year. Given the risks, it’s worth it.

Duncan concludes, “Business caused the problem of climate change, and business can solve it. But it can do so only if governments put the right incentives in place. This is up to the politicians, and the people who vote them into power.”

Economist leader: Cleaning up
.

Multinationals and Pollution: Indonesia Protests.

Protesters Carry Posters of Who They Say are Pollution Victims

INDONESIA: April 27, 2007

Protesters carry posters of people who they say are victims of pollution during a demonstration against Newmont Mining Corp. in front of Manado court, North Sulawesi.

An Indonesian court on Tuesday cleared the local unit of Newmont and the unit's American president of dumping toxic waste into a bay near a gold mine in North Sulawesi and making people sick.

Exxon Watch: funding cuts for CEI and other global warming skeptics

Following a series of posts on this blog about the behaviour of Exxon and its widescale funding of "think tanks", that are invariably global warming skeptics and pro-big oil, comes the news that such funding is to be cut.

For posts on this blog related to the Competitive Enterprise Institute (CEI) and Exxon see below:

Exxon going green? Not exactly, in fact, not at all.

A new year - time for an "energy diet"?

Inconvenient truth released: full truth, half truth or pure hollywood excess?

and my favourite:

Love Global Warming, Hate "Kooky English blogs"

Now we hear from the post-gazette that:

Exxon has stopped funding the Competitive Enterprise Institute, a Washington-based think tank that last year ran television ads saying that carbon dioxide, the main greenhouse gas, is helpful. After funding them previously, Exxon decided in late 2005 not to fund for 2006 CEI and "five or six" other groups active in the global-warming debate, Kenneth Cohen, Exxon's vice president for public affairs, confirmed this week in an interview at Exxon's headquarters in Irving, Texas. He declined to identify the groups beyond CEI; their names are expected to become public in the spring, when Exxon releases its annual list of donations to nonprofit groups.

Myron Ebell, director of CEI's energy and global-warming program, declined to comment about why Exxon didn't fund CEI last year. But he added: "Like any company, they are concerned about both policies and image.

"We're not at the mercy of our funders for what we believe. But we are dependent on them for funding to help promote our programs," he said. "Obviously, we would like to find a lot more funding on energy and global warming than we've had."

With such reduced funding it will interesting to see whether they continue to plough the same lonely furrow.

It would be good to think that the large number of well read (and not so well read) blogs that have questioned/ridiculed Exxon for the support of such groups (notably Treehugger and Gristmill) have made a difference.

If any Exxon executive is reading and would like to support a non-partisan academic blog that searches out the truth through scientific endeavor then look no further than the "Globalisation and the Environment" blog ;-)

Hat-tip: Treehugger

Exxon going green? Not exactly, in fact, not at all.

Two interesting articles looking at the recent Exxon announcement.

First the Guradian breaks the story.

Oil giant works on its PR

The leadership at ExxonMobil has promised investors that it will "soften" its public image in a bid to rid itself of a reputation for being green campaigners' public enemy number one.

So far, so good. However:

The company told the Guardian it was determined not to change its position, just to explain it better: "Greenhouse gas emissions are one of the factors that contribute to climate change," it said.

"This is an extremely complex issue but even with the scientific uncertainties, the risk (of global warming) is so great that it justifies taking action."

Think Progress have a neat little post on this story (Think Progress are another of these scary American think tanks by the look of it albeit left leaning this time (if that makes sense in a US context))

Think Progress is a project of the American Progress Action Fund. The Center for American Progress Action Fund is a nonpartisan organization. With the blog, CAPAF seeks to provide a forum that advances progressive ideas and policies.

The final paragraph from the article states:
Exxon’s New Position On Global Warming, Same As Its Old Position On Global Warming

Exxon can attempt to soften its language as much as it wants, but its record remains clear. According to a recent report by the Union of Concerned Scientists, Exxon has “funneled nearly $16 million between 1998 and 2005 to a network of 43 advocacy organizations that seek to confuse the public on global warming science.” The big-oil front group the Competitive Enterprise Institute has received $1.6 million from Exxon since 1998, using the funding to distort global warming research and attack any meaningful action to regulate carbon dioxide emissions.

Hat-tip: David Roberts.