Throughout my 35 years in sustainability it has always seemed odd that while so-called economic rationalism reigned over our political, economic and business worlds, rational thought wasn’t applied to issues like climate change. The risks were always clear, as defined by rational science, while a logical analysis of the economics showed acting early was cheaper than acting late. Yet a strange kind of religious and ideological zealotry took hold, as otherwise sensible, educated people ignored rational thought. It was a failure of reason.
While Copenhagen failed to deliver any agreement however, it may well mark a return to rational thought and with it some profound shifts in markets, politics and our approach to sustainability. Perhaps historians will mark this point and refer to the world BC and AC – Before Copenhagen and After Copenhagen.
What will historians say changed at the end of 2009? And if we could read their conclusions now, would it change our present responses – not as historians but as the creators of that history? Perhaps they will write something like this:
The old world ended at Copenhagen. It was the moment a critical mass of people came to accept that the old way of doing things was finished. They started to prepare for a new world, and for the shift to the war footing that would deliver it.
While Copenhagen failed to deliver action on reducing emissions, it delivered a very clear outcome. It shattered assumptions that had previously framed the debate and so provided an historic shift in the approach to the issue.
For a start it was the end of the debate about the science. Copenhagen marked the victory of reason over ideological and religious zealotry.
The debates continued on the detail and that was of course a healthy part of the process. There is always uncertainty in science and such debates test the strength of assumptions. But After Copenhagen there was a critical mass of powerful and influential people who accepted that despite the uncertainties, it was time to act. They kept debating 1 vs 2 degrees of warming and levels of CO2 at 350 vs 450ppm but they stopped debating the rules of physics and chemistry. They knew if you increase the thickness of the atmosphere’s blanket the world gets warmer. While many remained frustrated at the lack of action despite this acceptance, this was a critical turning point because the mathematics of what accepting the science meant for the economy were profound.
It was also the end of any chance of a measured and careful transition. That moment probably passed in 2000 but it was firmly dead and buried with the lack of an agreement in 2009. With actual emissions reduction now years away, the lags in the climate system dictated that a crisis driven, war like response was now inevitable, even with the high 2 degree target. As a result, assumptions about the pace of change and the process by which it would be delivered were finished. It was clear After Copenhagen that when the change came, the pace would be rapid, the process chaotic and the transformation radical.
This meant the level of national economic and company business risk posed by delay was now much greater than the risk posed by the change itself. As a result, business came on board at Copenhagen, now seriously worried that delay would lead to such rapid change, their companies faced catastrophic commercial risk.
Perhaps the shift of greatest historical significance was that it was now clear the pursuit of global consensus was an illusion. The major powers had played along with the UN process because the complexity of reaching consensus gave them an excuse to avoid action. They could profess support for a global deal, knowing it wouldn’t happen. But once there was a danger of it becoming real, they dropped that idea like a hot potato. There was nothing in history to suggest they were ever going to let large numbers of small, poor countries help determine the rules. As history shows, those with power don’t give it up lightly.
Instead they started the process of forming what was to become the Coalition of the Cooling, a group of powerful nations and their friends who had sufficient economic and political muscle to define the inevitable economic transition. If power was going to shift away from the sole superpower, it was in the interests of both the US and the group of large emerging powers to form a new club to guide the future. With the addition of their various allies, the future could then be negotiated with 10 people in the room. China had arrived.
What those in power missed until much later though was the strength of public concern and as a result the rising influence of civil society. Tens of thousands of advocates had gone to Copenhagen, assuming their intellectual and political contribution would help leaders get the right outcome. They left angry at the failure of world leaders but determined to force change from the bottom up.
The combination of civil society, particularly the youth movement, along with the simple mathematics of climate science, led to what most investors missed completely until it was too late.
After Copenhagen, coal was finished.
It was surprising so many missed this because the data was clear for all to see. Investment in clean energy outstripped investments in fossil fuel energy every year from 2008 on. More importantly, once 2 degrees was accepted as the maximum target, it was all over for coal. There just wasn’t any room in the remaining carbon budget for coal to keep growing. So once the world’s powers decided the science was in, coal was out.
This was the case anyway and would have unfolded over the decades to come, but when civil society decided to give up on the direct political process and focus all of its attention on coal, sentiment shifted quite rapidly.
It was of course technically illogical to focus just on coal, after all it was only 20% of global greenhouse gas emissions. But it was already clear the market would kill off oil, with electric cars and / or peak oil. All the alternative NGO campaign targets were too complex and missed the key ingredients : a powerful enemy that can be demonized, a simple NO campaign and definable physical targets to focus on. The movement had learnt the dangers of diffusion by putting so much into Copenhagen for so little tangible result.
So the group with nothing to lose, the Angry Islanders joined with the youth driven movement Our Climate Our Time and directed its powerful emotional message entirely onto coal.
Campaigns erupted everywhere – targeting every coal mine, every coal company and every coal train and ship. It was a market smart campaign with investors targeted as owners, banks as lenders and coal executives as climate criminals. It took a few years to build momentum but once the US and China jointly announced a ban on new coal plants, the house of cards came tumbling down. The valuation of coal companies collapsed, under the combined weight of public disdain, regulatory threat and shrinking market, with alternative technologies now competing on price. With investors running scared having seen their coal investments drop 75% in value over a month of carnage, the industry went into terminal decline, confined to the margins thereafter.
The litigation against directors and fund managers however, carried on for a decade more. Regulators took action against directors who hadn’t explained the key risks to investors. Shareholders asked why these risks weren’t obvious to directors given the science and why they were misled about the commercial potential of CCS.
So back to the present as we head into 2010.
Who knows how the future will actually unfold, but some parts of the above are clear. The focus on Copenhagen failed to deliver for the global climate movement. It was always going to, as I argued in my last column, but even I didn’t think it would fail quite so spectacularly. So a shift in focus is inevitable for climate campaigners. We don’t know where it will shift to, but we’ll find out in 2010.
The business community are the biggest losers from Copenhagen. Despite their really serious focus and coordinated calls for action leading up to Copenhagen, they now face heightened risk of discontinuous change. The lack of a regulatory result, combined with the political acceptance of the need for even stronger action than before, creates a huge gulf between present reality and the inevitable future. That gap will close at some point and do so suddenly. For companies determining their business strategies this poses massive risk. It makes the coal scenario painted above far from fanciful. Markets are driven by sentiment and sudden sentiment shifts are now inevitable. The challenge is working out where and when they will strike. I’d certainly be nervous if I was a coal executive or investor.
For policy makers it’s back to the drawing board. With no genuine global agreement anytime soon, perhaps they will abandon trading schemes and revert to the much simpler approach of national carbon taxes and bilateral deals, following the trade model. Meanwhile all but the lowest carbon economies now face ever increasing risk from delay. When the global market shift gets momentum, being stranded with high per capita carbon emissions could be competitive disaster for nations that are slow to act.
On personal level, part of the challenge is dealing with despair and frustration. Community activists, corporate leaders, policy makers and scientists have put so much effort into action on climate change, for little result. Sure we’ve seen great progress in understanding and have many new allies on board but negligible action to even delay the now inevitable crisis. The climate responds to emissions not to political accords.
So take a moment to grieve for the lost opportunity, shed a tear like Bill McKibben did and say thanks to all those who have thrown their all at it.
We have led the horse to water but it’s not yet thirsty enough to drink.
But don’t stay there. We don’t have time for despair. We now have to move on to the new world, the one After Copenhagen. So after some Christmas rest and reflection, decide what you’re going to do and get back to work. We have a civilisation to save.