Bridging Luxury and the Environment

by Margo Koniuszewski, author of the “Bridging luxury & the environment” project
AngelinaJolie

Angelina Jolie in the Louis Vuitton Campaign (Source credit)

English version of Article published in Forbes Poland

Ten years ago, while buying lipstick at the stand of a leading luxury cosmetics brand, I asked if I could bring back the empty packaging for reuse by the company. The surprised saleslady answered, “I am sorry Madam, we do not practice such things here”. Today, premium brands like Guerlain, encourage their customers to return product packaging (empty perfume bottle, etc.), which is then transferred to special centers for sorting, recycling and recovery.

Luxury and Sustainability

Before luxury brands began to be identified with large corporations – fashion houses that spend billions on marketing – they were associated with family values, cultural heritage, precise-craftsmanship and timelessness (jewelry and watches that are passed on from generation to generation). Today, we must add the ecological and social innovation necessary to ensure a sustainable future. Customers actively support this process by demanding more responsible behaviors from their favorite brands. The global emergence of social and environmental awareness represents the most important cultural transformation of the twenty-first century – to which the luxury sector must provide leadership if their brands are to retain their prestige – an essential element in the DNA of luxury brands.

A Luxury Sector with a French Flavor

Luxury Industry revenues reached €210 billion in 2013 with French brands accounting for 25% of sales. The LVMH Group continues to lead the sector with revenues of €29 billion in 2013. Given this scale, the behavior of the industry has a major impact and through its leadership it can become a catalyst for driving aspirations of more eco-conscious lifestyles.

In 2013, the LVMH Group (Louis Vuitton Moët Hennessy) invested €17.3 million in environmental protection – including waste management, water recycling, soil and noise pollution reduction, and projects to support biodiversity. Investments in efficient buildings, internal training and the sponsorship of environmental initiatives are budgeted separately.

Supply chain monitoring, eco-design, energy efficient lighting, certification of business processes, ecosystems protection, materials recovery and sustainability audits are all integrated in the various brand strategies that are specific to each business sector: Wine & Spirits, Perfume & Cosmetics, Fashion & Leather Goods, Watches & Jewelry and Selective Retailing.

Without Nature there is No Business

Luxury brands are now building their core image around caring for society and the environment. Wanting to preserve their beauty and appeal, they must (as many already do) provide a persuasive narrative for their contribution to alleviate social and environmental concerns. Global warming, deforestation, resource scarcity, pollution of air, water and soil, endangered species and environmental degradation disturb the favorable conditions that have allowed the industry to develop and thrive. As LVMH Group CEO Bernard Arnault says, “LVMH owes a lot to nature”. And the business case for sustainability is made even more compelling because “green solutions” benefits extend beyond image building, they can also improve the bottom line through efficiency and cost reductions.

Belvedere-Image-2_Site

In the production of Belvedere vodka, a brand of Polish descent, distillery Polmos Zyrardów has converted its power generation from oil to natural gas and improved its energy efficiency through a heat recovery system. The energy generated is now used in the production re-heating process. With these solutions, carbon emissions were reduced by 36 percent or 2 thousand tons, the equivalent to the consumption of 850 thousand liters of gasoline, like removing 900 cars from Polish roads. In 2012, LVMH launched a program to optimize energy consumption using LEDs in its boutiques, using technology form Philips Lighting amongst others – reducing the Louis Vuitton Maison power consumption by 50% since 1995. In addition to lower power bills, the shops have better possibilities in terms of “play of light” to showcase products.

Companies also benefit from recycling. LVMH created its CEDRE platform (Centre Environnemental de Déconditionnement et Recyclage Ecologique) to optimize the recovery and processing of waste generated in the production, distribution and recycling of its product packaging but also the waste from various events (exhibits, fashion shows, etc.). In 2013, it recovered around 1,600 tons of glass, paper, wood, metal and plastic.

The Hennessy Maison has been modernizing its vehicle fleet – more then 20 percent of its cars are now green (electric and hybrids). Charging stations have been installed at the factories and employees received eco-driving lessons, which helped reduce fuel consumption, accidents and maintenance costs. At Sephora, a fleet of electric trucks serves distribution centers located in French city centers, reducing costs and urban pollution.

Eco-marketing

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Veuve Clicquot Champagne casing made of potato starch and paper

The best strategy in terms of image and brand building in the luxury sector remains environmentally and socially responsible marketing. It is difficult to conceive a more compelling example for the imagination of wealthy eco-consumers then the fully biodegradable isothermal Veuve Clicquot champagne casing that is entirely made of potato starch and paper. Meanwhile, emotions-based cosmetics Maison Guerlain, engaged its brand in the protection of bees – the essential pollinators that are critical to healthy ecosystems. Through its Orchidarium research platform, Guerlain also supports the restoration of tropical forests – the natural habitat where orchids grow – passing along essential know-how to organizations that are involved in the collection of these flowers. Hennessy is also engaged in the protection of woodlands. The timber used for the production of cognac barrels comes from sustainably managed forests that are certified by FSC (Forest Stewardship Council) and PEFC (Programme for the Endorsement of Forest Certification).

guerlain

Guerlain – Celebrating 160 years of Commitment to Bees

Promoting advances in science is also important for Belvedere. Since 2005, it has worked with Lodz University of Technology to develop research programs in biotechnology and to help attract the best graduates.

Luxury ethics

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Bvlgari: Certified Responsible Jewelry Council label

Human rights stewardship is also important. Especially given the growing awareness of the social costs associated with precious metal and stone mining in the Third World. Responsible jewelry manufacturers became particularly vigilant in this area for fear of being associated with “blood diamonds”. Since 2005, Bvlgari has obtained the Certified Responsible Jewelry Council (RJC) label, certifying the implementation of responsible ethical, social and environmental practices in its supply chain. Since 2012, Louis Vuitton is also RJC certified.

Louis Vuitton also developed stringent  environmental audits of its supply chain.  There is also the implementation of ISO14001 with environmental assessment for transporters and warehouses.

LVMH works to reduce environmental impacts by designing quality products that are long-lasting and easy to repair. The durability and longevity of luxury goods contrasts with the planned obsolescence that is incorporated in fast moving consumer products.

Given the development of modern science, technology, and an awakening global consciousness, we realize that we can (and must) avoid repeating the mistakes of the past. Luxury brands enjoy global recognition and prestige, and we aspire to be associated with them. Aspirations are a critical element. If we want a better life and for meaningful leadership to come from the luxury sector, we better pay attention to what we buy and invest ourselves in asking the right questions. This is best path towards setting a new standard of sustainability for the industry and beyond.

Is a Fireplace Ban Justified?

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Will the fireside chat become a relic of history? Gorbachev-Reagan 1985 Fireside Talks in Geneva

While pollution alerts are sounding again in various French cities (Rennes, Nantes, Strasbourg, etc.), Environment Minister, Ségolène Royal, cancelled a controversial full ban on all fireplaces (even the most modern ones) that was expected in Paris and 435 municipalities on January 1, 2015. Following discussions with forest and wood industry professionals, the minister felt that the analysis supporting the ban was flawed, that the  law would be ineffective and that other measures should be explored.

Studies showed that fireplaces generate 25% of the fine particle pollution in the region, at par with the transportation sector. These figures are disputed by the wood industry which claims that fireplaces cause only 5% of the fine particles while 40% come from transport. But while lobbies debate, pollution limits are breached in Paris, across France and elsewhere. 7.4 million French homes use wood as their main source of heating, up from 5.9 million in 1999. In Haute Savoie (French Alps), where the prevalence of wood burning is high, pollution is a serious problem. Similarly, in Canada, the city of Montreal estimates that its 85,000+ fireplaces generate close to 50% of the fine particle pollution in the city – far more then industry or transport. Faced with these problems, authorities in Montreal and France continue to warn about the dangers of pollution peaks, promote public transport, reduce speed limits, suggest to lower heating and ask not to use the …fireplace.

Impacts on Health

Most people underestimate the impact of smoke pollution. But coming from a fireplace, a campfire or a wood-stove, smoke contains high levels of contaminants including small particles (that enter deep into lungs), carbon monoxide (CO), and other irritants with significant health consequences in neighborhoods where wood burning is popular but also indoors. Environment Canada warns about indoor pollution from fine particles that make their way throughout the house and remain long after the fire stops. The World Health Organization (WHO) considers that fireplace smoke causes cancer, headaches, eye irritation, respiratory disease and heart conditions. Particularly at risk are children, older people and anyone suffering from asthma and allergies.

camp-fireStudies have shown that even campfires cause pollution that can quickly exceed norms and be a multiple of those found in urban areas, even in zones with intensive industrial activity.

In Montreal, fireplace pollution contributes to the premature deaths of 1,500 people. In Paris, studies suggest it reduces the average life expectancy by 6 months in the region.

A Major Global Problem

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Picture: Global Alliance for Clean Cookstoves

The WHO estimates that 3 billion people cook and heat their homes through open fires and simple stoves burning wood, animal dung, crop waste, and coal. More than 4 million die every year due to the indoor air pollution that can be 100 times higher then acceptable levels for small particles. More then 50% of the fatalities are children under 5 because of pneumonia caused by the high levels of soot inhaled at home.

In poor countries people suffer from indoor smoke exposure because they lack better alternatives. It is odd that in the developed world, people who can afford better technology continue to use antiquated heating methods and expose themselves and others because of ignorance. Studies show that many people find the smell of burning wood pleasant and are not aware of its dangers. Surely, the authorities bear some responsibility for this.

Technology can Help

The heating performance and pollution levels are directly linked to the type of heating device, open fireplaces being the worst performing and the latest EPA certified pellet stoves are the best. According to experts, EPA certified fireplaces can reduce small particles pollution by 94% (versus old models that generate 70 grams per hour) through higher temperatures that improve combustion which dramatically reduces residual fumes and pollution. Agreeing with industry, Ségolène Royal confirms that technology can make major difference and should be deployed. She she prefers incentives to bans, like the €1,000 the Haute-Savoie region gives for the replacement of an open fireplace or wood-stove.

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People enjoy fireplaces – there is something primal and comforting about them – the sound of the wood crackling, the light dancing around the room. It is also comforting to know that if a storm or other event that takes out the lights and the central heating, we still have a way to cook, give some light, and can heat our homes. And wood, if managed properly, is a renewable resource. But the price to be paid for an open fireplace or for antiquated wood-stoves is too high. The best of both worlds is to use fireplace stoves, that use technology that helps eliminate particulates, improves heating performance while still providing the pleasure and security of the old fashioned fireplace.

Recommendations:

- New EPA certified stoves are 90%+ cleaner and much more efficient in terms of heating.

- An open fireplace offers a very poor heating performance but generates massive indoor and outdoor pollution. It is costly, wasteful and should be phased out.

- Never burn trash, plastic, paint, or wood that was painted/treated because this releases dioxins and other toxics.

- Ideally use hardwood that is properly dry. Avoid wet and soft woods. Not only are they more polluting but they also provide significantly less heat.

- Keep the installation clean and in good working condition. Regularly sweep the chimney.

- To cities and authorities: awareness raising campaigns are needed. Financial incentives can play an important role but regulation, controls and sanctions will eventually be needed. Helping households better insulate their homes will also go a long way.

- Addressing indoor air pollution from ancient cooking and heating practices (in developing countries and elsewhere) is complex problem but solutions are available. The technology exists and can be affordable if proper financing mechanisms are implemented. Here is an example from The Gold Standard Foundation.

Related links:

Campfire Pollution

Quebec Brochure on Wood Heating

WHO Household air pollution and health

A Bright Future for Europe is Possible

As a Polish-Canadian who grew up in Montreal, I clearly see benefits for Quebec to be part of the Canadian Confederation and for Poland within a reconciled and vibrant Europe. Today, when America and China compete for influence, it is only through Europe that individual member states can still play a constructive global role.

IMG_1085Speaking in Geneva to an eclectic audience ranging from international diplomats to political affairs students at the Graduate Institute, outgoing European Commission President, José Manuel Barroso, took advantage of his newly found freedom to fire back at his critics (and those of Europe). Europe faced its share of crises over the past decade: constitutional (2005), financial, social and political, and geopolitical with the situation in Ukraine. But in opposition to his naysayers and to the “prophets of pessimism” who continue to announce the downfall of the European project, Barroso predicts that Europe will not only survive, it will grow stronger and play a growing role in global affairs.

Financial Crisis

In July 2012, at the height of the financial crunch, chief economists of European and American banks expected the exit of Greece and were split 50/50 on the survival of the Eurozone. But at the 11th hour, a political solution was found between the richest and most vulnerable members, balancing responsibility and solidarity. The Eurozone stayed united and stable. As French political economist Jean Monnet predicted, Europe will be built by meddling through crises.

lehman-colapse2-630x200To critics that claim Europe is too complacent, self-satisfied and only wants to protect its situation as the world’s premiere “retirement home” Barroso reminds that the Eurozone crisis did not originate in Europe, it was a spillover from the Lehman Brothers collapse: a “made in the USA” crisis. Something many tend to forget… But still no excuse the fragility of European Banks!

Surely, Europe confronts the same challenges as the rest of the world in terms of protectionism, unemployment, anemic growth and inequality. As elsewhere, this is fueling populist extremism and inflaming xenophobic fears. But despite the emergence of inward looking “tea-party” rhetoric in member states, Europe is in good shape. The last 10 years have tested its resilience and it has come out larger (moving from 14 to 28 member states), with better governance, while the Commission has never had so much say in European affairs. Europe also continues to be a major global player. Already much larger economically and population-wise then the United States, it remains an attractive objective for Ukraine and Turkey.

Resilient and Ambitious

By overcoming the various “stress tests” and defying conventional wisdom, Europe has shown a formidable capacity for renewal and strengthening. The Euro is stable and remains one of the two leading global currencies. This extraordinary resilience comes from Europe’s capacity for integration that is stronger then attempts for isolation and fragmentation precisely because, in a globalized world dominated by the American and Chinese heavyweights, not a single European state has the scale to matter. But a united Europe has the power to protect its interests and project its values in the world. Some member states (i.e., Germany) have realized that through Europe they can get obtain global relevance.

British Prime Minister Margaret Thatcher

Unfortunately, not all members understand that on their own they are too small. Americans used to call London, their partner for historical, cultural and language reasons, to find out what is happening in Europe. Now they call Berlin. The real challenge is therefore for states to commit themselves to the European project and protect their own future. Thereby lies the challenge that will decide on the future of Europe.

Continued global relevance

As questions of human survival start to take precedence over business as usual politics, a new approach capable of providing a globally cooperative response is needed. The European adventure, enlightened by two self-destructive attempts at world domination (WWI & II) provides an innovative approach for cooperation across nations and an appealing alternative to the greed of unregulated imperial liberalism.

Connie Hedegaard.And for those inclined to discount Europe as decadent and inward looking, it is worth reminding that it was Europe that convinced George Bush to organize the first G20 meeting, that launched the most ambitious trade liberalization program in history, including the investment agreement with China that is being discussed and that remains the source of 60% of the support for development in the world. In 2007 already, Europe adopted the first international climate package with 20% reductions in greenhouse gases by 2020. Now the target is a 40% reduction by 2030, which puts Europe in the pole position on climate action.

Looking Forward

In contrast to Barroso, his successor, experienced and colorful former Prime-Minister of Luxembourg, Jean-Claude Junker did not wait to speak his mind. Prior to the secret-ballot that elected him, he asked French tea-party leader Marie Le Pen not to vote for him as he does not want the support of those who reject, hate and exclude. Among his first tasks he must deal with a new eurozone crisis in Greece, mounting anti-EU sentiment in member states, create jobs across Europe and resolve the lingering confrontation with Russia (with its influence in Syria, Iran and Libya). An exciting job description indeed…

2004 Tsunami, 10 Years Later

tsunamiOn Sunday December 26, 2004, at 0h58, the worst earthquake in 40 years reached 9.3 on the Richter scale and caused the 10 meter wave of the “Boxing Day Tsunami”. The waters devastated the Indonesian province of Aceh, killing 170,000 there. Within 90 minutes they  reached the southern beaches of Thailand, killing another 5,000+. In all, some 230,000 people died.

Early Warning Signals 

systeme_dartIn 2004, there was no global monitoring and warning system that could identify the threat and alert populations of the tsunami trajectory and time of impact. Today, a global network of 60 nigh-tech buoys helps measure the size, direction and speed of tsunami waves. The time of impact and the size of the floods are predicted based on mathematical models and past experience.

Timely information is critical. In 2004, the Indian town of Madras was hit 2 hours after the quake but the authorities had not been informed because information was only shared every 4 to 5 hours. Today, 140 seismometers are present along the Indian Ocean coasts and three regional alert centers (in Indonesia, Australia and in India) are tasked with informing all relevant countries within 15 minutes. It took 12 minutes for news of the 2012 tsunami to be relayed.

There is a cost however. It is estimated that the maintenance of the system alone costs up to $100 million a year.

Education is Key

Despite the improvements in technology and communication, risks remain and human factors may be to blame. While the 2012 tsunami alert arrived in time, most of the population of Aceh (Indonesia) tried to flee by car which blocked the entire town. The town was saved and the population survived because the announced disaster did not materialize.

The population is also tired of hearing about tsunamis and often resists prevention measures – even criticizing education programs in schools and preparedness measures implemented by the authorities. Such attitudes were also present in some of the Japanese areas affected by the Fukushima tsunami – the protection walls proved insufficient. In New Orleans, people have also rebuilt their homes in zones considered at risk.

A new Era of Global Vulnerability

Tsunami_1Until 2004, we experienced half a century with no major tsunami disasters. As a result, coastal areas have seen major developments in infrastructure and population growth – particularly in Asia. In the last decade, the two important tsunamis have caused major disasters (Boxing say in 2004 and Fukushima in 2011) in the region. This is no coincidence, most earthquake activity occurs along subduction zones. Particularly along the “Pacific Ring of Fire”.

Human activity, often related to development and associated progress is partly to blame. The destruction of “mangroves” increases the vulnerability of coastal areas to tsunami waves by removing an important buffer zone.

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Picture credit: MTA

Rising sea-levels are another aggravating factor. Water levels are now 30 centimeters higher then a century ago along the New York coast. The unfortunate timing of Hurricane Sandy coinciding with a high-tide resulted in massive floods in New York and New Jersey.

Technology can certainly help but will never be sufficient to overcome the shortcomings of human nature. The 2004 Tsunami in Aceh that killed 170,000 also allowed for the reconciliation of the authorities and rebel forces in order to rebuild their community. This is the kind of cooperation necessary to overcome the global challenges that are upon humanity – climate change, poverty, inequality… Let us hope that we will not need a global disaster to start moving in that direction.

Related stories:

Why older people suffer more in environmental disasters

Climate change: A new Era of Global Vulnerability 

Town moves out of harms way

Only A Carbon Tax Can Tackle Climate Change, by Stéphane Dion

StephaneDionBy the Honourable Stéphane Dion, Privy Council of Canada and Member of Parliament, based on his address to the Harvard University “Weatherhead Center for International Affairs”. 

Things are not going well on the human activity-induced climate change battlefront. And we cannot pretend we are not aware: the warnings are coming in from every quarter. In the summer of 2014, the US National Climatic Data Center announced that the combined global land and ocean average surface temperature for the January–July 2014 period “was tying with 2002 as the third warmest such period on record”. [1]

On September 9, 2014, the World Meteorological Organization published its 2014 Annual Greenhouse Gas Bulletin.[2] WMO Secretary-General Michel Jarraud declared: “The Greenhouse Gas Bulletin shows that far from falling, the concentration of carbon dioxide in the atmosphere actually increased last year at the fastest rate for nearly 30 years. We must reverse this trend by cutting emissions of CO2 and other greenhouse gases across the board. We are running out of time”.[3]

A few days later, the Global Carbon Project released its annual report card on the global and national trends in carbon dioxide (CO2) emissions.[4] It showed that global emissions from burning fossil fuels and cement production reached a new record in 2013, and are predicted to grow by a further 2.5 percent in 2014, raising the total CO2 emissions to 65 percent over its 1990 level – the year international negotiations to reduce anthropogenic climate change began.

On September 23, 2014, the United Nations hosted a climate change summit in New York. “The race is on, said UN Secretary General Ban Ki-moon, and now is the time for leaders to step up and steer the world toward a safer future”.[5]

Well, it didn’t happen: the leaders did not step up in New York. To be fair, a wide range of pledges were made by governments and businesses; but few countries announced real, new commitments regarding greenhouse gas (GHGs) reduction targets. Several key Heads of State did not even show up, including those from China, India, Russia, Australia, and… Canada.

Global warming is threatening to reach dangerous levels and humankind is losing the battle against it. At the same time, we have been unable to conclude an international agreement to help correct the situation. Why is that? And what can be done?

  1. Things are not going well: the planet is heating up.

The consensus among climate scientists is that it would be imprudent to allow global warming to exceed 2 degrees Celsius (2ºC = 3.6°F) above pre-industrial levels. Beyond this tipping point, climate science warns that our planet will become much less hospitable for virtually all forms of life, including humans. That is what the UN-mandated scientists grouped under the Intergovernmental Panel on Climate Change (IPCC) are telling us. In fact, the IPCC 2007 report stated that even 2ºC above pre-industrial levels is likely to have serious impacts.

Unless we act quickly, the 2ºC threshold will be crossed. The IPCC foresees that under current policies, global warming could well exceed 4ºC by the end of the current century: “Baseline scenarios, those without additional mitigation, result in global mean surface temperature increases in 2100 from 3.7°C to 4.8°C compared to pre-industrial levels”.[6] Such a temperature rise would increase climate disruption, the severity of extreme weather events, sea level rise and ocean acidification, animal and plant extinctions, food production and water supply disruptions, damage to infrastructure and settlements, etc.[7]

To get back on track and maintain a 50/50 chance to limit global warming to 2ºC, the IPCC’s recommendation is to reduce global GHG emissions by 40 to 70 percent by 2050, relative to 2010 emissions.[8] And according to the International Energy Agency,[9] we must do it right now if we are to succeed: we would have to reduce energy-related carbon dioxide emissions by 31.4 percent between 2012 and 2035, whereas if nothing is done, post-haste, to correct the current trend, these emissions will increase by 36.1 percent. In other words, in the absence of new measures, emissions will increase by one-third by 2035, whereas they would really need to decrease by one-third!

It should be noted that this anticipated growth of global GHG emissions – plus one-third by 2035 – marks a decoupling from the evolution of the world economy, which the IEA expects to more than double by 2035. This decoupling is in itself an accomplishment in which the countries can take pride; however, it is not good enough. To avoid a climate debacle, it is not enough that the growth of GHG emissions is slower than economic growth. What is needed is a significant reduction in emissions.

What must we do to counter this climate change hazard? Much more than what we are doing now.

  1. Negotiations on a global climate treaty are stalled

For 22 years now, beginning with the Convention on Climate Change resulting from the 1992 Rio Conference, the international community has worked hard to build a global strategy against the threat of human activity-induced climate change. To achieve this, the United Nations brings the representatives of virtually all Nations together each year. The meeting is called the Annual United Nations Conference of the Parties to the Framework Convention on Climate Change, or COP. The Kyoto Protocol was signed in 1997, at the Third Conference (COP 3) held in Kyoto, Japan. The Kyoto Protocol did go into effect worldwide eight years later, at COP 11, the UN Montreal Conference on Climate Change, which I had the honour to chair in 2005 as Canada’s Environment Minister.

Today, the Kyoto Protocol is in disarray and the world faces huge difficulties as it tries to conclude a new global agreement on climate change. Kyoto was concluded through a “politics-precedes-science” approach: following long and hard discussions and negotiations, governments announced national GHG reduction targets and only then did the scientists compute what the sum of these targets would mean for overall GHG reductions and climate change mitigation. But over time, COP after COP, the parties implicitly accepted to work through a “science-informs-politics” approach whereby GHG reduction targets are first established by climate scientists (the 2º C limit), after which national governments try, together, to determine how they are to be reached.

Countries accepted this 2ºC limit at the 2009 Copenhagen international climate Conference (COP 15), and more officially at the 2010 Cancún Conference (COP 16). But there is a problem: with all the commitments already made, countries will not reach this target. The Intergovernmental Panel on Climate Change foresees that even if all countries were to meet, by the agreed date of 2020, the greenhouse gas (GHG) emissions reduction targets to which they committed at the Copenhagen and Cancún Conferences, we would still fall short of what is needed: “The Cancún Pledges are broadly consistent with cost-effective scenarios that are likely to keep temperature change below 3°C relative to preindustrial levels” rather than the targeted 2°C.[10]

At the 2011 Durban Conference (COP 17), the countries admitted to this gap between their commitments and achieving the 2º C objective. And they went even further in the preamble of their joint statement, expressing their “grave concern” and promising to “raise the level of ambition” to bridge this gap. Yet countries did not announce stricter GHG reduction targets at Durban. They only managed to agree on a plan to reach an agreement, no later than 2015, for action to assemble all countries under the same legal system – beginning only in 2020. The very terms of this agreement are disquietingly vague: “a process to develop a protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties.” Even Christina Figueres, Executive Secretary of the United Nations Framework Convention on Climate Change, regretfully agreed that “What [the agreement] means has yet to be decided.”

This 2015 Conference (COP 21) will be held in Paris. As the MIT pointed out, this international venue is of tremendous importance, since it will heavily influence global GHG emissions reductions strategies “as far out as 2045 or 2050″.[11] Unfortunately, it is unlikely that the Paris Conference will secure the global treaty that the world needs, unless we significantly change our approach.

When on September 23, 2014, UN Secretary General Ban-Ki Moon hosted his climate change summit at the New York headquarters, during the UN General Assembly session, it was in the hope of creating some political momentum in preparation of this Paris 2015 Conference. He hoped that every Member State would come up with strong and bold new commitments on climate change.

But from this point of view, the Ban Ki-moon summit was yet another disappointment. Despite positive signals and a wide range of pledges and non-binding initiatives made by governments and businesses, including a new commitment to end tropical deforestation by 2030, no country really strengthened its GHG reduction commitments for 2020, and only a handful of them announced the post-2020 carbon reduction targets that will be required for the Paris summit. Even Christina Figueres recognized that these partial and piecemeal responses will not be enough to keep global warming below 2°C.[12]

Developing countries showed no sign that they would be willing to adopt legally binding GHGs emission control commitments by 2020. The four BASIC countries (Brazil, South Africa, India and China) stuck to the long-held stand of developing nations, linking their intended nationally determined contributions (INDCs) to “the extent of financial, technological and capacity-building support provided by the developed countries”.[13]

In other words, the blame game goes on. That doesn’t bode well for the 2015 Paris conference, and it is hard to believe that representatives of all the world’s countries will be able to reach a new deal to cut GHG emissions and prevent the planet from overheating dangerously.

This deadlock on reduction targets impacts all aspects of negotiations, including the funding promised to developing countries to help them deal with climate change. While we do have an agreement on a collective objective (100 Billion dollars per year beginning in 2020), nobody knows how much each developed country needs to contribute.

What we do know is that several countries – including Canada– will not meet their GHG emissions reduction targets for 2020.[14] So while we all express our “serious concern” that we might be heading toward a 3ºC+ warming scenario, nobody strengthens their commitments in order to keep us closer to the 2ºC track.

We can see that the United Nations climate negotiations are stalled. That is the inescapable conclusion of a cool, lucid mind. Collectively, we are facing what can be called a “great climate inconsistency”: an increasingly untenable gap between the urgency of taking action and the inertia of international negotiations. Why this gap? Why is it so difficult to do what must be done?

  1. Why this great climate inconsistency?

The Theory of Collective Action teaches us that it is easier to develop public policy when the goods are divisible – when those who work to achieve the results are the ones to benefit from them. Unfortunately, climate change doesn’t work this way. The climate is a global public good: one tonne of carbon dioxide emitted in New York has exactly the same effect on global warming as one tonne of carbon dioxide emitted in Montreal, Paris or Beijing. In effect, those who do something to decrease their GHG emissions are working for those who reap the benefits of that action while doing nothing. And the negative impacts of climate change on those who are particularly affected by them have no direct link with the latter’s level of GHG emissions.

Consequently, each country, each economic agent, each GHG emitter, big or small, may well expect others to do the job in their stead, expect to benefit from the efforts of others while doing as little as they can get away with, and lamely say: “I will not act until my neighbour does”. This perverse freeriding effect is the fundamental reason why negotiations are stalled: COP after COP, we wait for every country to increase its target significantly, only to see that they all decline to do it, waiting for the others to move. As long as countries keep acting as climate freeriders, they are unlikely to increase their GHG emissions reduction targets and our efforts will fall well short of the mark.

In other words, governments and businesses are very unlikely to step up their greening efforts if they have no assurance that their competitors will play by the same climate rules. What we need is an international agreement that gives them that assurance, one that changes the rules of the game for every player. What we need to do is to create a world where every decision maker, public or private, must and can take the true cost of global warming into account, secure in the knowledge that his/her partners and competitors have to pay for this cost as well.

As more and more experts agree, putting a price on carbon is essential to the success of any serious, comprehensive climate plan. Even the International Monetary Fund now recommends it.[15] So does the OECD.[16] And just ahead of the UN Secretary-General’s Climate Summit, the World Bank was able to convince 73 countries, 22 subnational jurisdictions and over 1,000 companies and investors to express their support for a price on carbon.[17]

In a report released just before the Ban Ki-moon summit, the Global Commission on the Economy and Climate made the point that a carbon price may be beneficial for the economy: “The Commission recommends that governments introduce a strong, predictable and rising carbon price as part of fiscal reform strategies, prioritizing the use of the revenues to offset impacts on low-income households or to finance reductions in other distortionary taxes”.[18]

In fact, the Ban Ki-moon summit made more progress on the carbon pricing front than on the adoption of more stringent, binding GHG reduction targets. That progress on carbon pricing is a positive development. It shows there are opportunities to explore linkages between carbon pricing and the new international climate change agreement to be reached in Paris.[19] But the main challenge facing us now is how to evolve from a hodge-podge of local or national carbon prices to a global, harmonized carbon pricing system. That is exactly what the IPCC recommends: adopting a “single global carbon price”.[20]

A global, harmonized carbon price would provide the world with an excellent sustainable development instrument. The price should be high enough to create the necessary incentives to limit global warming to about 2ºC. The International Energy Agency (IEA) recommends that the price of a tonne of CO2 be gradually raised, by 2035, to $125 for developed countries and $100 for China, Russia, Brazil and South Africa. According to the IEA, this can be done without jeopardizing economic growth: “Carbon pricing is not necessarily detrimental to industrial competitiveness: it all depends on how it is implemented and whether similar action is taken in competing economies. (…) In addition, part of all the revenue from carbon pricing may be recycled back to energy users in the form of investments towards improved energy efficiency, or through other, broader supportive policies for industry; hence, this may actually increase industrial and energy competitiveness”.[21]

This cost of about $125 per tonne of CO2 may seem high. Yet it is small compared to the social, environmental and financial cost of doing nothing to mitigate climate change: the Stockholm Environment Institute estimates the latter cost could reach $1,500 per tonne of CO2 in 2050.[22] But the main problem is that it is impossible for the world price of carbon to reach $100 or $120 per tonne of CO2 without first having negotiated an international agreement that can assure all economic agents that their partners and competitors will play according to the same climate rules. Carbon pricing will not reach the desired level as long as individual countries fear that carbon price-setting within their respective jurisdictions will scare businesses and investments away and send them off to countries where carbon dioxide emissions are still free of charge.

For some years now, I and others have been arguing that international climate negotiations must be readjusted.[23] The idea is to refocus these international efforts on negotiating a global harmonized carbon price signal, instead of doggedly spending the next years attempting to convince countries to accept stricter national quantitative targets to reduce their GHG emissions.

The mixed results achieved by the Ban-Ki Moon summit proved, once again, that the “to-each-their-own-target” approach does not work. Instead, we must adopt a “one-price-signal-for-all” strategy, a world carbon price – not as a stand-alone policy but as a cost-effective, universal anchor. This is essential to the success of any serious, comprehensive climate plan.

Let us see how such a strategy could work.

  1. A framework for a global, harmonized carbon price

The Dion-Laurent plan[24] would call for all countries to make a commitment to introduce, in their respective jurisdictions, a gradually evolving carbon price signal based on a scientifically-validated international standard, in order for the world to keep global warming to as close as possible to 2ºC over pre-industrial levels. Countries may levy this price through carbon taxes or emission quotas. Governments would be free to invest, as they see fit, any revenues accruing from carbon emission levies and the corresponding – and necessary – gradual elimination of fossil energy subsidies.

Under the principle of “Common But Differentiated Responsibility”, developed countries would be required to set aside part of their carbon pricing revenues to help developing countries introduce policies to lower their emissions, adapt to climate change impacts and create carbon sinks (through reforestation, for example). This requirement would help fund the yet unsourced $100 billion annual injection into the Green Climate Fund, which developed countries agreed to provide beginning in 2020. That amount could even be increased. The contributions of individual developed countries would be set according to the proportion of total developed country emissions that their respective GHG emissions represent. The lower a country’s emission level, the lower its share of the financial effort: that is sure to be another incentive for further emission reductions.

This international carbon pricing agreement would allow countries to levy border taxes on products from countries that do not establish a carbon price signal in accordance with the international standard. Of course, this solution would be a last resort, to be applied after the usual warnings have been issued. Hence, the message would be clear to all large GHG emitters: if you do not levy a carbon price on your products before exporting them, other countries will do it for you – and will keep the resulting revenue. In this way, it will be in each country’s interest to comply with the international agreement, to levy a carbon price on its own emissions, and to use the resulting revenue as it sees fit.

This international agreement would provide the world with an excellent instrument for sustainable development. At long last, carbon emitters would have to pay the social and environmental cost of pollution. Consumers and manufacturers would have an incentive to choose lower-carbon-content goods and services and to invest in new energy-saving and emission-reducing technologies. And governments and legislators would have the tool to achieve the scientific climate targets they have rightly endorsed.

Conclusion: Is this plan realistic?

Negotiating a global harmonized carbon price will be a very difficult task. I am not one to underestimate the political obstacles any government will face when trying to implement an economy-wide price on GHG emissions.[25] As Leader of the Official Opposition in the House of Commons of Canada between 2006 and 2008, I developed such a carbon-pricing plan; but during the 2008 federal electoral campaign, I was unable to convince Canadians to accept that approach. Today, I am well aware that here in the US, part of Congress, backed by a majority of the population, is opposed to President Obama’s initiatives to regulate GHG emissions through the Environmental Protection Agency.[26] And yet, we all know that a global carbon price will never be negotiated successfully if North American countries, notably the United States, fail to assume leadership in the matter.

So I understand why some will call this plan unrealistic. Yet I maintain that it would be easier to reach a negotiated global harmonized carbon price than to convince national governments to raise their respective GHG emissions reduction targets significantly. In particular, emerging economies – those with an annual growth of 6 to 10 percent – are likely to consider absolute reduction targets as an impediment to economic dynamism. But a harmonised carbon price, applying equally to their partners and competitors and yielding revenues that everybody could use as they see fit, would open much more interesting perspectives.

In any case, if anybody has a better idea to avoid the astronomical economic, human, political and environmental costs of a 3ºC (or more) global warming scenario, let them speak up! True realism – and plain common sense – dictate that as long as we are allowed to pollute for free, we will be unable to curb our GHG emissions sufficiently, and that we must therefore act now.

We need worldwide carbon pricing in order to do what must be done to make the world’s economy truly sustainable. We need harmonized carbon pricing as an incentive to replace coal with cleaner and renewable energy sources (or at least equip coal power plants with effective carbon capture and storage technology); to enhance energy efficiency; to develop affordable alternatives to petroleum-based fuels; to implement a major retooling of transportation industries and a massive conversion of on-road vehicle refueling infrastructures; to reduce high risk oil imports and increase energy security.

So to protect humankind against the threat of a 3ºC – or more – global warming sequence, what choice do we have? Pursue our current initiatives? Not without merit but definitively not good enough. My opinion is that our best and soundest choice is to champion the simple and useful instrument, much needed for a comprehensive and effective climate/energy policy, that a worldwide, harmonized carbon price would be.


[1] US National Oceanic and Atmospheric Administration, National Climatic Data Center Global Analysis – July 2014. Also: Michael Slezak, «The world is warming faster than we thought », NewScientist, October 2014.

[2] World Meteorological Organization, 2014 Annual Greenhouse Gas Bulletin.

[3] Michel Jarraud, WMO Secretary-General.

[4] http://www.globalcarbonproject.org/carbonbudget/.

[5] Ban Ki-moon, “Climate change affects us all. So what’s stopping us joining forces to act on it?”, theguardian.com, May 6, 2014.

[6] IPCC, Climate Change 2014: Mitigation of Climate Change, Final Draft Summary for Policymakers, IPCC WGIII AR5, December 17, 2013, p.8.

[7] IPCC, Climate Change 2014: Impacts, Adaptation, and Vulnerability, IPCC WGII AR5 Summary for Policymakers, WGII AR5, March 31, 2014.

[8] IPCC, Climate Change 2014: Mitigation of Climate Change, Final Draft Summary for Policymakers, IPCC WGIII AR5, December 17, 2013, p.15.

[9] IEA, World Energy Outlook 2013.

[10] IPCC, Climate Change 2014: Mitigation of Climate Change, Final Draft Summary for Policymakers, IPCC WGIII AR5, December 17, 2013, p. 15. PricewaterhouseCoopers comes to the same conclusion: “On our current trajectory we are headed for four degrees, with policy pledges that currently steer us only towards three.” The 2014 Low Carbon Economy Index, “Two degrees of separation: ambition and reality”

[11] Henry D. Jacoby and Y.-H Henry Chen, Expectations for a New Climate Agreement, The MIT Joint Program on the Science and Policy of Global Change, Report No. 264, August 2014: http://globalchange.mit.edu/files/document/MITJPSPGC_Rpt264.pdf.

[12] http://www.businessgreen.com/bg/analysis/2372308/un-climate-chief-new-york-summit-is-clearly-not-enough.

[13] Text of the Joint Statement issued at the18th BASIC Ministerial Meeting on Climate Change, Press Information Bureau, Government of India, Ministry of Environment and Forests, August 8, 2014: http://pib.nic.in/newsite/PrintRelease.aspx?relid=108305.

[14] 2014 Fall Report of the Commissioner of the Environment and Sustainable Development, Chapter 1- Mitigating Climate Change.

[15] IMF Survey Magazine: Fiscal Policy to Address Energy’s Environmental Impacts, July 31, 2014; also: Ian Parry, Dirk Heine, Eliza Lis, Shanjun Li, Getting Energy Prices Right: From Principle to Practice, IMF, 2014.

[16] OECD, Acting now to put a price on carbon, OECD Environmental Outlook to 2050: the Consequences of Inaction, 2012, p. 111.

[17] World Bank Statement, Putting a Price on Carbon, June 3, 2014: ; also: We Support Putting a Price on Carbon.

[18] Better Growth, Better Climate, the New Climate Economy Report. The Synthesis Report, Washington, September 2014, p. 42.

[19] Daniel Bodansky, Seth Hoedl, Gilbert Metcalf and Robert Stavins, Facilitating Linkage of Heterogeneous Regional, National, and Sub-National Climate Policies Through a Future International Agreement, Harvard Project on Climate Agreements, with the support of The International Emissions Trading Association, September 2014.

[20] IPCC, Climate Change 2014: Mitigation of Climate Change, p. 17.

[21] IEA, World Energy Outlook 2013, p. 282. More recently, the IEA developed a plan to make solar energy the main source of electrical power, which plan would depend on a significant global carbon price: “The vision in this roadmap is consistent with global CO2 prices of USD 46/tCO2 in 2020, USD 115/tCO2 in 2030, and USD 152/tCO2 in 2040″. IEA, How solar energy could be the largest source of electricity by mid-century, 29 September 2014.

[22] Franck Ackerman and Elizabeth A. Stanton, Climate Risks and Carbon Prices: Revising the Social Cost of Carbon, Economics, 6, 2012-10, April 4, 2012.

[23] Stéphane Dion and Éloi Laurent, From Rio to Rio: A Global Carbon Price Signal to Escape the Great Climate Inconsistency, OFCE, Paris, May 2012; www.carbon-price.com.

[24] Stéphane Dion and Éloi Laurent, From Rio to Rio: A Global Carbon Price Signal to Escape the Great Climate Inconsistency, op. cit.

[25] Stéphane Dion, Carbon Taxes; Can a Good Policy Become Good politics?, in: Alex Himelfarb and Jordan Himelfarb, Tax Is Not a Four-Letter Word: A Different Take on Taxes in Canada. Wilfrid Laurier university Press, 2013: .

[26] United Technologies/National Journal Congressional Connection Poll, July 2013.

Mixed Message from Australia after G20

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As host of this G20, Australia reluctantly released a statement that had been agreed with other leaders at the summit. Interesting energy and climate related commitments  were made, including:

  • To improve energy efficiency emphasizing six sectors: buildings, transportation -especially heavy vehicles, industrial processes, electricity generation, the financing of energy efficiency, and efficiency of networked devices. The White House highlighted a focus on heavy trucks and large vehicles that represent half the vehicle emissions but only 10% of traffic. The USA is keen on promoting its leadership in this area.
  • To phase out fossil-fuel subsidies that encourage wasteful consumption. The USA, China and Germany will conduct a study with the support of the European Union.
  • Strong and effective actions to address climate change, including a successful outcome of the Paris climate conference in 2015. Domestic targets for emissions reductions should be announced as soon as possible, ideally by early 2015.
  • The importance of contributing to the Green Climate Fund was highlighted. The USA committed $3 billion.

Tony Abbot and the Coal Addiction

Image from The Guardian

Image from The Guardian

The Australian Prime Minister and his team were not pleased. Having tried to resist pressure from President Obama and the European Union for climate change to appear prominently in the statement, they reluctantly sent the communiqué but made sure to downplay its significance. They also announced major investments of $7.5 billion in coal infrastructure despite warnings that the project is not commercially viable. Major international financial institutions refused to provide  financing.

Australia is highly reliant on coal but has suffered major setbacks in this sector recently, including the recent ban by China on the lowest quality “dirty coal” to improve air quality  that will hurt Australian exports.

Town Moves Out of Harm’s Way

“We can’t solve our problems with the same thinking we used when we created them”, Albert Einstein

Soldiers GroveThis is the extraordinary tale of Soldiers Grove, Wisconsin, a village of 500 that was located along the meanders of the Kickapoo River to allow timber rafting and to get hydropower for its lumber mills. Proximity to the water was a mixed blessing. Situated at the bottom of a bowl surrounded by mountains, the town was prone to flooding. The small  floods they called “ankle ticklers” but once a decade a major one would be devastating. The courageous and stubborn residents would clean up and rebuild.

“Insanity: doing the same thing over and over again and expecting different results”, Albert Einstein

1978 Flood 4With time, the floods got worse for reasons that were largely self-inflicted. Deforestation of surrounding hills reduced the amount of water retained by the soil and the runoff  caused erosion that filled the bottom of the river aggravating the floods. After studying the problem for three decades a $3.5 million dam and levee was proposed… to protect $1 million worth of property… In a rare moment of genius someone asked “what if we moved the town?” and the rest is history. In 1979, the town relocated to higher grounds 800 meters away.

Solar Town_PharmacyThe river still floods but the town has been spared and the people of Soldiers Grove have more time (and money) to come up with more brilliant ideas like becoming the first Solar Town in America.

Bill Becker, Executive Director of the Presidential Climate Action Project (PCAP), is one of the humble architects behind the move of Soldiers Grove. Here is his TED version of the story:

Relevant Links:

Soldiers Grove Solar Town

About Bill Becker

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