20 June 2007
What's the problem?
The earth has warmed up by 0.74°C over the last 100 years, but around 0.4°C of this has occurred since the Seventies. These more recent changes in climate change can't be explained by natural causes, only by human behaviour.
Naturally occurring gases create a greenhouse effect that keeps the surface of the earth around 33°C warmer than it would otherwise be, which helps sustain life.
Since the beginning of the Industrial Revolution, however, concentrations of greenhouse gases in the atmosphere carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O) have risen because of human activities, primarily fossil fuel use, agriculture and change of land use. As concentrations of these gases have risen in our atmosphere, global temperatures have increased at a similar rate.
The recent Fourth Assessment Report (AR4) from the UN's Intergovernmental Panel on Climate Change (IPCC) leaves no doubt that human activity is the primary reason for climate change. It says there's a 90 per cent chance that human activity is warming the planet and that average global temperatures will rise by another 1.5-5.8°C this century, depending on emissions.
What's the impact of climate change?
Currently, more than seven billion tonnes of CO2 are emitted globally each year by fossil fuels used for transport, industry and aviation. An additional 1.6 billion tonnes are emitted by change of land use, largely deforestation.
The repercussions of climate change are already being felt in the form of extreme weather conditions, melting icecaps and changing ecosystems. For example, coral bleaching or "marine heatstroke" has already destroyed a large proportion of tropical corals.
The US National Oceanic & Atmospheric Administration (NOAA) reports that the number of "extreme precipitation events" (blizzards and heavy rainstorms) in the US has increased by 20 per cent since 1990.
The World Health Organisation (WHO) estimates that climate change has already caused an additional 5,000,000 extra cases of severe illness a year. And by 2080, an estimated 200,000,000 people will be at risk from flooding and contaminated drinking water.
While developing countries are most vulnerable, the UK is not immune. Sea levels around our shores could rise by as much as 60-80cm, making flooding of low-lying areas a possibility. The Parliamentary Office of Science and Technology (POST) has even predicted that malaria will return.
What can be done?
Sir Nicholas Stern, former chief economist at the World Bank and author of the Stern Review Report on the Economics of Climate Change, believes it's practical to aim for a stabilisation of greenhouse gas levels in the atmosphere of 500-550 parts per million (ppm) of carbon dioxide equivalent by 2050, compared to 430ppm today. But even stabilising at that level will probably mean significant climate change.
Emissions per unit of gross domestic product (GDP) would need to be cut by an average of 75 per cent by 2050 to meet this target. As well as decarbonising the power sector by 60-70 per cent, there will have to be an end to deforestation. There will also have to be hefty cuts in emissions from transport.
One of the obvious problems is that it requires collective, coordinated action by most of the world's governments. It's already apparent that the Kyoto Protocol, which expires in 2012, is unlikely to save the world from climate chaos. However, following George W Bush's recent shift in position on global warming, there is renewed optimism that Kyoto's successor might.
This discussion topped the agenda at the G8 summit earlier this month, when leaders of the world's richest industrial nations agreed to seek " substantial" cuts in emissions in an effort to tackle climate change.
How do we do it?
The UN will provide the framework for negotiating a global deal. Although no mandatory target was set for the cuts, German Chancellor Angela Merkel's preference for a 50 per cent reduction in emissions by 2050 was included in the agreed statement. This is a real step forward in the fight against global warming.
However, it still begs the question: how will these cuts actually be achieved? The IPCC has laid out areas where reductions could be achieved most cost-effectively and the technologies needed to achieve them.
On transport, for example, it suggests a combination of energy efficient vehicles, biofuels, increased vehicle occupancy and a switch from roads to rail and waterways will cut global transport emissions considerably.
Most car manufacturers are already working on vehicles powered by hydrogen produced from renewable energy sources. And in aerospace, Richard Branson recently announced plans to make Virgin Atlantic the first airline to power its planes with biofuels.
Governments are also encouraging behavioural change through regulation, such as imposing tighter standards on energy efficiency and educating the public about how to reduce their carbon footprint.
But won't it harm our competitiveness?
There's undoubtedly a sticking point when it comes to ensuring governments, businesses and individuals make those carbon-curbing adjustments, namely that investing in emissions control might bring an overall reduction, albeit a small one, in GDP. In order to make sure the rhetoric translates into climate action, some incentives are needed.
Many experts believe the answer lies in carbon trading. A carbon trading system would set a cap on emissions from businesses, institutions, individuals and even countries. Those that emit more than their entitlement would have to buy credits from others, or face heavy penalties. Equally, those that emit less than their entitlement would be able to sell the unused portion to heavy emitters.
Advocates say the carbon trading model allows flexibility and increases efficiency in the reduction of carbon emissions. Instead of government regulations dictating how the private sector meets these goals, the market helps rationalise the process.
However, a global carbon market needs to be driven by a global deal limiting emissions. While the responsibility for stopping climate change lies with individuals, businesses and governments, it's a global problem that requires a global solution, which brings us back to the G8.
What is HSBC doing to help? Find out more at www.hsbc.com/committochange
HSBC believes climate change is the single largest environmental challenge this century. As the world's local bank, it is crucial that HSBC addresses issues that have the potential to affect not only our customers, but also the communities worldwide in which we operate.
Climate change is a challenge that requires global solutions. Collective action will be required from governments, businesses and individuals to stimulate the adoption of energy efficiency and clean-generation technologies to stabilise CO2 emissions.
Businesses must, of course, play their part. As an adviser, lender and investor, we recognise the significant role HSBC can play in helping the companies, clients and projects we finance respond to the challenges and opportunities of creating a lower-carbon economy. Indeed, we aspire to be a leading financial institution in this area.
Climate change is not only a business issue for banks, it will affect all people, everywhere. Last month, we launched the HSBC Climate Partnership, a five-year, US$100m programme to tackle climate change that aims to inspire action by individuals, businesses and governments. The partnership brings together HSBC, The Climate Group, Earthwatch Institute, Smithsonian Tropical Research Institute and WWF. Working with these partners and through engaging with our 315,000 employees, HSBC hopes to mitigate the impact of climate change on people, forests, water and cities.
http://environment.independent.co.uk/climate_change/article2679383.ece
