One of the great truisms of the fight against climate change is that we cannot hope to avoid a future as the new republic of Great Atlantis without tackling the problem of tropical deforestation.

In many ways, addressing deforestation should be the easiest part of the battle. According to the UN it accounts for 20 per cent of manmade carbon emissions each year with roughly 50,000 square miles of tropical forests disappearing every 12 months - equivalent to half the land mass of Great Britain.

But while the problem is huge study after study has shown that halting deforestation would represent the most cost effective means of reducing emissions. According to a study from UK think tank The Policy Exchange this week, investing the £550m the government is spending on biofuel subsidies alone in forestry protection would increase avoided emissions 50-fold.

In short, no carbon reduction initiative or renewable energy project offers better value for money than forestry protection. It seems so simple: develop a workable means of forestry protection and we can slash emissions by 20 per cent in double quick time, giving economies the extra breathing space they require to make the journey towards low carbon technologies.

The problem - and it is a dilemma that has haunted environmentalists since long before Sting began patronising Amazonian tribes - is how to achieve this, and once again the politicians appear to be looking in all the wrong places.

The deforestation debate at the latest round of UN climate change talks in Ghana this week centred on a number of different proposals, all of which aim to throw cash at the problem.

A tax on forestry firms to fund forest protection is one idea in the mix, as is a huge increase in forestry investment funds, such as those recently proposed by the Brazilian government. But the idea that appears to have gained the most traction and now seems likely to be adopted is the integration of forestry schemes into the global carbon market.

The thinking behind such a move is simple: provide countries with a way of monetising the continued survival of their tropical forests through the sale of carbon credits and they have a clear incentive to protect them and not cut them down.

But even if you ignore the potential dampening effect on the price of carbon that is likely to result from the issuing of millions of new carbon credits, you have to ask if such an approach could work?

The US delegation has previously voiced concern that such a scheme would effectively equate to paying loggers and the governments that fail to act against them not to do something that is already illegal. It is easy to dismiss this as the classic obstructionism that has come to define the US approach to climate change talks - but on this occasion they have a point.

Paying people not to do something smacks of a protection racket, and the problem with protection rackets is they have a habit of getting nasty.

The belief that if you throw enough cash at forestry protection you can halt the destruction of our remaining forests conveniently ignores quite how huge tropical rainforests still are.

There was a lovely story this week revealing that nearly half of Australia remains completely untouched by man with three million square kilometres qualifying as genuine wilderness. Well, the Amazon Rainforest stands at around 5.5m square kilometres - it's getting smaller all the time, but like the great forests of Africa and South East Asia it is still gargantuan.

Forestry protection initiatives have been very successful on a relatively small scale, but you can't just throw a fence round these forests and keep the loggers out. Nor can you pay them off and hope that they will stick to their side of the bargain and stop logging when there are such vast swathes of land for them to abuse.

Moreover, several green groups have voiced concerns that monetising the forests could have dire consequences for indigenous communities. If governments recognise the forests that make up their homes as a financial resource the temptation to force them off their land would be huge.

Alternatively, the money raised from forestry credits could go direct to the communities that call those forests home. But, while you can debate the moral issues surrounding the historical payment of reparations to indigenous communities, many of whom have been horribly abused over the centuries, there are few who would argue that a massive influx of cash can bring with it huge social problems as well as benefits.

None of this is to say that investment in forestry protection should not be increased, nor that it is still one of the most cost effective means of curbing emissions. But politicians need to recognise the limitations of such an approach.

In many ways forestry protection is a classic case of treating the symptom and not the cause.

The real answer to the forestry crisis lies not in carbon credits, investment funds, or anti-logging enforcement squads; it lies in the underlying economics that drive deforestation.

It is this that should have dominated the agenda in Ghana and should underpin those parts of the post-Kyoto deal that address deforestation.

We cannot hope to address deforestation while demand for timber and agricultural land makes illegal and unsustainable logging so attractive. If government's are really serious about the problem far more needs to be done to address these issues by enhancing productivity on existing agricultural land, curbing demand for biofuel crops that only serve to fuel deforestation, and developing alternatives to timber.

Get that right and then forestry credits might just stand a chance of working.

Right, I'm off to try and develop me some thin film solar cells, there's a lot of money in it apparently.

Have a good weekend,

Cheers,

James

Posted by James Murray on August 29, 2008 | Permalink | Comments (3)

Several weeks ago, at a roundtable event hosted by offsetting trade group ICROA, a challenge was issued to the fledgling industry.

Alice Chapple, director of sustainable financial markets at Forum for the Future, was the one throwing down the gauntlet, urging the sector to come up with a new nomenclature to replace the intrinsically flawed terminology of "offsetting" and "carbon neutrality".

She explained that she had not come up with anything better herself as yet, but felt the sector would benefit from the development of a banner thatb could prove less contentious and confusing.

The problems with the idea of offsets and carbon neutrality are well documented. Both feel like over-selling. The idea that you can simply offset or neutralise your emissions simply does not tally with the reality, where proving both the amount of carbon that has been emitted in the first place and the extent to which offset investment has definitively reduced emissions is fraught with difficulties.

The boldness of the claims embedded within the terms "offsetting" and "carbon neutrality", while tempting to firms looking for a quick and easy way to bolster their green credentials, have also opened the entire industry up to wave after wave of criticism.

If you are "offsetting" my carbon why are you investing in tree planting programmes that could take 100 years to soak up my emissions? How can you be sure my emissions are fully "neutralised"? How do you prove this project would not have happened anyway? If my emissions are neatly "neutralised", why can't I just go on emitting?

But if "offsetting" and "neutrality" are weighted with problems what should we be using instead? What can marry the catchiness and clarity of these terms, while tackling the philosophical questions that hang over the industry?

The best I had come up with was the idea of a "carbon contribution".

Instead of providing people with the certainty of an "offset", you simply ask them to make a "contribution" to a carbon reduction scheme. That contribution can be roughly in line with the amount offsetting firms would say you should make to offset your emissions, but in one swoop you remove the guarantees that it will exactly neutralise your emissions.

Those signing up can not kid themselves that they are completely eradicating their carbon impact, but can still make a financial contribution to the fight against climate change. Meanwhile, the complex administration that is required to ensure projects deliver the precisely right amount of emission reductions can be got rid of, ensuring that more of the money goes straight to the projects involved.

However, the idea of a "carbon contribution" is in many ways just as flawed as that of an offset.

It may get round the problem of overselling, but the fact is that many business customers like the certainty offered by an offset. Moreover, while simplifying verification processes might help raise more funds for projects they would also leave this contribution model open to exploitation by unscrupulous providers who, unless tightly policed, could get away with making a small contribution to carbon reduction projects while pocketing much of the cash.

Perhaps a better proposal is that put forward this week by Dr Paul Hooper of the Manchester Metropolitan University for "Climate Compensations". The approach may be similar to that proposed under a carbon contribution model but the slight shift in semantics has a number of advantages.

Firstly, it is instantly understandable. People know what compensation means and they know that while compensation payments are designed to help they rarely equate exactly to the original cost imposed by a problem. You may compensate someone if you do something wrong, but you know implicitly that you should not have done something wrong in the first place. You could not use climate compensations to assuage guilt in the way critics claim carbon offsets are often used.

Secondly, Hooper proposes that the projects funded by climate compensation payments would continue to be verified and inspected in the same way as offsets are currently.

Thirdly, it gives people the flexibility to pay what they can afford, potentially increasing the funding available to emission reduction projects.

But despite these advantages, there are still problems. As Edward Hanrihan of ICROA quite rightly points out, giving people flexibility to pay what they want could also result in them contributing far less than they do currently to projects. Equally, offsetting is finally gaining traction as a term and introducing a new terminology and business model now could undermine that momentum, particularly if both approaches ended up co-existing resulting in further confusion in the market.

And yet, with many potential customers retaining doubts about offsetting as a concept it surely makes sense to continue the debate over which banners are best placed to help the industry move forward. Suggestions on the back of a postcard would be great.

Posted by James Murray on August 28, 2008 | Permalink | Comments (0)

I am angry.

Properly, volcanically, apoplectically furious, in fact. In the words of the peerless Dr Frasier Crane I am so angry "I could kick a puppy through an electric fan".

The cause for this dyspeptic state of mind? The Kafkaesque world of the UK's attempts at green legislation.

It recently emerged that yet more PCs and TVs from the UK have been uncovered in scrap yards in Ghana where they are broken up in unregulated conditions that cause considerable harm to both the workers and the local environment.

Sadly, this is not a new story, in fact it's almost as old as the electronics industry itself, but it was meant to become a thing of the past when, after several years of delays, the UK finally passed stringent eWaste legislation last year.

Covering the introduction of the WEEE directive at the time I recall being told by a spokesman for the Environment Agency that it would initially instigate a "light touch" enforcement regime that would give firms a year or so to get used to the legislation before it started dishing out fines for non compliance.

Then, around six months after WEEE was introduced, the Environment Agency got caught up in the Treasury's slashing of Defra's budget, at which point it seems light touch became lighter still, gossamer light in fact.

And what does this softly, softly approach to enforcement mean? It means that workers in African scrap yards are continuing to cough their lungs up, while UK firms are openly flouting eWaste rules and illegally exporting broken electronic equipment without the slightest fear of detection.

Investigating the news that Greenpeace had found UK public sector PCs and monitors were being illegally broken up in appalling conditions in Ghanaian scrap yards, my colleague on BusinessGreen.com's sister title Vnunet.com, Rosalie Marshall, put it to a spokesman at the Environment Agency that its policing mechanisms may be falling a little short of expectations.

The response? Well, everyone always wants larger budgets for this kind of thing and you have to appreciate that the legislation is pretty "complex".

Well, yes the WEEE directive is complex, not least because firms can legally export working machines for reuse - a practice that extends working machines' lives but also provides illegal operators with an ideal cover for exporting broken machines. But despite this problem proper enforcement still isn't really that challenging.

If you can find the machines in Africa, as Greenpeace has already managed, then you can usually work out where they were from using the data that is all to often readily retrievable. I'm guessing the hospitals, schools and businesses where the machines originated haven't single handedly exported the old machines, so find out who their eWaste contractors are and you've got a pretty good staring point for an investigation. It hardly takes an Inspector Morse; hell, it doesn't even take an Inspector Clouseau.

Sadly, I am jaded enough to find basic incompetence such as this little more than mildly infuriating. But what is truly enraging is that this absence of proper enforcement is a becoming a systemic feature of the UK's green regulations.

Light touch regulation that minimises paper work and unnecessary audits and inspections is all well and good, but laws without any form of enforcement aren't real laws at all, they are aspirations - or worse still they are jokes, like those bizarre historic laws left on the statute book that stop you from using a postage stamp upside down.

Imagine the media furore if the government had introduced recent legislation banning hunting or smoking in pubs with the words, "we'll give everyone a couple of years to get used to it and then we'll cut the budget of the people charged with enforcing it to a point where they are never that likely to catch anyone anyway".

This relaxed approach to policing of corporate rules has always been justified (in private at least) on the grounds that it is exactly what business leaders want.

But while this may be true of the old school, laissez faire corporate titans I'd argue that when it comes to environmental legislation the new breed of enlightened green execs take a very different view.

It is hard to imagine that, having invested millions in developing WEEE compliant take back schemes, high profile manufacturers such as HP and Dell really want to operate in a world where firms handling their eWaste face next to no threat of legal action if they do flout the rules. Moreover, I'm sure they would love to see those competitors that have not seen fit to take the issue of IT recycling as seriously caught out on occasions.

Moreover, those firms already preparing for the extension of the UK's carbon cap-and-trade scheme through the Carbon Reduction Commitment will hardly be delighted at what already looks like another anaemic enforcement regime that will struggle to keep tabs on those firms that bend the rules.

The government can talk up its "world-leading" climate change bill all it likes, but unless it gets serious about enforcement the news laws that will result will not be worth the paper they are written on.

Right I'm off to try and find me a mutated fish and a boulder bunny.
Have a good weekend,

James

Posted by James Murray on August 22, 2008 | Permalink | Comments (1)

Our supply chains are broken.

That, in a nutshell, is the diagnosis from software giant Oracle's recent study on the state of the world's supply chains.

Of course, as a provider of software designed to help fix supply chains this conclusion is almost as self serving as David "show me the keys to No 10" Cameron's assessment of our supposedly "broken society". But that does not make the company's analysis of siloed, poorly integrated supply chains any less valid.

In truth, nothing Oracle is saying is particularly surprising. We all know that supply chains have become sprawling monsters that are supremely difficult to keep track of, a fact evidenced by the still routine uncovering of poor working practices at far too many of the factories that supply some of our most famous high street brands.

Equally, the revelation from Oracle's, admittedly small, survey of supply chain managers that almost half have no access to data from beyond those parts of the supply chain they manage directly only confirms the experiences of many who work in logistics.

The problem for firms keen to cut the environmental impact of their supply chains (which given high fuel prices, imminent legislation and the West's direct responsibility for much of the pollution in China and India should be everyone) is that it is impossible to start cutting emissions until you have a complete overview of the entire supply chain.

As Oracle's Dave Food pointed out it is this absence of oversight that has resulted in initiatives to cut emissions that are in danger of having the exact opposite result. The best examples top date are the debate over whether cut flowers from Africa actually have a lower carbon footprint than those from the Netherlands, because despite the flight they do not require heated glass houses, and concerns that cutting packaging levels could result in more emissions if it results in more breakages during transport. You get the feeling these simple examples could be the tip of the iceberg - the problem, of course, is that we just don't know.

The question now is how to fix these supply chains and get the information that is required to start driving effective carbon reduction initiatives - given they have already been in place for a couple of decades and relatively basic best practices such as communicating with partners and undertaking thorough audits are still well short of being universal it is obviously quite a challenge.

Perhaps the answer lies in not continuing to push these best practices - a Sisyphean task that appears to be making limited progress - but instead taking an entirely new approach altogether.

One of the most intriguing predictions in the Oracle study is that we will start to see the emergence of shared distribution networks whereby different firms, and in some cases even competitors, use the same logistics networks. In the case of retailers, for example, they already often outsource production to the same factories and farms, so why not do the repeat the trick with distribution? It is rare that distribution represents an area of competitive advantage and as such it makes sense to work with other firms and enjoy the carbon efficiencies, financial savings and greater ease of oversight that goes with that.

Another enticing prospect is that in order to gain the oversight they so desperately require firms will begin to take back control of their supply chains. American Apparel, one of the fastest growing clothes company's of recent years, is the poster child for this movement (and what posters they are), controlling almost every aspect of its supply chain and manufacturing the clothes in its own factories. The company has been so successful that others are bound to be taking notes.

Bringing an entire supply chain in house is likely to prove too daunting a prospect for most firms, even if there is a strong CSR and environmental case for doing so. But there are signs that firms are finally looking to co-operate with supply chain partners in a much more proactive manner than in the past. A group of high profile multinationals are now working with the Carbon Disclosure Project to routinely request carbon data from supply partners, while supply chain reforms sit at the heart of Wal-Mart's wide-reaching environmental programme.

We're also beginning to see more and more big multinationals starting to offer funding to their supply chain partners. IKEA this week pledged to invest €50m in clean tech start ups, responding to an absence of affordable green products by trying to kick start their development. The primary aim of such initiatives is to accelerate the emergence of new products that the retailers can then sell, but they also herald a more proactive approach to supply partner management - if you've got your own money invested in a firm you are more likely to keep a close eye on them.

There are certainly a fair few broken supply chains out there, but just maybe we are beginning to see a willingness to fix them.

Right, I'm off to make me some "anti noise" while trying to work out what exactly it is that George Bush has against cute and fluffy animals.

Cheers,

James

Posted by James Murray on August 14, 2008 | Permalink | Comments (0)

It was the US novelist F Scott Fitzgerald who once observed that the "test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function".

By that reckoning there has not been a great deal of intelligence on display over the past couple of weeks as the two sides of the debate surrounding the new Kingsnorth coal-fired power station bite chunks out of each other.

In fact, at times reasoned thought has been so noticeable by its absence that the whole imbroglio has resembled one of those manufactured, overly simplistic arguments that look more at home in the Big Brother house than the corridors of power (personal favourite moment so far, Arthur Scargill promising to asphyxiate himself if George Monbiot is willing to make like a Russian spy in a sushi restaurant and get a bit too close to some radiation).

The problem with the debate over Kingsnorth is that both sides of the row are clinging to positions that are almost entirely justifiable. Moreover, they are each attempting to navigate a series of facts that all but the most blinkered climate change denier and hair shirt wearing green are agreed on.

For those of you new too the argument (and you really should get involved - like all bust ups it is strangely captivating), here are those facts in something like their entirety:

1. Coal is one of the dirtiest fossil fuels on the planet. If the UK approves Kingsnorth and the new generation of coal fired power stations in the planning pipeline, and those plants then fail to implement successful carbon capture systems, we have no chance of meeting our carbon emission reduction targets.

2. The best way to reduce UK, and indeed global carbon emissions, is to keep the coal in the ground.

3. The UK faces a serious and widening energy gap as it retires the current fleet of coal and nuclear power stations.

4. With renewable and nuclear energy both likely to take decades to reach the required capacity the short term options for plugging the energy gap are between coal and gas. UK gas supplies are dependent on some pretty dicey parts of the world, not least Georgia and Russia neither of whom seem to be doing their bit for international stability at the moment.

5. Carbon capture technologies are largely unproven at large scale.

6. Carbon capture technologies need proving at large scale.

7. If energy firms are mandated to install carbon capture systems on new coal power plants before such systems are fully proven they are unlikely to invest in such plants, leaving the UK with a continuing energy gap.

8. If energy firms are not mandated to install carbon capture systems a new generation of coal power plants without such systems would negate any attempts to cut emissions in other parts of the economy (see fact one). A high price on carbon delivered through the EU's emissions trading scheme would encourage them to install such systems without the need for regulation, but there is no guarantee the price would be high enough.

9. What the UK does is largely irrelevant given that countries such as the China, India and the US remain committed to coal fired power.

10. A global climate deal that puts a meaningful price on carbon could stop all countries from using coal and force them to shift towards cleaner forms of energy that will suddenly appear cheaper.

11. An international deal that sets a price on carbon high enough to make coal economically unviable is about as likely as goodwill breaking out across the Caucasus.

Now I'd argue that each of these points are pretty hard to dispute. We might like things to be different but they represent the reality at the moment and the challenge is navigating a route that allows carbon emissions, both in the UK and globally, to fall, while energy needs are still met.

In an ideal world this would be achieved by leaving the coal in the ground and scaling up renewables and even nuclear capacity to plug the gap. But, sadly the chances of this happening quick enough and on the global scale that is required are slimmer than an Olympic distance runner.

The least worst scenario now is to grant approval to Kingsnorth but with a set of caveats far, far tighter than those the government is proposing at the moment.

Firstly, Kingsnorth must be built with carbon capture and storage (CCS) attached. Not at some point in the future, but right from day one.

E.ON, the company proposing the plant, has no incentive to install CCS so the government must provide the bulk of the funding. It is already running a competition for a £1bn CCS demonstration project and Kingsnorth is one of the proposals in the mix. The other projects will complain, but Kingsnorth should be awarded the contract straight away. All governmen's are happy to bend competition rules when it is in the wider national interest and this is one of those occasions. We need to know if CCS can work and fast, and where better to start than on a brand new power plant. Other sites might be more suitable, but if CCS cannot be made to work at almost any location then the argument put forward by its proponents that it can help cut emissions by being retrofitted to existing plants is obviously a crock.

Secondly, no other coal fired plant should be granted approval until CCS is proven to work at Kingsnorth. The energy companies will claim the other sites in the pipeline are needed and perhaps they are, but granting these approval before we know CCS is viable would be like buying an engagement ring before you've even been on a first date - presumptuous and stupid. If Kingsnorth alone cannot address the energy gap - and it can't - we'll just have to redouble our efforts around renewables and nuclear.

Thirdly, the government must signal that it is willing to either guarantee that the price of carbon will be high enough to make coal stations without CCS economically unviable or it must ban them outright. It has to make it explicit that if CCS succeeds at Kingsnorth it will be fitted to all future plants and if it fails Kingsnorth will be the last coal fired power station ever built in the UK.

If these guarantees make the project too risky a proposition for E.ON then other investors must be found. If CCS is as attractive a technology as the government maintains they should be queuing up.

Fourthly and finally, the government should fund a second CCS demonstration project to retrofit CCS to an existing plant. Again, if it is as serious as it keeps saying about the commercial opportunity presented by selling CCS to China and India this will represent a good investment.

Like all good compromises such an approach would please no one. E.ON would likely claim it is taking on too much risk, environmentalists would argue that the guarantees carbon emissions will be curbed are not strong enough, and the government would be angry at having to find more cash to fund a second CCS project.

But given the facts as they stand and the Realpolitik acceptance that globally the development of CCS is an essential safety net to go alongside the continuing expansion of renewables, then such a compromise represents perhaps the only way out of the current impasse.

Posted by James Murray on August 12, 2008 | Permalink | Comments (4)

The backlash is upon us.

It was always only a matter of time before those opposed to the steady march of the green movement used the economic slowdown to try and force it back to the margins of the political debate - and this week they were out in force.

Mayor Boris, for example, celebrated getting through 100 days in office without any humiliating groveling apologies (give it time, they'll come) by scrapping a flagship zero carbon vehicle project, while professional controversialist Julie Burchill offered up her assessment of environmentalists as "supremely unsexy" hypocritical poshos who manufacture their concern over the environment as an excuse to tell poorer people what to do (much to the amusing chagrin of George Monbiot).

Meanwhile, over at The Times columnist Alice Thompson offered a thorough assessment of why "being green is not cool anymore", arguing that the "the chilly economic climate... has frozen the shoots of environmentalism". Citing static demand organic produce and a MORI poll showing that the proportion of people who rank the environment as one of their top three concerns has fallen from 15 to 10 per cent in the last year, she argued that "espousing the green life, with its misshapen vegetables and non-disposable nappies, is increasingly being seen as a luxury by everyone".

Admittedly, she concludes that a desire to lower energy and food bills means people are behaving in a greener manner by growing their own veg and trying to embrace energy efficiency, but the crux of the argument remains that the environment is fast receding as a political and business topic.

What is so interesting about these attacks is that both Thompson and Burchill, perhaps wilfully, are addressing an extremely narrow and increasingly outdated idea of what constitutes an environmentalist.

The idea that the green movement is faltering because fewer people can afford to buy organic Swedes or because environmentalists are still perceived as hair shirt attired hippies completely fails to comprehend the extent to which the green movement has shifted in recent years from niche popular movement to critical economic issue.

Demand for organic fruit and veg and other green consumer products will undoubtedly drop off as people tighten their belts, but the importance of this market to the green business movement has always been overstated (in fact you can make a case for it not being green at all given organic crops lower yields and the requirement at a time of rising food prices for more land to be given over to farming).

The business world's interest in green issues has always been more about the opportunities and challenges presented by the massive structural shift towards a low carbon economy than opening up a couple of relatively small new consumer markets. As such the economic slowdown will have negligible impact on the emerging clean technologies and green business models that truly define the green business movement. In fact, with the slowdown caused in no small part by rising energy prices there is a strong case for saying that the case for greener and more energy efficient infrastructure and processes.

This is certainly the view of most investors as the alternative energy gold rush and recent spate of clean tech IPOs clearly demonstrates.

Right, I'm off to put my money in Brazil.

Have a good weekend,

James

Posted by James Murray on August 8, 2008 | Permalink | Comments (3)

Back in the mid nineties, when he was already well on his way to becoming the UK's tragic sportsman of choice, Paul Gascoigne took a break from his hectic schedule of acts of footballing genius and craven stupidity to appear on one of those early evening TV magazine shows that continue to prove the non-existence of a benevolent and kindly God through their very existence.

I can't remember the show, but I do recall that the presenter was an acolyte of the Michael Parkinson sycophancy as interrogation school of interviewing and asked Gazza something to the effect of why he was so good at football.

In an all to rare moment of lucidity, the man who famously introduced himself to Lazio fans with a belch, explained that he had an ability to anticipate what was going to happen two or three moves down the line and get himself in the right place to take advantage. He felt he knew where the ball was going to end up.

Gazza is not alone in this observation. It is remarkable how often the greatest sportsmen identify this sense of anticipation as their defining quality - the thing that allows them to stand out from their peers.

Obviously, it is not the case in the glorified kindergarten games of the Olympics, where the only variables are the athlete's dedication, genetics and drug intake. But in the organised chaos of team sports an ability to instantly recognise, understand and analyse all the variables at play is what so often differentiates players. At the highest levels, every player has the same command of the basic skills a sport requires and pretty much the same fitness levels - it is the sense of anticipation that really separates the world beaters from the journeymen.

Now it is hardly a new observation, to argue that there is to link between the world of business and sport. Indeed, battalions of inarticulate middle aged men who were once moderately good at kicking various shaped balls are able to keep themselves in Pringle sweaters by fleecing businesses for millions by making this very same point on the after dinner circuit. But that does not mean that the parallels are any less true.

For businesses, a mastery of the technical basics - the day-to-day ability to develop and sell good products while balancing the books - is essential for their survival. But like the difference between David Batty and Gazza what separates the good from the great is the ability to see what's coming and react accordingly. The problem is that when it comes to businesses ability to anticipate three or four moves ahead there are far more Battys out there than Gazzas.

This was made apparent this week with the news that many businesses remain woefully under prepared for the introduction of the UK's new carbon cap-and-trade scheme, despite the fact its introduction is less than two years away.

But while the failure of businesses to begin implementing the processes and systems required to comply with the Carbon Reduction Commitment is a particularly blatant example of many firms' failure to look beyond the end of the next quarter, there are countless other instances of companies missing out on opportunities, or worst still conceding own goals, as a result of their inability to anticipate the changing nature of green legislation and technologies.

The most frustrating thing for spectators is that all it takes is for businesses to get their heads up and look around to see what is happening and where the opportunities will be.

This week alone we've seen the Spanish government unveil one of the most wide reaching packages of green regulations in history, energy prices heading north with promises of further rises on the way, and US legislators facing yet more law suits demanding that they act to curb carbon emissions.

As the Co-op argued this week in its report criticising oil companies plans to exploit carbon heavy tar sands in North America, those companies and investors that fail to anticipate the carbon regulations that all the evidence suggests are coming are taking huge risks and could yet be badly burned.

Of course, just as in football, taking time to analyse all the variables and work out what will happen next is extremely difficult in the heat of competition and as such businesses find it hard to think much further ahead than the next quarter even when times are good, let alone when the economy is struggling.

But it is worth noting that not one of the companies currently prospering as a result of growing demand for green products is an over night success story. Whether it's a global conglomerate such as GE and its Ecomagination initiative or an emerging start up such as Tesla and its electric cars, they all saw the way the market was moving several years ago and began to plan accordingly so that they are only now in a position to begin reaping the rewards.

For those businesses that haven't yet worked out what to do about the changing realities posed by soaring energy costs and environmental legislation the time to decide whether they want to be amongst the journeymen or the global superstars of this world is fast approaching.

Right, I'm off to brush up on my GCSE physics and see if I too can work out a cheap way to make hydrogen.

Have a good weekend,

James

Posted by James Murray on August 1, 2008 | Permalink | Comments (1)