The worst thing about taking two steps forward and one step back is that the frustration at your stilted progress makes it so easy to forget that you are actually moving forward.

So it is currently for all those in the green business movement - progress is undoubtedly being made and at a pace that would have been unimaginable just 18 months ago. And yet as each new scientific report on climate change makes more horrifying reading than the last you can't help but feel it needs to move much faster still.

This dichotomy was highlighted to me this year at a conference where the keynotes were delivered by the contrasting figures of Chris Rapley, director of the Science Museum and former head of the British Antarctic Survey, who gave a chilling update on the scale of the climate change threat, and Bob Hertzberg, the ebullient boss of solar firm G24i who argued that the low carbon economy could prove to be just around the corner.

The temptation to be disheartened is always there, but as the end of the year draws closer it is worth remembering that there are convincing signs that despite the gloomy economic backdrop Hertzberg might just be right.

One question that was never asked amidst all the recent reports of the UK and EU emission reduction targets was whether we could actually exceed them.

At first glance the answer appears to be such a resounding no that the question is simply not worth asking. These targets have never been met in the past, emissions are still rising and no nation on Earth is yet to convincingly detach economic growth and carbon emissions.

But perhaps it is not so daft to ask after all, particularly if you think about how fast economies and technologies can change.

I (and everyone I know) have iPods and mobile phones and computers stuffed in pockets and bags that were simply unimaginable to most people just a decade ago.

Technologies can go mainstream very, very quickly - all they have to do is serve a need and be better than the version they are replacing.

And that is why it is not entirely inconceivable that Europe could cut emissions by more than 20 per cent by 2020 and get more than a fifth of its energy from renewable sources. Because increasingly green technologies are getting ever close to performance and cost parity with their more carbon intensive counterparts.

All those start ups and multinationals that started investing in developing low carbon technologies five or six years ago are now seeing those projects accelerate or come to fruition and action plans such as the EU's mean they know they have a market for their end products.

This is not to suggest that tackling climate change would suddenly become easy, but rather than being daunted by the challenge it is worth remembering that all we need is a number of energy and transport technologies that are cheaper and better than the technologies they are looking to replace (and scientists are convinced solar can compete with the grid within a few years, while 100mph electric sports cars are already a reality) and the market will do the rest.

And that is as upbeat a place as any to finish the year.

BusinessGreen.com's blog is taking a few week's off for Christmas from today, but we'll be back again in the New Year.

Happy Holidays to all our readers, and thanks for your continued support during 2008.

Cheers,

James

Posted by James Murray on December 19, 2008 | Permalink | Comments (0)

So it looks like Europe will get its climate change package after all.

According to various reports, heads of state will today agree a compromise deal, dispelling fears that intransigence from Poland and Hungary, and to a slightly lesser extent Germany and Italy, would scupper legislation that has been years in the making.

And yet even before the deal is finalised the chorus of disapproval from all sides has already begun.

Green groups have slammed proposals that would allow countries to meet large chunks of their emission reduction targets using carbon credits bought in from overseas, while the industrial lobby will undoubtedly claim that they deserved still more free pollution permits under the emissions trading scheme.

Friends of the Earth's climate campaigner, Robin Webster, led the catcalls, claiming that "huge loopholes" would allow big energy-users "to carry on polluting and nations to buy offset 'credits' from abroad".

The concerns over imported credits are undoubtedly valid, particularly given the mechanism for buying these credits, the UN's CDM, is itself still struggling to iron out some pretty fundamental flaws. Moreover, the whole package is likely to be dogged by similarly unsatisfactory compromises with many of the original proposals - such as the fines for car firms that fail to meet new emission standards - having already been watered down.

But politics is about nothing if compromise and there is a strong case for the green movement to focus on what is in the final package as opposed to what has been removed.

It is easy to forget when looking at the minutiae of the proposals exactly how historic they are.

The binding targets to cut greenhouse emissions by 20 per cent, generate 20 per cent of energy from renewable sources, and deliver a 20 per cent improvement in energy efficiency have been retained and will drive massive changes in the way Europe operates over the next 12 years. They really will provide the foundations on which the low carbon economy can be built.

New car emission standards, for example, mean that in five years time many of the vehicles on the road will have to be far greener than they are today, while the way we generate energy and use much of our energy is likely to change beyond recognition over the next 12 years.

Across the entire green business movement concrete certainty that there will be demand from government for low carbon products and services will allow clean tech firms to invest with more confidence than ever before. Wind turbine and solar manufacturers can continue to scale up production capacity, smart grid innovators can accelerate development plans, electric car firms can press ahead with new models, and green consultancies can start hiring, all relatively safe in the knowledge that demand for their products will strengthen.

There have also been some improvements to the package resulting from the lengthy negotiations.

The electric car sector has received an unexpected boost from its inclusion in the targets for renewable fuel use, and the proposed "solidarity fund" that has been designed to help poorer eastern European states build low carbon infrastructure is entirely right and proper.

Even where it looks like the proposals have been watered down it can be argued that the deal is not as bad as it first seems.

Allowing governments to buy in billions of euros worth of carbon credits from overseas should not become an excuse for inaction at home, but the model, flawed as it is in practice, does help accelerate the transfer of low carbon technology to the developing world.

Equally, the likelihood that more industries than originally expected will receive free pollution permits under the EU's emissions trading scheme will weaken the carbon market and deliver huge windfalls to some pretty undeserving industries. But the emission caps imposed under the scheme will still be much lower in the next phase than they are at the moment and the fears that some sectors would simply decamp to China, where they would carry on polluting at will, were genuine and had to be addressed.

But most of all, detractors should remember that any deal would have been worthless if it did not include the whole bloc.

As the UK's increasingly assured climate change secretary Ed Miliband has been keen to explain of late the low carbon revolution cannot happen unless you bring everyone with you.

Concessions simply had to be made to get everyone on board.

Deep down those politicians who believe the scientists warnings know the 20 per cent target does not go far enough, just as they know that some of the compromises agreed over the past two days are unsatisfactory. But they are equally aware that they will never get anywhere if they set targets so ambitious that some countries and businesses immediately dismiss them as impossible to achieve.

What they have delivered is a set of goals defined not just by the art of compromise but also the art of the possible - and for that this agreement should be welcomed.

Posted by James Murray on December 12, 2008 | Permalink | Comments (1)

Here's a question you don't hear too often of late. Could the global banking sector actually be a force for good?

Given the likelihood that you are currently faced with a dwindling pension, rampaging sense of job insecurity and pervasive sense of impending economic catastrophe the most likely answer is "erm, no, not really".

In fact, given the mess the bonus chasing greed monkeys have imposed upon the rest of us you would be forgiven from subscribing to the opinion of guy who this summer reportedly journeyed to Wall Street with a cardboard sign displaying three simple words: "JUMP! You fuckers".

And yet while the reputation of the global banking sector might be lower than the proverbial snake's belly it remains arguably the most powerful weapon we have in the fight against climate change.

As the recent meltdown made excrutiatingly clear the banks' sit at the hub of every aspect of our lives and as such they have the power to shape our economies in a manner that is far more immediate than anything governments can muster.

As we are now all finding out, when they get things wrong the shockwaves reverberate throughout the economy damaging everything they touch. But equally, when they get things right they have the potential to drive progressive change on a similar scale.

That is what is so exciting and potentially revolutionary about the launch this week of the climate principles, a set of guidelines requiring financial institutions to consider the carbon impact of their investment decisions.

The principles have already secured support from Crédit Agricole, HSBC, Munich Re, Standard Chartered and Swiss Re, and they also form part of a wider trend that has seen Citi, JP Morgan Chase, Morgan Stanley and Bank of America sign up to a similar set of US guidelines governing investment in the energy sector. Meanwhile, countless specialist ethical and green investors, such as the newly launched Earth Capital Partners, are also operating in line with stringent sustainable investment criteria.

There are variations between these different investment guidelines, but they all boil down to a commitment to push the companies the banks invest in to embrace environmental best practices and, in extreme cases, withdraw financing from the most polluting projects.

In theory, this is a hugely effective means of forcing the world's most carbon intensive industries to clean up their act.

When it comes to regulation, the most carbon intensive sectors know there always will be loopholes to exploit, politicians to lobby, and fines that are so modest they won't make much difference to the bottom line. In contrast, they are also aware that not being able to get access to finance because of a poor environmental record could very easily destroy them.

Those businesses that refuse to listen to politicians calls for more responsible behaviour will have no choice but to listen to their bankers, on the understandable grounds that it is the bankers that carry the bigger sticks.

Sadly, in practice, all this is likely to prove far more difficult to achieve.

The power of initiatives such as the climate principles will be hugely diminished unless all the banks are willing to act in unison, something that will be nigh on impossible to achieve in a competitive market.

As long as some banks remain happy to lend to whoever they like regardless of the environmental implications others will almost certainly fall foul of the argument that if "we don't lend to them someone even less responsible will". It may be the same rationale deployed by loan sharks and drug pushers, but it has a certain morbid logic to it.

And yet, there are early signs that these initiatives could work.

The confirmation this week that HSBC is to phase out its investments in some of the more environmentally dubious companies operating in the rainforest regions of Malaysia and Indonesia, combined with Bank of America's commitment to back away from mountain top removal coal mining projects proves that at least some banks are willing to back up their support for voluntary investment guidelines with real world action.

If enough banks follow their lead it will not be long before companies that illegally clear rainforest or engage in the most polluting forms of mining or energy production simply have to change their ways or risk their capital flows grinding to a halt.

Moreover, there is every chance that more banks will follow suit given that most of the companies already signed up to these types of guidelines have done so for sound commercial reasons.

HSBC, for example, is not considering pulling out of financing oil sands developments because of a sudden attack of environmental conscience, but more because it is fearful that potential carbon legislation in Canada could mean it struggles to make its money back.

If enough banks conclude there is no longer decent returns to be had from carbon intensive industries that fail to clean up their acts - a prediction that carries considerable weight in the UK following the publication of new carbon budgets - then they will rapidly create a self fulfilling prophecy by refusing to provide financing for the worst environmental offenders.

Tempting as it may be to continue to blame the bankers for all our woes, it looks like we could do with them stepping away from the ledge for a little while yet.

Right, I'm off to try and disable my flash player.

Have a good weekend,

James

Posted by James Murray on December 5, 2008 | Permalink | Comments (3)