Climate Crunch

Climate change is a terrifying reality, but the U.S., China and the U.K. are beginning to execute a collaborative strategy to counter it.

The Climate Crunch is real. Energy and climate change will influence our economy more than the current Great Recession.

Experts have reached consensus that the world's countries must strive to reduce greenhouse gases by 80 per cent from 1990 levels by 2050. Can you imagine cutting your daily activities so dramatically or inventing a technology so brilliant to make this happen?

The clock is ticking and scientists tell us we are losing the game. If we don’t get aggressive now, then we are bound not to win.

The chess pieces in the global game of climate change recently moved.

First, elected representatives in the United States are debating not if, but how to deal with climate change. This shift came in the form of the Environmental Protection Agency proposal that greenhouse gases endanger public health and welfare of current and future generations. As well, The American Clean Energy and Security Act of 2009, which is currently being debated in Congress, calls for the U.S. to ramp up renewable energy production, establish a low carbon fuel standard for cars, and kick-start energy efficiency. The most dramatic part of the proposed legislation is a cap and trade system. Most importantly, there is a shot across the bow to all other countries that don’t move in the same direction, as the proposal also directs the U.S. to implement a border program to apply carbon-based trade tariffs on products that come from countries not playing the climate change game.

Second, China did its part by signaling that it wants to determine the rules of the game. As a centrally controlled government and managed economy, China’s five-year economic plan sets the agenda. China’s next five-year plan will run from 2011 to 2015, and it is the perfect opportunity to get some practice with monitoring, reducing and reporting on emissions, particularly in the energy and electricity sectors.

Third, the United Kingdom introduced a standard annual fiscal budget and the world’s first carbon budget. In practical terms, this means that a government down in the polls, battered by the devastating recession, and facing an election next year, took the time to say as much about jobs, wages, taxes, and pensions as it did about green jobs, energy efficient homes, wind farms, and clean cars. It builds on the U.K.’s massive commitment to renewable energy as part of its low carbon industrial strategy. The investments in carbon capture and storage are another deliberate effort. Plus, hundreds of millions of British pounds will be invested in home retrofits, new housing and fuel poverty.

This trifecta is a once in a lifetime. It’s an unprecedented convergence of three major players starting to push each other in the same direction.

This is more than a coincidence. The U.S., China and U.K. are in a high stakes game, executing a strategy that will change the way things work with the energy we use, the environment we pollute, and the economy we grow. They are all part of major international negotiations on climate change that are happening now behind the scenes and are building towards a formal United Nations conference. This is sophisticated stuff with economists, diplomats, political hacks and heads of state deciding if there will be a climate change deal when they meet in Denmark this December.

The U.S. and China are deal-makers. The U.K. is a deal-broker. For them, it’s about a bit of progress today and the balance of power tomorrow. There will be others that attempt to be deal-breakers.

The U.S. can’t sign a deal that sends jobs, money or technology to China without getting something in return that delivers energy security and economic growth. China can’t sign on to a deal that does not require the U.S. and other developed countries to move first to reduce emissions and hold a trump card of green protectionism. As the power-player in the EU, the U.K. wants and needs a deal. Somewhere in between the lines there is a deal to be made.