Climate Change Front and Center at World Economic Forum

DAVOS, Switzerland, January 29, 2007 (ENS) - U.S. Senator John McCain told the closing session of the World Economic Forum Sunday that he expects the U.S. Congress to take action on climate change very soon, and predicted that the Bush administration will follow suit.

"I admit that it is very late, and it may not be enough," said McCain, "but I think that for the first time you are going to see some action on this compelling issue."

The Annual Meeting closed on an "upbeat mood" with the co-chairs pledging on behalf of the 2,400 participants to use their positions of leadership to turn commitments on the top issues of climate change, global trade and globalization into action.

McCain

Senator John McCain, an Arizona Republican, told the World Economic Forum closing plenary that the U.S. is ready to move on climate change. January 28, 2007 (Photo by Remy Steinegger © World Economic Forum swiss-image.ch)
McCain said he is still optimistic despite current world problems. "I still believe America’s best days are ahead of us," he told participants in Davos.

British Prime Minister Tony Blair, too, sounded an optimistic note in his closing remarks. Blair said that the three key issues dominating the Annual Meeting in Davos – climate change, world trade, and Africa – still hang in the balance but said there had been progress on each that would have seemed unimaginable even a short time back.

"What is really happening," Blair told the participants, "is that nations – even the most great – are realizing that they cannot pursue their narrow national interests without invoking broader global values."

On climate change, Blair described the new American attitude as a "quantum shift."

Controlled by Democrats and in office less than one month, the new Congress has already begun moving climage change legislation forward, and President George W. Bush, previously more concerned about oil supply than greenhouse gases, referred to the "serious challenge of global climate change" in his State of the Union message last week.

Blair

Tony Blair, Prime Minister of the United Kingdom, at the World Economic Forum in Davos. January 27, 2007. (Photo by Remy Steinegger © World Economic Forum swiss-image.ch)
Opening the Forum on January 24, German Chancellor Angela Merkel spoke in her capacity as G8 president and head of the European Union Ppresidency. She said that globalization is a force for good but that all countries must be treated fairly and integrated into the global economy.

"Globalization offers far more opportunities than risks for people - more peace, more prosperity and more growth," she said.

In respect to climate change, Merkel said, "zero growth is not the answer, but rather enhanced innovation," adding that "new technology for energy efficiency is absolutely necessary."

Both Merkel and Blair, who hosted the G8 in 2005, advocated expanding the small influential club of nations at the core of much of the world's political and economic decisionmaking.

Merkel

German Chancellor Angela Merkel also hosts the G8 meeting this year. (Photo by Severin Nowacki © World Economic Forum swiss-image.ch)
Merkel said the goals for this year's G8 set for June in Heiligendamm, include "new forms of dialogue" between G8 leading industrial nations and emerging economies such as Brazil, India and China, Mexico and South Africa - along with a closer Atlantic partnership between Europe and the United States.

In two radical suggestions, Blair recommended merging the International Monetary Fund and the World Bank, and expanding the United Nations Security Council.

The Council is composed of five permanent members - China, France, Russian Federation, the United Kingdom and the United States - and 10 non-permament members - currently, Belgium, Republic of the Congo, Ghana, Indonesia, Italy, Panama, Peru, Qatar, Slovakia and South Africa.

"A UN Security Council without Germany, Japan, Brazil or India, to say nothing of any African or Muslim nation," he said, "will, in time, not merely lose legitimacy in the eyes of the world, but seriously inhibit effective action."

At a special session on climate Thursday, China and India reaffirmed their support for reducing the effects of climate change, while a leading insurance executive urged transfer of clean energy technologies to the world’s two major emerging economies.

Zhang Xiaoqiang, vice-chairman of China's National Development and Reform Commission, stressed that his country intends to follow the Kyoto Protocol, although China is not one of the industrialized countries that is legally bound to do so.

While China intends to try to keep its emissions low, Zhang said, cement and steel production in China is highly energy intensive, and only around half as efficient as technologies used in the west. To meet its targets, Zhang said, China will need help from the industrialized world.

Ahluwalia

Montek Ahluwalia works with the Planning Commission of India during the session Climate Change: A Call to Action (Photo © World Economic Forum swiss-image.ch)
Montek Ahluwalia, deputy chairman of the Planning Commission of India, reported that India is increasingly turning to nuclear power to cut its emissions, and that India’s strategy is similar to that of China.

India also expects to suffer from the effects of global warming, Ahluwalia declared. "It’s clear that business as usual is not going to work."

Jacques Aigrain, CEO of the reinsurance giant Swiss Re, noted that investments to control climate change are considerably less than the cost of risk-adjusted consequences. "Waiting and seeing because one element or another is not certain is not a valid answer," said Aigrain. "No shareholders would tolerate this in business. Why should the people tolerate it from us?"

Aigrain stressed that it is essential to transfer clean-energy solutions to both India and China. They need to use coal, so they need access to clean coal-based energy technologies, he said.

Market solutions will prevail, Aigrain said, encouraging politicians not to hide behind global agreements. "Global agreements are the best way to get nowhere," he said. "It’s true in business and even more true in international politics. Let’s take concrete steps, like the ones in California."

Aigrain

Jacques Aigrain is Chief Executive Officer of Swiss Re, which provides reinsurance products and financial services from its offices in 30 countries. (Photo courtesy World Economic Forum)
California has voted to reduce its emissions to 1990 levels by 2020, representing roughly 174 million metric tons of carbon reduction, Speaker of the California State Assembly Fabian Nunez told participants in Davos.

Steve Chu, director of the U.S.' Lawrence Berkeley National Laboratory, said California is already feeling the effects of a warming climate. The snow pack in California’s Sierra mountains has decreased 30 percent to 90 percent," he said.

"That is our water supply," Chu pointed out. "Even a decrease of 20 percent leads to severe water shortages in California. A decrease of 50 percent means that our agriculture will be gone, and beyond that we cut into our drinking water."

Chu added that rising sea levels are now at the upper range of what was predicted five or 10 years ago. Science has to come forward with new solutions to climate change, ranging from renewable fuels to carbon sequestration, he declared.

Peter Brabeck-Letmathe, chairman and CEO of Nestlé and World Economic Forum Foundation Board Member, also is concerned about water. "If I had to identify one resource [that] I am worried about, that is water," he said. "There is no market mechanism which regulates the water supply."

Neville Isdell, Chairman and CEO of the Coca-Cola Company, said South Africa attempted to do just that with water. They set the basic water requirement at 60 liters, which would be supplied for free to every citizen. Anything in addition would be priced according to usage.

Energy company chiefs joined political leaders to discuss increased competition over access to oil and natural gas and the impact on the geopolitical and physical landscapes.

Tillerson

ExxonMobil Chairman and CEO Rex Tillerson (Photo courtesy World Economic Forum)
Rex Tillerson, chairman and CEO of ExxonMobil Corporation, the world's largest oil company, said that fossil fuels still account for "80 percent" of energy consumption, and that a balance must be found between economic growth and prosperity, and protecting the environment.

U.S. Secretary of Energy, Samuel Bodman, said, "There will be a 50 percent growth in energy demand over the next 20 years and I see no alternative to nuclear power as an emission friendly source of electric power."

"Co2 is a problem, and if we are good entrepreneurs, then this is a huge opportunity," said Jeroen van der Veer, Chief Executive of Royal Dutch Shell. "There is enormous energy efficiency technology available that is not being put to use," concluded Tillerson.

Aigrain said science must come to the fore on climate change. Technology solutions must be easily transferable to India and China - countries that Aigrain termed "our pension funds," as they will be the future drivers of economic growth.

Aigrain's remarks echoed those of Steve Chu, director of the Lawrence Berkeley National Laboratory, who said that "without clean coal extraction we're going to have an enormous problem. We have to invest very seriously in technology and encourage China and India not to make the same mistakes as the U.S," he said.

party

Farewell party at the Schatzalp at the close of the World Economic Forum, January 28, 2007 (Photo by Annette Boutellier courtesy WEF)
After four brainstorming sessions dedicated to exploring the shifting power equation, the underlying theme of this year’s World Economic Forum Annual Meeting, climate change was voted the issue that will have the greatest impact in the coming years.

Session panelist Scott Friedheim, co-chief administrative officer of the financial services firm Lehman Brothers, identified one business shift that climate change would cause. "There will be a move away from corporate social responsibility towards long term sustainability," he said.

Annual Meeting participants broke into small groups to discuss which shift would have the greatest global impact in the coming years. They created a short list of important changes that are currently underway in business, technology, society and the global economy and then voted for the most important.

Climate change was chosen as the shift most likely to affect the world in the future, narrowly beating the emergence of new markets in second place.

"Climate change is one of the greatest challenges that we face," said World Economic Forum Managing Director Ged Davis. "We need to bring governments and non-state actors together to offer innovative solutions."

The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. Incorporated as a foundation in 1971, and based in Geneva, Switzerland, the World Economic Forum is impartial and not-for-profit; it is tied to no political, partisan or national interests. Visit: www.weforum.org