Monday, 21 December 2009

Macro Level Trends – Copenhagen Climate Summit – The Futility of Short Orders

After many months of rhetoric and hype that Copenhagen would lead to a cementing of international eco ambitions in turn leading to a global policy agreement, the stark economic realities that have beset many members of the G20 & G77 ultimately created the politics of disporia.

As supposedly the successor to Kyoto, the US and UK essentially took charge of matters, though perhaps idealising the application of the international cohesion created by generally united reaction to the financial crisis. Instead, seemingly for many it became a 'trap and pony show', both in terms of downsized ambitions and indeed as a euphemism the political subtleties emerging.

The core script, already previously beset by the recognition that no legally-binding agreements would be made, was written and re-written time and time again until it became almost an academic exercise of oxymoronic word-smithery – grandiose in appearance yet increasingly lacking any substance.

The most progressive proponents early on in talks were some of the fast growing EM nations such as Brazil, India and South Africa, presumably to have greater influence in proceeding and not alienate the US or UK, but early enthusiasm took a back-seat to the big picture economic - and regional social cohesion - interests of the EU and China.

The high ideals of CO2 reduction target of an 80% reduction by 2050, and global warming target of 1.5 degree (as opposed to 2 degree) limit became early casualties. As the high ideals crumbled so the innate, increasingly empty, politicking grew; coming to a head as President Obama & Premier Wen met. Their talks reportedly becoming (not surprisingly) ever increasingly fractious as China resented the US for its accusations of secret coal mines and its self appointment as policy policeman, and in turn the US seeks Chinese transparency given its concerns about China's growing geo-political influence in Asia through its regional exports of minerals and energy.

By the end the US, India, China, Brazil and South Africa agreed upon the disputed areas to be latterly considered, but with even an agreement to post-pone full ratification by a year, the hollowness of Copenhagen shines through, shorn of its central ideals; much as the hair on the heads of the environmental protestors outside were shorn in protest.

Perhaps the greatest symbolic illustration of the failure was the inability to even multi-laterally support the UN sponsored 'REDD' programme. It seeks to protect flora and fauna from the de-forestation effects of the logging industry in EM nations. [NB. it is reputed that the present rate of deforestation actually surpasses the CO2 levels of combined harms of the entire global transport sector, being the 2nd biggest 'emitter' at 20% of global output, only behind energy production].

By the end the only agreement made was that the world's poorer nations would be given $30bn (£19bn) of climate aid over the next 3 years, with that aid to increase to $100bn (£62bn) annually from 2020 – though this was sceptically met regards its power to do good.

Copenhagen reporters state that by the end there was a growing recognition by many that previous high expectations of massive carbon reduction in the near and medium term were unrealistic given the state of play for many national economies, supposedly rich and poor alike, and their political needs wants and desires.

The growing consensus implicitly projects that instead a new routemap should be considered, something beyond the realms of the conventional UN model that some would argue has run its historical course given the very changed geo-political landscape the 'global village' now sits within.

The irony is that this sad end was set in motion some time ago. The highly charged emotional rhetoric of 'green-speak' has set expectations both political and public. But demonstrated itself to be little more than a useful ideological vehicle for politicos and the possibility to align and direct massive public expenditure to big-budget yet ill-conceived schemes and projects across the industrial spectrum.

This emotional irrationality flies in the face of good investment governance and procedure, the sort practiced by the financially driven, results orientated private equity sector; and a mirror mentality of good stewardship of public funds by respected senior ranking officials.

[NB Relative to recent press comment, investment-auto-motives conjects that the reason that the £2.5bn of state aid for the UK auto-industry has not been immediately forthcoming is because Whitehall has yet to be convinced of its direct application towards long-term value creation. And instead seeks greater structural re-form and robustness for the UK auto-sector before providing sizeable monies].

So, looking forward...

We face a period where having convinced the majority of the public of the need for eco-behavior, the very modus operandi of international central governments, and its negative effect on presently unaligned unconvinced private investment, must alter.

Government must become far more concise in its industrial planning and thus provide a stable framework by which commercial enterprise can be guided.

Instead of political grand-standing and the questionable force-fitting of big-number yet shallowly devised economic modelling, far clearer multi-stage roadmaps must be drawn. Roadmaps which combine the virtues of financial conservatism and commercial creativity.

For the auto-industry itself, that means a far broader vision that the over-utopianised, panacea-like ideal swallowed by politicians and the public alike. We will not all be driving electric cars by the end of the decade given the complexity of PESTEL 'headwinds' that must be overcome. The EV does indeed have a role to play and should not at all be discounted, but its role as a solution provider for mass personal transit is specific and requires much social, commercial and product re-engineering. Eco-enthusiam should not overlook the technical frailties of purely electrically powered vehicles.

In relatively stable, circuit-type environments they have a definite role, as we see in factories or commercial premisis, and on golf courses and retirement villages - especially so in mid latitude regions. Environmental cleanliness, minimal temperature variance and other factors seemingly must be created and controlled to give the perfect world for relatively low-tech, low-cost EV solutions. Real world, weather dominant, applications in cities, suburbia and the country present very different challenges.

A graphic example of this surfaced coincidentally and serendipitously with the virtual collapse of Copenhagen.

The Eurostar rail service came to a grinding halt over the weekend because the electric motors of its locomotives could not operate with snow and chill-wind condition interference to the drive and control systems. Cold and moisture, though scientifically conductive for electricity, are not condusive to real world EV drive and control systems - let alone the repletion of stored battery energy.

The Eurostar fiasco serves as a reminder that political hyperbole must work in orchestration with technical achievement and a deliverable reality.

Thus as Christmas fast approaches the festive period offer a good reflective period for politicians and policy-makers around the world, to re-plot a truly tenable course forward. After all. Every element of the P+E+S+T+E+L formula must be balanced to create a progressive result.