David Hone: ‘U.N. urged to heed market in Copenhagen climate talks’

“With some clear thinking, with some good structure, and international agreement, we can actually shape a different energy future,” says Hone.

David Hone: There are pathways out of the dilemma that we’ve got ourselves into. With some clear thinking, with some good structure, and international agreement, we can actually shape a different energy future.

David Hone is Climate Change Adviser for Shell. He’s talking about the dilemma of rising global demand for energy while fossil fuel burning is known to be one of the elements causing climate change. He said climate change is a ‘key issue’ for Shell. And he spoke of world leaders gathering in Copenhagen in December 2009 with the goal of reaching a new global climate treaty.

David Hone: I think in relation to where we’re going on the climate change discussions leading to Copenhagen, the key message is “don’t forget the market.”

Hone is hoping for guidelines for an effective system for global trading of carbon emissions.

David Hone: The Kyoto Protocol, which was negotiated back in 1997, was built on the basis of a global carbon market as one of its long term goals. And all of the pieces are there to deliver that. I think, clearly the world’s going to change. Clearly, the Kyoto Protocol is going to make a transition into something different that’s acceptable to all the parties. Let’s not forget the market foundation that it’s built on and the fact that the market can deliver some very substantial changes if directed in the right way.

Those changes to how energy is produced, said Hone, include renewable energy and carbon capture and storage, which will need a jumpstart from carbon trading. Hone said global warming caused by the burning of fossil fuels is a serious issue.

David Hone: For us, it’s a key issue. Clearly, we’re a high emitter in terms of our emissions directly. And of course, there’s the indirect emissions from the products we produce, which are used by consumers all over the world. So we clearly can’t ignore this issue.

He said Shell is addressing the issue in several ways.

David Hone: Through improving the efficiency of our own operations, through developing carbon capture and storage, which is the geological storage of CO2, through developing a biofuels business, for example, helping our customers to understand the role of energy and how we can make better use of the energy we provide and that others provide. We’re developing a range of low carbon alternatives that we hope may bear fruit in the future. And of course, underpinning all of this, we think it’s important to interact with governments on this issue, because governments are ultimately setting new rules for the future.

He added that governments, both in developed and in developing countries, will need to be involved in implementing policies to keep CO2 emissions down within their own national boundaries.

David Hone: We’ve had a number of years now in the E.U. an emissions trading system, or a cap and trade system, and we found it very useful to always be part of that dialog that exists, to help set those rules and to set the way in which the emissions trading system works, so that it can actually deliver the price of carbon necessary for the market, to force that market to change. Similarly in the U.S., there’s a very active discussion going on as we speak, around the implementation of a cap and trade system in the United States. And it’s just as important for business to be part of that discussion as well.

Will cap and trade of carbon emissions – which will add a price on CO2 to the cost of doing business, such as in manufacturing – harm economic growth? Hone said he doesn’t think so.

David Hone: We need to put to bed one of the negatives. It won’t harm economic growth. It will redirect economic growth. And there’s a big difference between those two. Economic growth will continue. There’s no question about that. But the direction in which we take it is really what we need to tackle.

Developing countries, such as China and India, will play a critical role in addressing climate change.

David Hone: We’ve seen very recently, a recognition at the United Nations that China will start moving in its five-year plans to substantially reduce emissions. They’re implementing energy efficiency measures that are exceeding those in many developed countries. I think where we’d still like to see additional action – from countries like China – is in the difficult area of emissions from coal-fired power stations. The key solution to that today, if you continue to use coal, is to develop carbon capture and storage. It’s a technology that can do the job, but of course there’s a reluctance to implement it where there’s no carbon price. And today, in China there’s no carbon price to drive those sorts of technologies. So we have to find ways of implementing those particular technologies in places like China, where there’s a high use of coal. And that’s going to come through cap and trade systems, to the carbon price, through offset projects, but also eventually through implementing their own approaches, their own cap and trade measures to drive emissions down and to encourage these types of technologies.

This podcast was made possible in part by Shell – encouraging dialogue on the energy challenge.

Jorge Salazar