22/11/2005 - Industry's immense capacity for innovation can help mitigate the effects of climate change, but there is a substantial barrier that must be addressed in order to provide clarity: The uncertainty about the Kyoto Protocol beyond 2012.

Current government commitments under Kyoto to reduce greenhouse gases only extend to 2012. Beyond that, the situation is unclear. That's a problem for industry, particularly capital-intensive industry.

It is not that such businesses are unable or even unwilling to reduce their emissions. The problem is that in capital-intensive industries, where turnover for replacing equipment can take decades and cost hundreds of millions of dollars, companies need to know what the future holds. It is also a massive problem for nature, and people around the world grappling with the ever-increasing impacts of climate change.

Once the decision is made to replace a new plant or piece of equipment, that investment is expected to produce aluminum, electricity, automobiles or nickel — to name a few of the more obvious examples — for decades. While retrofitting equipment to be more efficient is always possible, it is often the most expensive way of tackling the problem. The best approach is to incorporate carbon-reducing measures into the planning for equipment turnover and replacement.

So, to harness the immense innovative capacity of the private sector to seriously tackle greenhouse gas reductions and remain economically competitive in a low-carbon economy, the business community first needs greater certainty. Some unknowns are commercial — such as what the demand will be — and up to the company to assess. But others lie with governments, and minimizing the uncertainties that arise from international agreements and national plans is one of them.

That brings us to the upcoming United Nations climate change meeting in Montreal running from November 28th to December 9th. It will be a huge affair, where up to 10,000 participants will analyze and debate aspects of the Kyoto Protocol and its future. Most importantly, the meeting will mark the beginning of the discussion on what to do about climate change once the current Kyoto Protocol commitments expire in 2012.

Coming out of that meeting, the world's political leaders need to send two clear messages to the business community:

1. That they are prepared to seriously tackle the problem and begin discussions to establish new targets for emissions reductions beyond 2012.

2. That the time frames are sufficiently long-term to allow business to plan for it intelligently, while also providing shorter-term check-in points to ensure that governments are meeting their commitments.

In short, we need a signal to come out of Montreal that there's going to be steady, unremitting and thoughtful pressure to extend emission reductions beyond Kyoto.

Canada's Environment Minister, Stephane Dion, as the host of the Montreal meeting, has a central role in ensuring that happens. There will be many complaints — some valid — about the process, the measures used to assess different kinds of reductions, and the techniques to do so. The issue of sharing the burden of cuts between the developed and developing economies is fraught with difficulty.

The unwillingness of the United States to endorse Kyoto is a position not held by many states, companies or senators in the United States. And the position of one country, no matter how important, cannot be used as an excuse for others to ignore global warming.

If we believe we must hold the average increase in worldwide temperatures to below 2°C, and we do, we must act. The federal government has asserted that cutting emissions will be financially, as well as environmentally, advantageous by making us more competitive. So here's Mr Dion's chance. An ambitious push to launch negotiations on the post-2012 time period from Montreal will send the right signal to industry and the public.

Kyoto's first round was like a bicycle with training wheels — it got us started. But now is the time to take the training wheels off and to really start pedalling.

* Daniel Gagnier is Senior Vice-President of Corporate and External Affairs at Alcan Inc. Jennifer Morgan is Director of WWF's Global Climate Change Programme.

This opinion piece first appeared in the The Ottawa Citizen on 22 November 2005.