Climate change: "the greatest challenge of our time."

UN Secretary-General Ban Ki-Moon calls climate change "the greatest challenge of our time. Nothing less than the future of our planet, and the well-being of all its people," he says, "hangs in the balance."
In the lead up to the first commitment period of the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC), which runs from January 1st, 2008 through 2012, projects are being developed all over the world to reduce GHG emissions.
A global carbon market has burst forth: New projects capture methane gas from landfills, animal waste and coal mines and use that "bio gas" for the clean production of heat and electricity. They also improve energy efficiency at industrial enterprises and implement new technologies for clean energy production, such as the use of renewable energy.
From 2002 to 2006, projects have been transacted for 2.4 billion tCO2e, of which 1,440 million tCO2e were within the European Union and another 960 million tCO2e were in developing countries.
Among the industrialized countries, the EU countries and Japan have accepted firm commitments to reduce their GHG emissions from 1990 levels. They can meet these commitments by investing at home or abroad in developing countries or countries with transition economies that have also ratified the Kyoto Protocol.
Although Canada has ratified the Kyoto Protocol, it has not followed up on its commitment to reduce its GHG emissions by 6% from their 1990 level. Australia's newly elected Prime Minister, Kevin Rudd, ratified the Kyoto Protocol in his first day in office, reversing the policy of the previous government. That leaves the United States - the world's leading emitter of GHGs - as the only industrialized country not to have ratified the Kyoto Protocol.
While the EU countries and Japan take action on climate change, the United States and Canada are holding out for a better deal. The U.S. and Canadian governments are calling for the developing countries that are also the world's leading emitters of GHGs - such as China, Russia, India, Brazil, Indonesia and Mexico - also to bear part of the cost of taking action on climate change.
They want them to join the industrialized countries in accepting firm commitments to reduce their GHG emissions. The developing countries counter that since the onset of the industrial age, for the last two centuries, the industrialized countries have had a free ride - developing their economies at the expense of the world's climate.
Developing countries such as China and India point out that on a per capita basis, their emission levels are much lower than those of industrialized countries, reflecting their lower levels of GDP per capita. Before they pay the economic price for addressing climate change, they first want to catch up and lift their populations out of poverty.
As the United States and other industrialized countries stare down the leading developing countries across this precipice, the window for developing projects under the Kyoto Protocol is closing. Reducing emissions from landfills, animal waste, district heating facilities or industrial processes requires investment.
According to a November 2007 report by French bank Caisse des Dépôts, 58 public- and private-sector investment funds have raised capital of €7 billion ($10.5 billion) to invest in projects that reduce emissions and to purchase carbon credits that these projects generate. However, the report states, "In anticipation of negotiations of a post-Kyoto agreement, the future of the carbon market is uncertain."
For carbon projects to be viable, they must generate sufficient cash flow from the sale of carbon credits from emission reductions to justify the upfront investment. Projects typically take at least a year to implement, so any projects that are initiated now will only begin generating emission reductions in 2009.
Four years of cash flow, until year-end 2012, is a tight time frame to justify the investment in most projects. A post-Kyoto agreement that provides certainty through 2020, for example, would breathe new life into prospective carbon projects, by according project developers and investors with at least 12 years of cash flow from emission reductions.
As the world's nations wind their way through negotiations at a UNFCCC summit last week in Bali, investors and project developers around the world who are taking action on climate change stand in waiting for a compromise to be forged.
There has been much scientific debate over climate change - whether global warming is caused by humans or natural phenomena, such as sunspots. The principal debate should be over values: Do we continue to dump waste in uncovered landfills or open-air lagoons, to vent methane gas from coal mining - and consume energy in ways that harm our environment?
Or do we take responsibility for the impact of our lives on our planet? Do the "haves" of the world consider the well-being of the "have nots" to be distinct from their own? Or do we live in a world where the well-being of one is dependent on the well-being of all?
Climate change is indeed "the greatest challenge of our time." The challenge is not only to mobilize the world's resources of capital and intellect to roll back the damage that two centuries of industrialization is doing to our planet's climate.
The foremost challenge is to bridge the great divide that separates the one billion people who live in industrialized countries from the over five billion people who live in the developing world. We need to forge common ground where disparate interests might otherwise prevail - and we need to build a world of shared values in this 21st century, where everyone can call our planet "home."