What do we learn from Bali?

It seems that not a month goes by without another conference, meeting or process relating to climate change. Within this context the UN Framework Convention on Climate Change Conference in Bali last December was much awaited. It came at the end of a year when climate change had risen to the top of the political agenda in Australia; the Intergovernmental Panel on Climate Change had released its fourth assessment report and a certain former Vice President had become the first person to win a Nobel prize and an Oscar in the same year. Expectations were high - so now the dust has settled - what do we learn from Bali?

Bali achieved all it possibly could
As the science of the human induced climate problem becomes ever clearer, it is easy to feel frustrated by the lack of political breakthrough. Just when the need for urgency is clear, the global political and policy response seems to lag. However, when you realise the world hasn't faced a problem like this before - a complex issue with no boundaries, and potentially significant impacts on all countries - it is easier to understand why it takes so long for all involved to agree.

Ratification of Kyoto can no longer be seen as a badge of honour in international climate diplomacy
Serious constraints to reaching agreement on a post 2012 global climate treaty still remain. The United States was joined at Bali in their resistance to legally binding emissions targets by two major developed economies that have ratified Kyoto: Japan and Canada. Among the many reasons for this, Japan already have a comparatively energy efficient economy and fear how binding targets might affect their position in relation to other Asian economies. While Canada have an emissions intensive economy, a government now less progressive on climate change, and are far from achieving their emissions target under the Kyoto Protocol.

Bali did result in some positive and substantive agreement
There were positive developments on the elements of an effective post 2012 treaty. These elements will now be developed through the UN process to:

• include agreement on the need to transfer new low emissions energy supply-and-demand technologies to developing economies
• establish a process to include avoided deforestation as part of a future global climate treaty
• and reach agreement that new investments in adaptation to the effects of climate change would be established.

Business engagement and leadership remains vital
Many of the constraints to progress at a diplomatic level are to do with the relationship between the developing and the developed world. One side considers it unreasonable for the developed world to demand emissions reduction from countries seeking to grow and alleviate poverty. Alternatively, the other side views exponential energy and emissions growth in developing countries as unbalanced, when developed countries are being asked to constrain.

Many major businesses operate in this setting, and have influence in both the developed and developing world. Businesses not only stand to be effected by the direct impacts of climate change, but the lack of policy clarity means that investment decisions cannot be guided by clear, legally based rules and direction. A powerful means of overcoming this is ensuring they understand both the risks associated with inaction and the opportunities presented by greater policy clarity. Business needs to articulate the benefits of clear policy, and can be part of framing what those policies are.

Looking to the future
The focus will now shift to the Copenhagen UN meeting in December 2009. This two year process will spur countries and negotiators to agree on the parameters of the post 2012 global climate treaty. The meeting will also occur after a likely change in perspective from the world's largest economy. The new United States administration takes office in January 2009, and Clinton, Obama or McCain would all have significantly different perspectives on climate change than President Bush. A shift in position by the world’s largest emitter will be a powerful factor in increasing the likelihood of agreement from other nations.

In conclusion Bali was no giant leap, not the breakthrough many were hoping for, but a positive step forward that has laid the foundations for a new, more effective international climate treaty to be agreed in 2009 that can come into force in 2012. As little as two years ago many believed that international climate diplomacy might peter out in disarray. This is now very unlikely. Two years isn’t a long time to get agreement on a new global climate treaty, however considering the recent dramatic increase in domestic and international recognition of the severity of the issue, there is now a strong likelihood it can be achieved.