Frost & Sullivan comments on COP17, the 17th Conference of the Parties to the United Nations Framework Convention on Climate Change that is taking place in Durban, South Africa. Research Manager for Renewable Energy Alina Bakhareva in London and Industry Analyst Johan Muller in Cape Town.

With little more than a year left to the end of Kyoto Protocol, the need for a new international agreement on climate change policy has never been more pressing. COP17 in Durban, South Africa, officially known as the 17th Conference of the Parties to the United Nations Framework Convention on Climate Change, opened yesterday. The question now is: "Will COP17 bring a much-awaited decision that its predecessors in Copenhagen and Cancun failed to deliver?"

The sad answer is most probably that it will not. During last two years we saw the negotiating parties' positions being increasingly shaped by national economic and political interests. With global slowdown affecting the economic recovery and sovereign debt crisis in Europe among other reasons, the hope of national agendas becoming less of a driver in shaping future climate friendly positions (instead of climate change initiatives) is doubtful. This notion should be considered against the fact that climate policy is shaping the future of several industries, key to every nation's economy, such as energy and power, automotive, aircraft manufacturing, construction and agriculture. Will this mean the end of the battle against climate change? The good news is that a failure of international talks in reaching necessary objectives will not mean an inglorious end of the climate change battle. What it signifies is the end of Kyoto paradigm.

A new paradigm is evolving, which is based on ‘home-grown' rather than imposed policies and actions, due to various factors such as local social/environmental conscience, and commercial viability, among others. Indeed, being more climate friendly can independently be linked to positive economic returns, such as is the case with energy efficient aviation objectives. The battle with climate change is bringing along many opportunities and countries will ideally not want to miss out on exploring these opportunities. A few countries illustrate this point perfectly, albeit countries which are not even signatories to the Kyoto Protocol. The United States have not ratified the accord, and China (the largest contributor to greenhouse gases), is not willing to make any commitments until the United States get on board. Other major countries such as Japan, Russia and Canada indicated that they will not be held accountable to a second commitment period unless the biggest emitters are also bound. There is evidence that the Kyoto protocol is not solely responsible for the move to more climate friendly practices, as is evident by the examples below.

Firstly, there is the USA, which was convinced that ratifying Kyoto would affect its economic growth. Despite a lack of federal government commitment, a great number of state programmes and support mechanisms have sprung into existence to support the green energy and energy efficiency. A few programmes at federal level exist as well; altogether making the US the second largest country in renewable energy investment in 2010.
Secondly, there is China, which is not obliged to lower its emissions as it was considered a developing nation at the time of drafting the Kyoto protocol. China's 12th 5-year plan approved in March, 2011 denoted clean energy, energy conservation and clean energy cars as three out of seven strategic investment areas. The plan's emphasis on clean energy sources is an important step to ensure sustainable growth. Another positive sign of China's commitment to renewable energy is introduction of feed-in tariffs for solar energy in August 2011.

From the first steps in crutches of heavy government support in Japan and Germany in late 1990s, the clean energy sector is confidently evolving as a win-win solution for many countries as it reduces CO2 emissions through creating new jobs, bringing in investment, and developing cutting edge technologies.

While the USA, India, China, Korea and 94 other developed and developing countries have set their targets for the renewable energy use, international help and coordination are desperately needed in the deployment of energy-efficient technologies in poor and developing countries. Large initial investment which is necessary for most clean energy technologies constrains the uptake and growth in those countries that cannot support the green sector through their respective national budgets. We believe that the Green Climate Fund that was agreed on in Cancun, Mexico during COP16, should become a cornerstone for a new round of international negotiations in Durban, essentially aiding and guiding the upliftment of developing countries. Caution should be taken not to impose policies (such as carbon taxes and carbon caps) that are too strict on developing countries' industries, stifling the movement to lift these countries out of poverty. A balance between the actions of developed and developing nations should be found, ensuring optimal growth to a low carbon future.

Although the COP meetings cannot be ignored as a driver of (at the minimum) raising the awareness of countries and industries towards a more climate change friendly future, the question begs to be asked: How much of a stick has the COP agreements really been? International cooperation on climate change is likely to evolve based on a new paradigm. A multitude of national policies drawn on every country's strategic priorities and aspirations will ultimately potentially deliver the needed CO2 reductions more effectively than a target imposed by an international body. A failure of international talks in Cancun in 2010 and a great number of national policies and efforts in the clean energy space are clear indicators of coming changes.

To interview Frost & Sullivan's analysts on this subject, please contact Chiara Carella, Corporate Communications, at chiara.carella@frost.com

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