Environmental Engineering Reference
In-Depth Information
viewed in the context of the carbon markets,
characterised by liberal interdependence between
developed and developing countries, management
of the global environment by industrialised powers
through complementary benefits, economically
efficient advocated solutions to meeting the global
challenge of limited greenhouse gases agreed on
a multilateral platform. Found in the arguments
of both the public and private sector for acting
on climate change, environmental protection is
nonetheless predicated on the promotion and
maintenance of a liberal economic order.
After the link between carbon dioxide and
anthropogenic global warming was established,
and industrial emissions were identified as an
externality, the need for risk mitigation arose.
The process of carbon's commoditisation into
a tool for risk management can be traced from
ideology (neoliberalism, neo-Gramscianism,
Coasean economics), to inception (first emissions
market in the US), to regulation (Kyoto) to action
(establishment of carbon markets).
The new generation of businesses seeking to
incorporate carbon footprinting, emissions trading
and greener strategies across the value chain is
best understood in the concept of the shift toward
liberal environmentalism. By understanding how
this shift came about, through the discussion of
discourse and hegemony and norm formation,
one can grasp more concretely the congealing
ideology of climate change prompted action
in business models today. Carbon as a tool for
risk management in businesses is important to
understanding this shift as without having the
necessary instruments in place, business and
civil society would never agree to the burgeoning
costs of climate change mitigation imposed both
physically by the increased frequency of dangerous
weather and imposed legislatively by government
decisions to act. Through the instrumentalisation
of CO
2
into a tradable asset and utilising carbon
as a financial instrument, businesses are able to
manage project risk, market risk and reputational
practical considerations for businesses today show
how carbon is used as a tool for risk management,
underpinned by the long road to economic accep-
tance outlined by the theories described.
Current Perceptions
Broadly, low carbon growth—that is, in a less-
greenhouse gas emitting trajectory—has been ac-
cepted as the most sustainable means of economic
development. The risks associated with climate
change on a meteorological level and the physical
and financial impacts that are felt geographically
(i.e. impacts on agriculture) and societally (i.e.
forced displacement) are disputed and indeed
contentious, but here the Stern Review findings
are assumed. According to the Stern Review,
failure to act now by investing 1%-2% of global
GDP per annum in mitigation risks up to 20%
drop in global GDP per annum by the start of the
next century. Stern cites climate change as the
greatest market failure that has ever existed and
recommends early action as the key to preventing
future disaster (Stern, 2006). This view, widely
publicised in the last several years, has reached
if not acceptance, then acknowledgement by
economists and governments. Its is in tandem with
this report that the carbon markets such as the EU
ETS and the CDM took off as the economically
efficient means of addressing dangerous climate
change. But this view also became entrenched in
the shift toward liberal environmentalism that has
been taking place, and today catalyses the usage
of carbon as a tool for managing risks, slowly
embedding itself in corporates.
In the time leading up to the COP-15 in Co-
penhagen, from October to December, 154 new
climate related policies emerged, bringing the
global total to 500+ policies in 125 jurisdictions
(countries, states, provinces) (Fulton, 2010 DB).
The proliferation of this approach, the need to
manage the risks inherent in climate change has
become a global phenomenon. These policies
encompass the spectrum of green issues, includ-
