Can governments slow climate change?
Nandan Nilekani is cofounder and CEO of Infosys, the Indian business process outsourcing company. He is a former FORTUNE Asia Businessman of the Year and on the advisory board of the Fortune Global Forum that will be held in New Delhi, October 29-31. He is writing a daily blog at Davos, which is being cross-posted here. Nilekani's first entry:
This year it is clearly about climate change and sustainability. But as is common with such complex topics there is as much confusion as clarity. At Davos there is a consensus that developmental models impacting the environment need to be rethought in the context of global development, especially in the case of India and China. Today, 70% of the world's carbon emissions originate from the US and Europe. The carbon emission per capita in the US is 24 tons per annum, whereas it is 4 tons in China and 2 tons in India. Everyone agrees that if India and China achieve the same standard of living as the US, we will need more than one planet for all of us to live together.
Given the fact that 70% of the world's carbon emissions are from the US and Europe and people of India and China want a better standard of living, we cannot then deny them development. So, it is very clear that we have to fashion a new kind of development model, which is less injurious on the environment. While there is agreement on this, the question is who does what and who pays for what? It is also clear that there is a role for government and there is a role for business. For government, there are basically five responsibilities.
The first is to create regulations to encourage the right kind of behavior. For example, having fuel emission standards for automobiles or mandating that x - percent of petrol should be bio fuel and so forth.
The second way that governments can make a difference is by creating global grading systems for different kinds of emissions so that less efficient organizations pay more. This essentially puts a price on environmental degradation.
The third way governments can achieve this is by having taxes on those forms of activities that they believe are harmful to the environment.
The fourth role of government is to give subsidies to those forms of behavior which they think is good for the environment.
Finally, governments have to support the technological development so that new innovative ways are coming up to develop carbon efficiency technologies.
Companies in turn have to work to become more innovative, more efficient, more environmentally friendly, and have to reduce their consumption of energy, water, or plastic, you know they have to make more things biodegradable and so forth, that is up to companies to do.
So there is a role for company, there is a role for government, and often in the conversation the lines are blurred as who does what.
The other issue is who pays for all this? Developing nations believe that they should not retard their growth because of a problem created by someone else. They want adequate compensation for the cost of inventing and implementing sustainable growth.
So the key issue at Davos is, "will we be able to out of all this create a framework as to not only what needs to be done but who does which part of it and most importantly who pays for it?"
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