The product of two tense weeks of negotiations was the Copenhagen Accord, a non-binding political agreement which sets a 2 degrees Celsius target (i.e., that the increase in global temperature should be limited to 2 degrees Celsius).
The Copenhagen Accord does not contain any specific emissions reduction targets nor any framework for a carbon market. While the Accord includes provisions for short- and long-term financing, there is no indication of where the money for a promised US$30-billion fund will come from or where it will be directed.
Furthermore, the Copenhagen Accord omits any mention of plans to continue climate talks in 2010. Many parties were disappointed with the weak outcome of the Copenhagen Conference, but the Copenhagen Accord could represent an important first step towards more meaningful international action on climate change if countries are willing to implement it.
Some of the implications of the Copenhagen Conference for Canadian businesses are:
- continued uncertainty surrounding the timing and scope of federal climate change regulations
- a continuing patchwork of regulatory initiatives at the provincial and regional levels, resulting in the need for companies to comply with competing regulatory requirements
- a potential shift towards a new mode of climate negotiations among the world's major developed and developing countries
- no global carbon market in the foreseeable future given the lack of emission reduction targets, but domestic and regional carbon markets will continue to develop
- potential costs to Canadian manufacturers and exporters as a consequence of proposed 'border adjustment' provisions in U.S. climate legislation
- enhanced opportunities for Canadian companies to attract investment dollars and export clean technologies around the world.
From a business perspective, it was evident in Copenhagen that despite the political inertia, the business community is engaged on the climate change issue and continues to push forward with clean technology solutions in the spirit that innovation is good for the bottom line.
There is no doubt that governments will need to play a key role in providing incentives to drive innovation and facilitate market access for companies at competitive prices. From a Canadian perspective, there continues to be significant international interest in Canadian companies and investment opportunities. As a result, there is great potential for Canadian companies to attract investment dollars and export their expertise and clean technology solutions to markets around the world.
Further delays in implementing federal climate change legislation may make it increasingly difficult - and more costly - for Canada to meet its 20% below 2006 levels by 2020 target. Without knowing the types of emission limits they face, many companies are adopting a wait and- see attitude, which means that emission cuts may ultimately be deeper and more expensive to make within a shrinking timeframe. In addition, companies will need to manage the competing regulatory requirements of provincial and federal systems.