WRI OFFERS 6 ISSUES TO WATCH
22 December 2003

This morning, Jonathan Lash, President of the World Resources Institute, presented a list of 6 major environmental issues to watch in 2004. As current trends in economics, industry and international politics show environmental degradation ongoing, with no clear established governing authority to scale back pollution, pressures on the environment are likely to bring these issues to the fore in the coming year.

Lash warned that the US withdrawal from the Kyoto Protocol has already had significant negative impact on the worldwide effort to regulate waste products that contribute to the greenhouse effect, global warming and ecological degradation. The six issues outlined by the WRI president relate specifically to ways in which the human political arena interacts with the factual environmental realm.

The six issues were listed as follows:

1. Kyoto Protocol:

Lash noted that the Kyoto Protocol is the only agreed-upon global mechanism to "moderate the rapid rise in greenhouse gases" and that a failure to implement would be an unwise step backward for the world community. As written, if 55 countries, including 55% of industrial output, ratify, the protocol takes effect. If either Russia or the US ratify, the Protocol takes effect, but at present both the US and Russia are opposed to signing. Other signatories have indicated a willingness to change the Protocol and implement without the full 55 ratifications.

Mr. Lash reminded the press that the "5 warmest years in recorded weather history have taken place in last 6 years; the 10 warmest years in recorded weather history have taken place since 1987". These warming trends are disrupting "ecological patterns that have held for thousands of years", causing an intensification of droughts and storms.

2. Renewables:

WRI reports that use of renewable resources is growing at 6%, making it the fastest growing energy resource. Wind power has been growing at 26% per year from 1997 through 2002. Among the statistics Lash presented: Germany's wind-generating capacity is now at 20% of domestic consumption, Denmark's at 15%, and the UK last week announced the largest wind project in history, off the Scottish coast.

Major corporations have committed to buying green power (112 megawatts... comparable to taking 100,000 cars of the road). Lash said the "condescending smile" of fossil-fuel executives is based on erroneous assumptions about cost and market viability. In sum, renewables: "it's the place to make money in the future".

3. Hydrogen

The WRI president stressed the fact that hydrogen is not a renewable energy source, but rather an "energy carrier". One of the economic benefits of using hydrogen to store and deliver energy is its abundance: it is the single most abundant element in the universe. It can easily be extracted from water, and its use to generate power yields only water or water vapor, zero pollutants. The economics of hydrogen, especially in fuel cells, may soon be apparent, and many auto-manufacturers are already betting on its role in the new energy economy. But Lash warns of a production pitfall overlooked by many: energy is required to extract hydrogen from water, raising the question of how that energy will be generated. Environmentalists want a commitment from government to use renewable resources to generate hydrogen, but current policy includes future subsidies for using fossil fuels to produce hydrogen. This would be counter-productive, because even clean-burning natural gas emits contaminants which renewables do not.

4. Pollution Trading

Pro-market policy-makers, especially those interested in limiting or eliminating regulatory structures, have been anxious to institute the trading of pollution credits as a means of easing the transition to clean energy for industry and industrial economies.

According to WRI, the EPA appears be using trading to deal with nutrient excess, and the Chesapeake region looks set to take the lead. It's a nice story about cooperative problem-solving and some environmental benefits, but markets can't always solve problem. Lash cited the need for regulation: the only way pollution credits make sense is if they are counterbalanced by regulatory costs and pressures; without those pressures, there is no market value for the credit-trades.

He also noted that some contaminants do not lend themselves to this kind of solution. A proposed trading system for mercury (which is intensely toxic); if trading is not widespread, mercury hotspots will emerge, endangering health in those hotspots, because there, pollution would not decrease, and might increase dramatically. So mercury requires strict environmental protections regulation.

WRI joined the Chicago Climate Exchange (CCX) earlier this year in order to manage and enhance the integrity of the first pollution credit trading exchange.

5. Global Ecosystems

Among key issues regarding global ecosystems themselves is the underestimation of their real economic value. Traditional economics measures the value of goods and services as traded in a given marketplace. Natural systems, which provide not only needed cyclical and stabilization services, but of course also yield products which are vital to human civilization. Traditional economics measures the value of these goods and services only as specifically related to planned exploitation of the earth's resources, and not in terms of the long-term costs of degradation of these powerful natural systems.

According to Mr. Lash, about half of worldwide jobs depend on ecosystems, and of course everything depends on them directly or indirectly. Civilization requires ecosystems whose "carrying capacity" can afford to yield on a continuing basis the goods and services required to support human life and lifestyles. There is so far no comprehensive study of the global ecosystem capacity to support human life into the future. Some signs are: most fisheries over-exploited, collapsing or in "rapid decline", forest depletion, is rampant, causing floods, landslides and soil erosion, and dry conditions (from poor inland precipitation escalation) have increasingly led to raging firestorms in normally humid regions like Western Europe.

The UN directed Millennium Assessment of Global Ecosystems, to be published in 2004, will be the first worldwide ecosystem study.

6. Soft Law:

'Soft law' refers to the voluntary organization of and commitment to improvement standards. For instance, the Equator Principles: is a collaborative organizing framework through which banks can steer investment toward environmentally producitve, responsible or visionary policies. As of 3 December, 19 banks had joined in adopting the Equator Principles. The project is based on the knowledge that environmental degradation contributes to unforeseen costs, such as decreased productivity, political instability and financial volatility.

In agreements such as the Equator Principles, non-governmental business interests are taking the lead, stepping out ahead of cautious politicians, in order to help make the responsible decisions required to safely usher in the new era in global economic development, in which sustainability will play a central role. There are 65,000 multinational corporations in the world, whose decisions have enormous impact on our environment, as they do on a wide variety of social and political issues. With the expansion of 'free trade' policies, which often imply unregulated laissez-faire business methods, soft law is coming to the forefront as a means of demonstrating the long-term benefits to enterprise and industry of adopting ecologically sustainable programs and policies.

The WRI president, in response to questions about regulation and voluntary ecological engagement, that transparency tends to generate environmental benefits.

• For more information about the global environment, visit the World Resource Institute's Earth Trends publication, online