VZCZCXYZ0007
RR RUEHWEB
DE RUEHLO #0875/01 0861617
ZNR UUUUU ZZH
R 261617Z MAR 08
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC 8020
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHBJ/AMEMBASSY BEIJING 1022
UNCLAS LONDON 000875
SIPDIS
SENSITIVE, SIPDIS
E.O. 12958: N/A
TAGS: SENV KGHG UK
SUBJECT: UK/Climate Change: Businesses Concerned Over
Competitiveness, Regulatory Risks
1. (SBU) Summary: At a March 19 DCM-hosted lunch for
businessmen on climate change, guests expressed concern
about climate change regimes raising regulatory risk and
eroding UK and European international competitiveness.
Guests want an international climate agreement to bring
in China and India, and to establish a "level playing
field" for industry. China has approached the UK-based
firm "Carbon Trust" for collaboration on consumer labels
showing a carbon footprint. U.S. and UK boardrooms are
much more knowledgeable on climate than they were 18
months ago but most corporations have a gap on climate
and environmental strategy between executive levels and
department heads further down the food chain. One guest
predicted that consumers and financial firms will
increasingly set the environmental agenda, eroding the
policy position of NGOs. End summary.
Carbon Trust CEO Was Guest of Honor
-----------------------------------
2. (U) The DCM hosted a lunch, jointly organized by the
Commercial Section and the Business Council for
International Understanding, on March 19 for businessmen
to discuss issues related to climate change. Guests
attended from Dow Chemical, AES Electric, Rolls-Royce
Fuel Cell Systems, ConocoPhillips, CH2MHill, Marathon
Oil, Morgan Stanley, and Cairneagle (a financial
consultancy). The Guest of Honor was Mr. Tom Delay (no
relation to the former Congressman), CEO of the Carbon
Trust, a government-supported company that works with
businesses to assess and reduce carbon footprints. (For
more on the Carbon Trust, see www.carbontrust.co.uk )
No "Chief Environmental Officer"
--------------------------------
3. (SBU) Mr. Delay opened the meeting by saying that
boardrooms in the United States and Europe now have a
much clearer picture of the risks and opportunities of
climate change than they did even 18 months ago. He said
that many businesses seem unsure how to handle
environment and climate at the executive level; there is
a gap between executives making strategic decisions and
environmental department heads further down the food
chain. Most firms do not have a "Chief Environmental
Officer," he said, but he went on to cite BP as a firm
that is "years" ahead of other firms in taking on climate
and environmental issues as part of its basic business
operations. In individual conversations after lunch,
guests expressed a desire to see more of a leading role
played by government in showing the way forward on
climate change mitigation. (Note: Even among this group
of knowledgeable executives, there was clearly
uncertainty about climate policy and technology.)
Firms Seek "Level Playing Field"
--------------------------------
4. (SBU) Competitiveness and a "level playing field"
were the predominant climate policy concerns of the
guests. Delay said that China, India and other
developing countries need to be part of a global
agreement on carbon. He noted that China has approached
the Carbon Trust about establishing a Carbon Trust in
China, and that one of the projects of interest to China
was labeling consumer products with their carbon
footprint. Carbon Trust has also had discussions with
the State of California about establishing a California
Carbon Trust.
Tough To Reconcile Growth with Cap-and-Trade
--------------------------------------------
5. (SBU) Mr. Delay from Carbon Trust said a regulatory
framework setting a "price for carbon" through a cap-and-
trade system is essential for sending the right price
signals to the private sector to encourage investment in
low-carbon technologies. He admitted that reconciling a
cap-and-trade system with the need for continued economic
growth in developing countries was a tricky problem. He
added that in his opinion, financial institutions and
consumers will exercise more and more direction on
environmental policy relative to the NGOs who currently
set the agenda.
Comment
-------
6. (SBU) Business's point of view is clear: they want
regulatory certainty and a method for keeping their
industrial capacity in developed countries competitive
with developing countries. There does not seem to be a
clear preference from industry for cap-and-trade.
LEBARON