Global Divide Over Global Warming - Analyst Blog

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Nearly 200 countries have converged on South Africa for the climate conference, which is currently underway in the city of Durban. Climate change conferences primarily focus on reaching a consensus to reduce global warming and greenhouse gas emissions.

The Kyoto Protocol (1997) had identified developed countries as primarily responsible for high levels of greenhouse gas emissions following decades of unbridled industrialization. The protocol requires countries to lower emissions according to pre-agreed targets, but does not impose penalties.

Although the Durban conference comes at an important juncture because the commitment under the Kyoto Protocol runs out in 2012, the possibility of a consensus emerging among participating countries remains unlikely. The division appears to have particularly sharpened between the industrialized bloc and the Asian giants like China and India in terms of who should bear the larger responsibility. 

Meanwhile, the Durban conference has revealed an important statistic. According to a team of German scientists the current carbon commitments will increase global warming by up to 3.5 degrees Celsius as opposed to the United Nation's target of 2 degrees to which governments had agreed on last year.

Although the environmental Kuznets Curve (inverted U-shape) submits that ecological degradation falls as prosperity rises, this does not hold true for the use of energy and natural resources, such as land and water. As a matter of fact, economic growth makes increasing demands on environmental resources. Therefore, as global consumption increases so does global warming.

A global 'Climate Change Initiative' would be incomplete without public-private participation. Innovations on sustainable management of resources would, therefore, have to come from fossil fuels producers such as ConocoPhillips ( COP ), Exxon Mobil Corporation ( XOM ) and BP Plc ( BP ) among others, and their intermediate-user industries like the automotive companies - Ford ( F ), General Motors ( GM ), Toyota Motors ( TM ), etc.

In Conclusion

The approach to climate change needs to undergo a radical transformation. Financial mechanisms like carbon trading cannot be lasting solutions because they do not address the issue of rising global temperature. To put it in simpler terms, penalizing and dissuading excessive energy consumption may not amount to much on their own.

Sustainable consumption of resources needs to be encouraged and incentivized even as indiscriminate exploitation of resources needs to be penalized through user charges and taxes. Climate change cannot be treated as an item on the balance sheet. In the absence of a tangible roadmap, the impact of climate change would be far-reaching and irreversible for humanity.


 
BP PLC ( BP ): Free Stock Analysis Report
 
CONOCOPHILLIPS ( COP ): Free Stock Analysis Report
 
FORD MOTOR CO ( F ): Free Stock Analysis Report
 
GENERAL MOTORS ( GM ): Free Stock Analysis Report
 
TOYOTA MOTOR CP ( TM ): Free Stock Analysis Report
 
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BP , COP , F , GM , TM

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