The public were only starting to become aware of global warming during the 1980s, and even then businesses didn’t take much notice of it. Firms did not want to say that humans were changing the climate in case they had to pay money to clean it up. Large polluting firms even set up the Global Climate Coalition in 1989 to try to convince people that “going green” was a ridiculous idea, and that there shouldn’t be cuts in greenhouse gas emissions. It seems, however, that in the last decade businesses have taken an almost complete U-turn in their approach to tackling the subject of climate change. The GCC has collapsed with companies withdrawing funding. Corporations now seem to realise the importance in tackling climate change. These climate issues are now becoming important even for the g8 now, with Germany (who hosted this year's summit) trying to get everyone to agree what to do once the Kyoto protocol finishes is 2012.

But why the sudden change in ethics? There seem to be a few reasons for this shift in attitude towards climate change by firms. There is much more scientific evidence today than ever before, and more and more experts seem to be converging on the idea of climate change being caused by humans. On top of this, climate change is very much in the limelight thanks to events such as Hurricane Katrina, the heat wave in Europe and endorsement by many celebrities, including Al Gore. Being “green” now seems to be the good thing to be, and firms are jumping on this bandwagon. They want to be seen to be doing the right thing. Not only does this help attract customers, but it also attracts clever young workers to their firms. There is also economic pressure on firms. Governments are becoming more supportive of the idea of putting a price on the damage caused by carbon, and making polluters pay for their own mess. Governments are also keen on being less dependent on oil and gas from Russia and Middle East. They want efficient sources of energy, which mostly tend to be solar and wind. Firms will also need to change as new federal controls may be introduced in America to cut carbon-dioxide emissions.

Companies may not be moved just by fear of regulation however. New technologies being developed for cleaner energy, mean new money to be made. Investment is rising globally in renewable power, low-carbon technologies and bio-fuels from $28 billion in 2004 to $71 billion in 2006. Stock prices of clean energy companies are rising greatly. It seems that more and more people now want in on this new craze. As more money goes into the industry, costs will fall. The price of wind power for example has dropped from $2 for every kilowatt-hour in the 1970s to around 5-8 cents today. Coal is about 2-4 cents, so the gap is shrinking and so are the costs of switching from dirty to clean energy. This movement could be easily crushed - a fall in oil prices could persuade many to give up pursuing the costly investment in clean technology. Governments also need to keep up their pressure on firms. A good way to do this seems to be introducing Carbon Credits.

Carbon Trading

It is thought that a price between $20 and $50 per tonne of carbon dioxide should stabilise the concentration in the atmosphere to about 550 parts per million by 2020-30. This is thought to be a stable sustainable level to have in the atmosphere. People are afraid that the price of energy will go up and slow down economic growth. Petrol prices would rise 15% and electricity 35%, and it is thought global economic growth will be reduced by 0.1% annually. This is hardly a great change compared to the already fluctuating energy market.

A price for carbon has to be set first, and taxing polluters can do this. A tax would be easy to build into a company’s investment plans and would not fluctuate so violently. However many people do not like the idea of being taxed. Therefore the EU has adopted the idea of a “cap-and-trade” system. The Kyoto Protocol has been instrumental in getting many countries to work together over this. The European Emissions-Trading Scheme first established a price for carbon. Then it encouraged efficient emissions reductions by allowing companies to buy credits cheaper than it would cost them to cut their emissions. Carbon credits come from allowances given to industries such as electricity, oils metals etc. but also from certified emissions reductions in developing countries, which can be sold. Trading in carbon has continued to grow with $30.4 billion worth of allowances traded in 2006. The important factor in this system is the carbon price - it has to be high enough to make a difference to businesses. Europe’s price level is starting to make a difference but it is countries such as the US, China and India that will be the deciding factor on whether climate change will be “cured”.