Indonesia has set a target of attracting $160 billion in foreign investment over the next few years, and through recent deals with China and India, it is coming closer to achieving this goal.   China and India have agreed to finance billions of dollars worth of Indonesian infrastructure projects- including railways, road, ports and bridges – in exchange for coal.  The nature of the agreements is similar to the controversial “minerals-for-infrastructure” deals China has entered across Africa to secure access to that continent’s resources.

Leading purchasers of Indonesian coal are China, India, South Korea, Japan and Taiwan.  Indonesian production levels are predicted to rise nearly 90% to 480 million tons by 2020.

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However, despite this overall reduction, China’s greenhouse gas emissions have grown sharply as the nation rapidly industrializes and continues to construct new coal-fired power plants.  China is now the world’s leading emitter, having overtaken the United States in 2008.  This past year, China ‘s fossil fuel combustion released 7.5 billion tons of CO2 into the atmosphere.

China is not the only developing nation whose emissions have grown sharply.  India also saw an increase of 7%, and it has now overtaken Russia as the world’s third largest emitter.  In aggregate, the developing world now accounts for half of all global emissions.

United States emissions, on the other hand, fell by 6.5% to 5.9 billion tons in 2009, the lowest level since 1995.  However, “although the share of emerging markets is growing, the industrialized countries remain the preponderant source of historical greenhouse gases,” reminds Nick Robins, head of HSBC’s Climate Change Center of Excellence.

The United States and China, as well as the world’s other top emitters, now find themselves under tremendous pressure to either extend the Kyoto Protocol or formulate a successor to the climate treaty, which is set to expire in 2012.  Nations are also attempting to come up with domestic emissions reductions plans of their own.  “In terms of future emissions targets, China is ahead of the U.S. because it has set itself commitments to reduce carbon intensity, while the U.S. is struggling to get climate legislation through Congress,” remarks Robins.

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By closing the “efficiency gap” between today’s wasteful production methods and other more streamlined options, we can reduce global resource strain, and potentially save billions of dollars.   For every dollar spent on efficiency methods, the report estimates savings of $2-$4 in what would have been wasted energy.

Important developments in this sector are occurring around the world, including massive smart grid investment in South Korea, construction of new high voltage transmission lines in China and development of smart grid software in high-tech hubs in the United States and India.

The following chart shows where we are now… and how far we still need to go.

ONGC’s Chairman R.S. Sharma is reportedly petitioning the federal government to establish a sovereign wealth investment fund to continue making these investments, as India is heavily reliant on imported oil.  In fact, the relationship between India and Saudi Arabia has developed so much recently that the Saudis have committed to doubling crude oil shipments to India.

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China and India have formally agreed to ratify the Copenhagen Accord, the global climate agreement which stemmed from last year’s U.N. climate change convention in Copenhagen.

Over 100 countries have already approved the Accord, which aims to limit the increase in global temperatures to no more than 2 degrees Celsius, or 3.6 degrees Fahrenheit, above pre-industrial levels.  The Accord also calls for spending on the scale of $100 billion a year to assist emerging countries in making adaptations to climate change.

China and India are two of the world’s fastest growing economies, and in recent years their rates of energy consumption and carbon dioxide emissions have skyrocketed.  By joining the Accord, China and India have added legitimacy to the treaty and have demonstrated to the rest of the world that they are serious about addressing these important climate issues.

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The IEA attributes the majority of this growth to demand from developing nations.  ”The demand growth is all coming from countries east of Suez,” said David Fyfe, head of the IEA’s oil industry and market’s division.  ”The emerging economies of China, India and the rest of Asia and the Middle East is where all the action is.”

Oil demand in developed nations, on the other hand, has hit a wall as consumers have moved away from oil as a power and heating fuel.  There may be some increased demand for transportation fuels and petrochemicals in industrialized nations, but overall demand will not compare to the 6.1% market growth predicted in booming emerging nations.

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This work results from an 18-month combined effort with CEOs and experts, and dialogues with over 200 companies and external stakeholders in some 20 countries.

The report presents new opportunities for business in a broad range of business segments with the foresight to lead their societies on a sustainable business development agenda. Entitled Vision 2050: The new agenda for business, the report “lays out the challenges, pathway and options that business can use to create an opportunity-rich strategy, both regionally and globally, that will lead to a sustainable world,” said Dr. Mohammad A. Zaidi, Executive Vice President and Chief Technology Officer of Alcoa, who led the project as one of four co-chairs.

“The world already has the knowledge, science, technologies, skills and financial resources needed to achieve Vision 2050. However, concerted global action in the next decade will be required to bring these capabilities and resources together, putting the world on the path to sustainability,” explained WBCSD President Bjorn Stigson.

The publication outlines a future in which 9 billion people live well, enjoying health, food, shelter, energy, mobility, education and other basics of life. Syngenta CEO, Michael Mack added that “humanity has largely had an exploitative relationship with our planet; we can, and should, aim to make this a symbiotic one.” In the Vision 2050scenario, global society attains this standard of living at a sustainable rate, without further harm to biodiversity, climate and ecosystem services.

The report states that the world already has the resources to achieve Vision 2050,but there is a catch: “The radical changes highlighted in Vision 2050 demand a different perspective from business leaders, requiring them to rethink how they operate to stay on-track for a sustainable future,” added Samuel A. DiPiazza Jr., former CEO and Chairman of PricewaterhouseCoopers. This includes a radical transformation of global markets, governance and infrastructure, and a re-thinking of our ideas of growth and progress.

Vision 2050 spells out the “must haves” – the things that must happen over the coming decade to make a sustainable planetary society possible. These include incorporating the costs of externalities, starting with carbon, ecosystem services and water, into the structure of the marketplace; doubling agricultural output without increasing the amount of land or water used; halting deforestation and increasing yields from planted forests: halving carbon emissions worldwide (based on 2005 levels) by 2050 through a shift to low-carbon energy systems and improved demand-side energy efficiency, and providing universal access to low-carbon mobility.

As part of this transformation, Vision 2050 calls for a new agenda for business: to work with government and society worldwide to transform markets and competition. “Sustainability will become a key driver for all our investment decisions,” added Idar Kreutzer, CEO of Storebrand and another project co-chair. New rules for markets will reframe environmental challenges as economic challenges, driving innovation and competition in the direction of sustainability and away from resource- and energy-intensive production. Rationalizing prices to include such externalities as climate and biodiversity impacts will make corporate environmental efficiency a true competitive advantage across all industries and regions.

Business will lead market change by doing what business does best: forming partnerships, creating efficiencies and competitive advantage, seizing opportunities and meeting customer needs. At the same time, a shift toward sustainability will trigger trillions of dollars in new investments in infrastructure, technology and human services, creating new opportunities for business to thrive and grow. A recent study commissioned for this project with PricewaterhouseCoopers and released today indicates that this investment could reach US$ 3-10 trillion per annum in 2050.

Vision 2050, with its best-case scenario for sustainability and pathways for reaching it, is a tool for thought leadership, a platform for beginning the dialogue that must take place to navigate the challenging years to come. “It is hoped that the Vision 2050 work will be used for many years to come. It is designed to be a platform for companies when deliberating strategies and for dialogue with governments and society about how to realize the sustainable future,” concluded Per Sandberg, Project Director for Vision 2050.

Download

• Vision 2050: The new agenda for business – full report ( 2.6 MB)
• Vision 2050: The new agenda for business – summary report ( 2.4 MB)

However, the “Copenhagen Green Climate Fund” planned in last month’s conference has not yet been implemented, making it likely that the donor countries will each determine how their aid packages are distributed and to whom.  Delegates from China, India, Brazil and South Africa have welcomed the pledge, calling the $10 billion expected to be released in 2010 an important symbol of rich countries’ willingness to help.

The Copenhagen Accord set forth a January 31^st deadline for nations to submit quantitative details on their voluntary emissions reductions targets and achievement strategies.  The United States has formally submitted its approval, and informed the United Nations of its intent to reduce carbon dioxide and other greenhouse gas emissions 17% from 2005 levels by 2020.  Todd Stern, the chief U.S. climate change negotiator, said final emissions targets will be submitted following Congress’ passage of energy legislation requiring carbon cuts.

India will begin construction on the nation’s largest desalination plant in the city in Nemmili next month.  The project is slated for completion in two years, at which point it will be capable of producing 100 million liters per day (MLD) of fresh water from sea water via reverse osmosis.  The desalination plant will help meet municipal water needs, which have previously been met via monsoon rains.  Changing climate and weather patterns, however, are making India’s monsoon season more unpredictable.  Read more here…

In South Africa, upgrades are being made to an existing desalination plant on the Eastern Cape.  Upon completion, the new plant will have a ready to serve a municipal population of nearly 50,000 people in the Ndjambe Municipality.   Read more here…

The Copenhagen Accord is a non-binding agreement between developed and developing nations which aims to cap overall temperature rise to within 2° Celcius.  Over the next three years, $30 billion in financing from developed nations will help support emissions reductions projects in some of the world’s poorest countries.  Developed nations are working towards a long term, $100 billion a year financing plan by 2020.  Read more about the Copenhagen Accord…

The Copenhagen Accord is not a legally binding agreement, and many delegates are frustrated with the underwhelming results of the talks.  World leaders like Barack Obama, on the other hand, called the accord “an important breakthrough,” but stressed that much more action is needed to truly address the global threat of climate change.  Read more about world responses to the conference…