Executive Secretary Yvo de Boer:
As Executive Secretary of the UN Framework Convention on Climate Change, de Boer opened the talks by trying to set realistic expectations. “If you think we’ll come away with a long term political and economic response to climate change you’ll be disappointed.” Indeed, Bali is just the beginning of the negotiations, which are expected to continue for the next two years.

But he challenged ministers that their populations were watching them to see what their response would be “to the very clear message given to you by the scientific community.”

In his opening statements, de Boer set a triple benchmark to judge Bali's success:

• To formally launch negotiations on a long term climate change regime.
• To agree on what the agenda of those negotiations will be.
• To set an end date to “define when the negotiations need to be completed.”
  

He said the Kyoto treaty was an important architecture to build on, which has had positive results including giving governments the responsibility for measuring emissions, providing opportunities for countries to prepare and adapt to the impacts of climate change, and starting an international carbon market.

The carbon market, which nearly tripled last year, was worth $30 billion dollars, according to the World Bank, 80% of it in Europe. The US Senate is currently debating proposals for to establish a cap and trade system which would greatly expand the carbon market in the US.  The Congressional Budget Office estimates carbon trading has the potential to be a $300 billion market in the US alone.

De Boer disappointed activists by predicting that fossil fuels would continue to be used in the future, saying that in nearly every scenario he’s seen, there will “continue to be a reliance on coal,  on oil, and on gas.” As economies continue to grow, “It’s almost inconceivable to expect countries not to exploit that resource. And that means that a key part of the challenge is going to be to develop the technology that allows you to use fossil fuels in a cleaner way.”

The Agenda:

Adapting to the effects of Climate Change: With the UN’s latest report saying that we are witnessing the effects of climate change already, and that they will continue even if we do sharply reduce emissions, do Boer said we need to focus efforts on adaptation, and get an Adaptation Fund operational to “really get resources flowing to countries to help them adapt to the impacts of climate change.”

Technology Transfer: Given that many strategies and technologies have been developed for reducing emissions, there needs to be an emphasis on spreading those technologies to developing countries. De Boer noted that “commitments in the past have not been fully met on the issue of Technology Transfer, and more resources need to be mobilized.”

Deforestation: With deforestation responsible for 20% of global emissions, the Council will likely focus on methods of reducing the demand for wood products from developed countries, as well as helping developing countries reduce the economic strains which lead them to cut forests for fuel, and agriculture.

Financing: Finally of course, is the issue of how these strategies will be financed, and the balance to be struck between developed and developing countries. UN Development reports and the Stern Review released last year point out that the sooner we address climate change, the less costly it will be. While some governments and industries are resistant to regulations they fear will hurt economic growth, many believe the “Green Economy” has enormous potential.

Rajendra Pachauri is the lead scientist for the UN’s Intergovernmental Panel on Climate Change, which shares this year’s Nobel Peace Prize with Al Gore. “It is wrong to indulge in the fallacy that the cost of tackling climate change will disrupt economic progress and will cost jobs,” he says.

According to the UN, by investing just 1.6 percent of global economic output we could potentially avoid the worst effects of climate change. But that still amounts to trillions of dollars, and where that money will come from is the subject of intense debate.

The Stakes:
As counterintuitive as it seems, a global temperature change of just a few degrees could make all the difference. The latest UN IPCC report indicates that if the global temperature rises 2 degrees above pre-industrial levels, 30% of plant and animal species could face extinction. If the temperature rises 3.5 degrees, half of all species could be wiped out.

The impacts on human society will also be severe, displacing millions of people, and sending hundreds of millions into poverty. Between 2000  and 2004 climate disasters affected 262 million people, 98 percent of them in the developing world, according the most recent UN Human Development report. Kevin Watkins, lead author of the report, and a senior research fellow at Oxford, says, “The message for Bali is the world cannot afford to wait. It has less than a decade to change course.”

The United Nations, the European Union and many developing countries want a target requiring developed countries to cut emissions by 25% - 40% below 1990 levels by 2020, and 80% by 2050.  China and the US oppose mandatory reductions, but groups within both countries are working to reduce emissions levels; and it is widely acknowledged that the next US president, Democrat or Republican will likely address the issue.

How much individual governments are willing to commit to reducing climate change is a big subject of discussion in Bali.

Addressing the conference, Secretary General of the UN, Mr Ban Ki Moon said that while technologies exist to help countries cope with climate change “what is missing now is political will,” and that it was time for world leaders need to think beyond their own narrow national interests.

The Players:

The United States
With the recent change of government in Australia, the US remains the only developed nation which has not signed the Kyoto Protocol. While the Bush administration has sought voluntary limits on emissions, and allowing countries to establish individual solutions, the President is being increasingly marginalized as the Congress, state, and city officials move forward. "We believe that there is a significant transformational effort now taking place in the US. The US is going to lead,” said John Kerry upon his arrival in Bali.

Mayor Bloomberg of New York City, who has developed “plaNYC” to address climate change, and committed $80 million dollars toward the effort, is also in attendance. A video presentation was made by California Governor Arnold Schwarzenegger, who has been an outspoken proponent of stricter emissions regulations, and trading carbon credits; while “America’s Climate Security Act” just passed the Environment and Public Works committee in the US Senate, pledging to reduce emissions levels 70% by 2050.

“Clearly, the U.S. position is much more advanced than the White House position,'' says economist Jeffrey Sachs , director of the Earth Institute at Columbia University in New York and a special adviser to the UN. California’s environmental protection secretary, Linda Adams has led a delegation to Bali to consult on the state’s efforts, saying, “We are laying the groundwork for what we feel will soon be a national policy."

The Climate Registry , a nonprofit based in California, has been signed by all but 11 states, who have agreed to establish a sytem for measuring and verifying their emissions. "This is really democracy at its best," said spokeswoman Nancy Whalen. "In other countries, the top tells you what to do and you follow. Here, it's the states leading the way for the federal government."

China
China is set this year to surpass the United States in carbon emissions, but as a developing nation, they are not subject to the Kyoto protocol. The Bush administration has argued that if China and others continue to pollute, then efforts at reducing emissions in developing countries will be negated, while putting us at a disadvantage economically. The Chinese respond that developed nations have been pouring greenhouse gases into the atmosphere for over a hundred years, and it’s unfair for wealthy nations to expect developing countries to compromise their growth in an effort to reduce emissions.

"The ideological construct of you-go-first, no-you-go-first has not gone away entirely," said Christopher Flavin, president of the Worldwatch Institute, in Wired.

But the Chinese are also witnessing some of the world’s worst smog in Beijing, and a host of environmental concerns across the country, while rising health care costs associated with pollution threaten to limit the very growth that has fueled them. So the Chinese delegation has indicated that they are willing to make commitments to conserve energy and reduce emissions.

Flavin says that just as Silicon Valley entrepreneurs and green venture capitalists helped boost climate initiatives in California, similar interests are influencing politics in China.

"There is a lot of buzz around China around renewable energy. The solar industry has already created a number of billionaires whose companies have gone public along the Silicon Valley model," he said. "Over time these new energy industries will start to become politically influential in China."

Whether these pressures and incentives will translate into Chinese commitments in Bali remains to be seen. But the opening statement by the Chinese called for developing countries to “undertake commitments” to develop policies and measures addressing climate change. It was the first time China had ever used the word “commitments” in any climate-change negotiation, analysts said .

Secretary General Ban Ki Moon made comments this week clearly aimed at China and India, saying, “I support the principle of common but differentiated responsibilities when it comes to climate change. “Yet this principle does not mean that developing countries should do nothing.”

“The credibility of the negotiations that begin in Bali hinges on the participation of major emitters in the developing world,” he added.

Russia
Of the world’s top five polluters, Russia, which ratified the Kyoto Protocol in 2004, is the only country which has met its Kyoto targets. But that is because China and India were exempt, the US declined, and the Russian economy collapsed in the nineties. They are still below their 1990 emission levels, but they have been growing steadily under Putin. And while the Russian economy has lots of room to improve its energy efficiency, they may also increasingly switch to coal as natural gas prices rise.

Independent research organization Climate Strategies reports, “As the Russian leadership is seeking to regain status as a world power, Russia may want to play a more serious, and independent, role in the climate negotiations.”

But they may also use lack of commitment by the US to avoid taking action: “Should the US not join the negotiations, the Russians may use this as an excuse to remain outside as well.” As recently as May, the Russian delegation to the UNFCCC made a presentation promoting voluntary measures to achieve “common but differentiated responsibilities, fair burden sharing, and realistic & achievable commitments.”

India
Rajendra Pachauri is the lead scientist for the UN’s Intergovernmental Panel on Climate Change, and shares this year’s Nobel Peace Prize with Al Gore. He is also part of a group of environmentalists, scientists and policymakers convened by Indian prime minister Manmohan Singh. In an interview Pachauri did with the Financial Times, the paper sums up India's situation like this:

"Per capita energy consumption and emissions in India are small compared to developed countries, but it has recently overtaken Japan to become the world’s fourth-largest emitter of carbon dioxide. And with 1.1 billion people, annual GDP growth of more than 9 per cent and projected doubling of energy consumption between 2005 and 2030, the country needs to act now."

Pachauri says matter-of-factly, “It’s yet to be seen what the government of India will do.”

India has argued against taking on any commitments, pointing out that its per capita emissions are much lower than in rich countries, which also bear more responsibility for the emissions already in the atmosphere.

Secretary General Ban Ki Moon said he agreed that industrialised countries had to take the lead in combating global warming because of the “burden of their historic responsibility,” but that “now is not the time to look back at what has happened in the past”.

“We must look at the historic responsibility from the perspective of our great grand-children,” said Mr Ban. “They will not question whether you were a developed or developing country. They will look at whether you showed leadership.”

Japan
Ten years ago this week, the nations of the world met in Kyoto, Japan, to sign the world’s first global treaty to address global warming.  To mark the anniversary, the U.N. celebrated with a giant birthday cake.

Japanese Environment Minister Ichiro Kamoshita, whose country is having difficulty meeting its Kyoto targets, referred to these troubles at the pact's "birthday party" in Bali. "It's only 10 years old yet, it's still a child," he said. "At the age of 10, children can be quite difficult, and so it is with the Kyoto Protocol."

Rajendra Pachauri has applauded Japan’s efficient public transportation system, their shift from coal and oil to natural gas, significant use of renewable energy, and the nation’s long standing culture of energy efficiency. But Japan is taking a harder line at the conference, joining the United States and Canada in resisting hard targets, calling for developing nations to do more, and stressing the need for “compatibility” between environmental protection and economic growth.
 
“Japan seems to be taking harder positions with tougher language, and Canada is coming in behind, supporting them, so the U.S. doesn't have to do much,” said Dale Marshall, climate-change policy analyst at the David Suzuki Foundation.

The European Union
The European Union has shown leadership by committing itself to 20 - 30 percent reductions below 1990 levels by 2020. Stavros Dimas, the European commissioner for environment said, "We need this range of reductions by developed countries. Science tells us that these reductions are necessary. Logic requires that we listen to science."

But the EU is also hoping to cash in on the carbon markets they’ve developed, and the booming economy in energy efficiency measures, green building, clean technology, alternative fuels, and renewable energy.

Lu Xuedu is deputy director-general of the Office of Global Environmental Affairs, a part of the Chinese Ministry of Science and Technology. Dr. Lu is also a member of the UNFCCC Clean Development Mechanism (CDM) executive board, and of the Chinese delegation for climate change negotiations.

Lu writes in China Dialogue, “Of course, the EU’s determination to cut emissions is not purely based on concern for the environment. There are also commercial considerations. For EU companies that own advanced low-carbon technologies, commitments to reduce greenhouse-gas emissions have huge economic value.”

Australia
At the opening session of the Bali conference the delegation from Australia was greeting with long applause, which Executive Secretary de Boer said, “reflected people’s appreciation of Australia’s courage to take a dramatically different position and engage strongly with the international community.” Newly elected Prime Minister Kevin Rudd has made addressing climate change a top priority and by ratifying the Kyoto treaty has the left the United States as the sole developed country not to sign the protocol

But environmentalists want to see Rudd back up his campaign promises with actions. "We need to see real leadership here in Bali," said Hans Verolme, head of World Wildlife Fund's climate change program. "Australia needs to make up its mind. What we need is real clarification on its level of ambition."

So far, Australia has shied away from supporting immediate reduction goals of 40% by 2020, saying it must await the conclusion of a study next year. "Our long-term target ... to reduce our greenhouse emissions by 60 percent by 2050 against 2000 levels is an ambitious target," said Prime Minister Rudd. "We will establish a proper and methodological basis ... to determine an interim target."

The Business Community
Various business groups have told negotiators they need firm targets to encourage investment in reducing greenhouse gas emissions.

David Hone, group climate change adviser for Shell Oil, said countries should be given definite emissions targets, broken down into “clearly segmented timeframes”.

“The real confidence would ultimately come once we’ve set and passed one or two [target] deadlines and someone’s held to task if we don’t meet them. If that doesn’t happen, then the whole thing starts to unravel,” he said.

Steve Lennon, chair of the International Chamber of Commerce delegation at the Bali conference and managing director of Escom in South Africa, said : “Businesses and investors always look for certainty. What they want is a firm regulatory environment.”

A U.S.-based coalition of 27 companies and major environmental groups, the Climate Action Partnership, will push for a mandatory U.S. carbon trading program. The group's representatives at Bali will include Dow Chemical Co., the largest U.S. chemical maker, and Royal Dutch Shell, Europe's biggest oil company.

"The transition to a new energy economy will create tremendous business opportunities,'' said billionaire Ted Turner. "Clean'' energy may be the "biggest business opportunity there's ever been,'' Turner said last week in an e-mail. "You see some of the best-run corporations in the world preparing for that shift, and businesses with their heads in the sand will get left behind.''

In a bid to not get left behind, more than 130 corporate brands were featured in a two-full-page advertisement in the Financial Times. The companies were signatories to an open letter called the “Bali Communique on Climate Change” written by The Prince of Wales' Corporate Leaders’ Group of Climate Change.

Companies including British Airways, Coca-Cola, Dupont, Gap, GE, Johnson & Johnson, Kodak, L’Oreal, Nestle, News Corporation, Nike, Nokia, Pirelli, Philips, and Virgin signed a letter stating: “We believe that tackling climate change is the pro-growth strategy. Ignoring is will ultimately undermine economic growth. It is our view that a sufficiently ambitious, international and comprehensive, legally-binding United Nations agreement to reduce greenhouse gas emissions will provide business with the certainty it needs to scale up global investment in low-carbon technologies.”

Not to be outdone, the Association of European Carmakers representing major manufacturers including BMW, Porsche, Volkswagon, Volvo, and even Ford and General Motors, wrote a letter to the Financial Times stating:

“Sir, As the chief executives of 13 auto companies producing and marketing our products around the world…we write to give support and encouragement to the UN-sponsored ministerial talks on climate change opening in Bali, Indonesia, this week. We think it vital that they work towards the kind of comprehensive agreement that our planet needs.”

As the Conference comes to a close in the next few days, there will undoubtedly be many opinions as to whether or not “comprehensive agreement” was reached.

But whatever the outcome, the negotiations in Bali are establishing a precedent of international dialogue between governments at all levels, organizations and businesses on global issues of unprecedented impact and magnitude for every community on earth.

If the UN scientists are right, we will know in a frighteningly short period of time how successful these talks prove to be.