Climate change: the big debate

The UK causes 2 per cent of global carbon emissions. What should we do about the remaining 98 per cent?

What is Britain doing to tackle climate change?

It depends on how you look at it, and who you ask. As ministers point out, we are one of only a few countries due to meet its target under the Kyoto Protocol for reducing climate change-causing emissions. In our case, this is a cut of 12.5 per cent on 1990 levels by 2012.

On the other hand, as environmental groups emphasise, our emissions of carbon dioxide (CO2, the main polluting gas) are actually higher now than they were in 1997, when the treaty was negotiated. A big fall happened as a by-product of "the dash for gas", which replaced carbon-intensive coal in electricity generation. In reality, we have yet to take effective action to cut emissions.

So who needs to act?

All of us: individuals, businesses and governments. Our personal choices in transport and energy usage, such as the way we heat and light our homes, are responsible for 44 per cent of Britain's carbon dioxide emissions. Simple measures, such as installing energy-efficient light bulbs, turning down the thermostat a degree or two and taking the train instead of driving, would make a big difference if millions of people did them.

Businesses are also responsible for a large share of CO2 emissions. Some are already becoming carbon neutral, but much more needs to be done. And the Government needs to adopt policies ­ both political and financial ­ to encourage action and set a framework for it.

But surely Britain only makes a small contribution to the worldwide problem?

We produce 2 per cent of the world's total carbon dioxide emissions, far less than the United States or China. Two per cent isn't the whole picture, though, as the worldwide operations of British companies, for example, add to our total, as does the energy used to make goods that we import from countries such as China. We also help decide the policies of the EU, and the EU contributes 12 per cent of all emissions. Practical measures need to be taken locally by individuals, businesses and communities, but they must also be part of an international effort.

How's that effort progressing?

Not too well. The Kyoto Protocol only allows for rich countries to cut their emissions by 5 per cent by 2012, yet scientific evidence suggests they'll need to make reductions of 80 per cent by then to prevent climate change escalating out of control. But few are likely to meet even Kyoto's modest targets.

Negotiations are under way for post-2012 measures, which would include developing countries for the first time, but these are getting bogged down. There is some hope of movement after President Bush's recent announcement that the US will participate in a global agreement to cut emissions for the first time.

Does this signal a sea change in the United States?

Public and political opinion has been changing very fast in the US, especially since Hurricane Katrina devastated New Orleans. Four out of five Americans now believe that climate change is a serious problem and three quarters tell pollsters that action is needed "right away". Leading the way, Californian governor Arnold Schwarzenegger has adopted one of the most radical programme of cuts anywhere in the world. Other governors, both Republican and Democrat, are introducing their own measures, as are more than 300 US towns and cities. A coalition of top business leaders has urged the Bush administration to make deep reductions, much of the religious right is pressing for action, and several bills have been introduced into a once-sceptical Congress. Climate change is also bound to loom large in the presidential election next year, campaigning for which is already under way.

But what about the problem of China's emissions?

China's emissions are growing rapidly as the country develops, but the Chinese government is seriously concerned about the devastating effect climate change would have. Its measures reduced the amount of energy used to produce each unit of GDP by 47 per cent between 1990 and 2005, but is this enough? China needs to develop and believes that most of the action to tackle climate change must be taken by the rich countries that have overwhelmingly caused it. On this basis, it would only join an international deal if the United States did so too.

Can this circle be squared?

Absolutely. Providing the biggest polluters cooperate, a new global agreement on much deeper cuts is not just possible but likely. Time, however, is desperately short. The best evidence suggests that, if dangerous climate change is to be avoided, worldwide emissions must start to fall within a decade, which would involve making a deal in the next year or two. Over the longer term, the best and fairest solution ­ dubbed " contraction and convergence" ­ would entitle everyone on the planet to the same share of a safe level of emissions and would apportion them to each country appropriately.

But wouldn't such cuts bankrupt the world economy?

Not really. Any cost of taking action will be far outweighed by that of failing to tackle climate change. A landmark report for the British Government by Sir Nicholas Stern last year calculated that 1 per cent of GDP needs to be invested each year to address climate change and that failing to spend this could lead to a fall in GDP of 20 per cent ­ and another Great Depression. The good news is that the countries and businesses that act first are likely to prosper by developing technologies that others will then want to buy.

What is HSBC doing to help? Find out more at www.hsbc.com/committochange

HSBC believes that international action to create a low-carbon economy is essential. It is critical that every nation and every person plays their part.

More than 70 per cent of HSBC's worldwide CO2 emissions in 2006 came from the energy used to operate our buildings. Most of our 315,000 employees work in offices where the energy we use and the CO2 we produce are measured and reported publicly. We have set three-year reduction targets to cut these impacts year on year.

In 2005, HSBC became the world's first major bank to become carbon neutral. This means our worldwide operations contribute zero net CO2 into the atmosphere.

To reduce our overall energy consumption, we invest in building technology upgrades and workplace environmental-awareness campaigns to decrease energy use. HSBC purchases "green" electricity, generated from wind, water and the sun. In parts of the world, we invest in large and small-scale renewable energy technology such as solar panels. In the United States, a branch has been constructed with state-of-the-art environmental technology.

We'll never be able to stop carbon emissions totally. To achieve carbon neutrality in 2006, HSBC sourced carbon offsets from several renewable energy projects in China and Thailand, based on their credibility, cost-effectiveness, additionality and sustainable development benefits. This all positions us well to finance the future lower-carbon economy.