Major Economies Business Forum:
Perspectives on Low
Low-Carbon Pathways
Key Messages
Low carbon pathways can guide better national policies and build greater international confidence – but
only if they are well prepared, open to consultation and review, and published with supporting
information.

The plan itself is less important than the process. Pathways need to be part of a flexible and ongoingprocess embodying means to achieve continuous improvement to remain relevant—unexpectedrelevant
advances in technology or changes in the global economy and international policy can change the game.

Governments should report progress and update pathways based on domestic and international
experience and achievements. Objective progress reports should be published frequently, perhaps
annually, and pathways updated periodically, for example, every four years.

Consultation is key. It is business that will be making investments and adjusting to different market
circumstances at various stages along the low
low-carbon pathway. Therefore,e, business must be closely
involved in charting the course.

A guide, not a law. Binding commitments and legislation have their place, but low
low-carbon pathways
should be statements of current policy and intent backed by an implementation plan, not rigid nationalnaprescriptions.

Introduction
The call for nations to develop low-carbon
pathways has become part of the international
dialogue. Leaders of the Major Economies Forum
countries agreed at L’Aquila in July 2009 that theywould prepare low-carbon growth plans. The
United Nations negotiations include proposals that
all countries develop low-carbon pathways,
describe them in their regular National
Communications, and update them as necessary.
The concept of low-carbon pathways is potentiallyvery useful, whether as part of a global agreement
or national policy. There are various formulations—low-carbon, zero-carbon, pathways, growth plans—
but the common element is a focus on how
emissions reductions goals and commitments would
be achieved while maintaining the economic growthnecessary to support improved living standards andreduce poverty.
There are many potential benefits that thesepathways can provide if developed sensibly.
Fundamentally,
they
canmakenationalcommitments more credible, whether to othernations or to long-term investors in energy,
infrastructure, and industry, by providing
information on how goals will be attained. They
should highlight the real circumstances, options andconstraints that countries face, in the context of acoherent overall national policy. They can makeclearer to citizens the choices that need to be
made, the costs and benefits of different
approaches, and the impacts on their energy andland use and all that is affected by such changes.
And they can provide a vital avenue for business toinform and gauge government expectations,hopefully resulting in greater clarity on investment
requirements and policy implications, e.g. forgrowth, competitiveness and jobs. If poorly
implemented, however, low-carbon pathways risk
being either an empty formality or unduly rigid andconstraining.
Business has a particularly strong stake in the issue,
since we will suffer first if there is no basis for

December 7, 2010

investment or if the framework ignores businessrealities and expertise.
The value of pathways
There is no shortage of actual and proposed climate
and greenhouse gas emissions goals. The nonbinding goal of the Copenhagen Climate Accord(CCA) to restrain average global temperature rise toless than 2°C implies very large aggregate global
emissions reductions over the next several decades.
Separately, G8 countries aspire to an 80% reductionin their emissions by 2050. All the major economies
have made political commitments associated with
the CCA, which may form the basis of a newagreement, to reduce emissions or take actions thatwould slow emissions growth by 2020. These goals
generally share two features:
1. meeting them requires broad, complex andsustained changes from the status quo; and2. the goals themselves are merely waypoints
along the path to continuing emissions
reductions.
Setting and proclaiming an overarching goal is not
the end of the process for national governments.
They also must give thought to how their goals
might be achieved and the broader implications ofsuch efforts. Just as importantly, however, theyshould communicate their thinking clearly tocitizens, government at all levels, othergovernments, and especially to the business
community. This presents clear opportunities for allparties to improve understanding, build trust, andprovide feedback. The latter is particularly
necessary to ensure that data and assumptions are
realistic and that pathways can evolve to accountfor changing circumstances, including the pace oftechnology change.
The proper goal of a low carbon pathway is not topredict or delineate the future, but to be mindful ofit; detailed predictions will always be wrong andinflexible plans that depend on them will rapidly
become irrelevant or worse. A sensible approach
marshals the best available information about
future conditions and requirements now while2|Pageacknowledging that it is uncertain and incomplete
and will inevitably change. Successful businesses
apply this approach already, recognising that its
value lies not only in the plan itself but also in theprocess of planning. This brings attention tosystems,
assumptions,interconnections,preconditions, and consequences, rather than toisolated projects and targets. The process needs tobe repeated regularly with the humility to recognize
emerging difficulties and modify plans to ensurethat they remain relevant.
It is important to note that the “carbon” in low
carbon pathways is and should remain merely
shorthand for all greenhouse gas emissions. Acountry considering a pathway should not restrict
itself to energy-related carbon dioxide emissions,but consider the full range of gases, as well as
emissions from land use and opportunities forexternal partnerships to generate cost-effective
offsets.
International status of pathways
Low carbon pathways have several benefits in thecontext of an international agreement: if well
prepared they can improve a country’ ability tomeet its goals, encouraging a results-based
approach to policy; if well communicated they canbuild confidence between countries; and if
sufficiently practical and detailed they can focus
international cooperation and assistance on
identified areas of need. These benefits are unlikely
to arise unless countries are as open andcomprehensive as possible in preparing andcommunicating their low carbon pathways. Ideallythe pathway information provided internationally—
most appropriately as part of regular nationalcommunications—should be at least as detailed andcomprehensive as the equivalent statement ofdomestic policy.
However, countries are naturally very cautious
about describing or making potential commitments.
This means that in the international context,
pathways should be provided for information onlyand should not be viewed as constituting a binding
commitment in themselves. Pathways will of course
December 7, 2010reflect the autonomous commitments or binding
obligations that countries choose to take on, but
the processes for making commitments andproviding low carbon pathways should be kept
separate.
This extends to any provisions aroundmeasurement, reporting and verification andinternational consultations and analysis that may beagreed; such processes should apply to the relevant
mitigation or financial commitments, rather than tothe broader content of a low carbon pathway.
Again, this is necessary to encourage countries toinclude more information without fear ofcompromise to their sovereignty. Transparency
remains very important, however, and countries
should include supporting material and assumptions
or make them otherwise available.
It would be helpful for the international community
to develop guidelines for the preparation andreporting of low carbon pathways, both to assist
countries that may lack capacity in this area and tohelp ensure that pathways are developed andreported in a more consistent and comparable
format. Use of similar measures and definitions
would be particularly useful. However there may belimits to the consistency that can be achieved, since
low carbon pathways are primarily a domestic
policy document and will reflect the differing
circumstances, starting points, and practices ofdiverse national governments.
Development of guidelines should strongly feature
consultation with business, which can provide
input, advice, and comment on effective planning
processes, data, assumptions, and expectations thatmust be met if plans are to effectively mobilize or
attract private investment.
As noted, pathways need regular update andrevision if they are to incorporate the best
information and remain relevant. If countries
commit to prepare low carbon pathways, theyshould also commit to publish regular progress
reports and to prepare periodic updates—at an
appropriate, but defined frequency, e.g. every four

3|Pageyears. Less developed countries may need capacitybuilding assistance to meet this goal.
National status of pathways
The main use of a low carbon pathway is to improve
the quality of national policy and decision-making
around emissions mitigation. There are several
principles that should guide the development ofthese pathways. Pathways should:
Be realistic. Pathways should be achievable. Thismay mean tempering ambition, but not forgoing it.
The overall mix of enhanced investment, increased
effort and technological improvement should bephysically and economically plausible, especiallyover the near-term, e.g. five to 10 years, and within
the credible capabilities of the country in question,
taking account of pledged or foreseeable levels ofinternational assistance and the security of energy
supply. Assumptions about the availability, cost,and performance of future technologies are
particularly important to plans that stretch to 2030
or beyond, and the uncertainty and unpredictability
around these should be clearly recognized.
Be flexible. Technological, economic andinternational developments will rapidly supersede
an overly rigid plan. Well-developed pathways will
have the flexibility to accommodate a range offoreseeable developments. While pathways may
involve greater emphasis on particular technologies
that are better adapted to national circumstances –strong solar or coal resources, for instance – theyshould not be solely reliant on any one technology.
Technologies should not be ruled out or‘deselected’, given the need for a broad portfolio of
approaches to address the immense challenge ofemissions reduction. Unforeseen game-changing
developments can significantly alter the prospectsof particular technologies and the relative
attractiveness of alternatives. Policy should beflexible enough to recognize such changes. Policy
should also be responsive to changing needs andpriorities, for example if facing recession or otherunforeseen economic circumstances.

December 7, 2010

While the role and nature of government differsfrom state to state, in general low carbon pathways
should not have the force of law – they should bestatements of policy that advise and guide public
and private actions. A more binding legal status
would likely be far too cumbersome to match a
rapidly evolving reality.
Be co-ordinated across government. In mostinstances low carbon pathways will be prepared bynational governments, but there is a risk that they
will be the responsibility of only a narrow part ofgovernment. Pathways involve the future of awhole economy, society and polity, raising issues
around projections and their consistency fordevelopment,
infrastructure,finance,
macroeconomic management, skills and education,
research, business assistance and regulation, andmuch more. Such a broad canvas cannot beaddressed solely by the energy ministry or theenvironment ministry, but will require the expertiseand inputs of the whole of the government. Better
communication and coordination between thedifferent arms of national governments is required
to design sound low carbon pathways, and has
obvious broader benefits as well. Other levels ofgovernment – regional or local authorities, forinstance – should also be involved. As with pastefforts to develop reliable emissions inventories,
the process as well as the outcome should aim forcontinuous improvement based on experience andreview.
Another aspect of this is that low-carbon pathways
involve values and goals beyond mitigating climatechange. Governments, business and citizens alsoseek energy security, a cleaner environment,
improved healthcare, economic development, andso on. Pathways need to be developed with allthese goals in mind, seeking solutions that candeliver multiple benefits.
Be consultative. Government does not hold all therequired information or all the answers, even whenit draws on its full range of expertise. Citizens, nongovernment organizations and business have vital
perspectives and knowledge to share and should be
consulted extensively in the development and4|Pagereview of low carbon pathways. It is especially
important to consult business early and often on
these issues. It is business that will make most of
the investments needed to translate pathways into
reality; business will also bear the brunt ofresponding to changing markets that results; andbusiness has a deep store of experience that is vitalto making plans and policies more practical andachievable.
Without
strongconsultation,
governments may be unaware of the investment
barriers, market expectations, skills requirements orsystemic problems that can bedevil elements of a
proposed pathway. Business can provide
perspectives on implications for investment,competitiveness and jobs.
To be effective, business consultation should bebroad and open to the full range of views, providing
opportunities for involvement to all enterprises andall sectors. A narrow focus or a ‘cherry-picked’ setof participants that would potentially benefit frompolicy change is unlikely to provide a sufficient
breadth of information or perspectives.
Be transparent and contestable. When a pathway
has been developed it should be reviewed andpublished, with comprehensive supporting materialand assumptions made available as well. Suchtransparency is important to demonstrate thecredibility of the pathway and to permit it to bequestioned and improved. Errors, incorrectassumptions and unconsidered issues are much
more likely to be found with a high degree ofopenness, greatly assisting the quality of thepathway and resulting policies, especially as time
passes.

Be updated frequently. Even a process built on theabove principles cannot produce a perfect plan
once and for all. The plan will inevitably incorporate
predictions that fail, targets that are not met andassumptions that prove incorrect. This is notnecessarily a problem, and could be an opportunity,
if the pathway is subject to ongoing scrutiny andimprovement. The process should include means totrack progress against actual outcomes and toprovide explanations for changing assumptions.
There should be frequent tracking updates to show
progress and note major developments – perhaps
annually – and regular major reviews leading to
updates based on future development andconsultation processes. This will have implications
for administrative costs, but the potential costs ofoutdated and irrelevant policy are far greater.
It is important to emphasize that frequent update
does not mean that national policy should beunstable or unpredictable. Indeed, while tracking
should be frequent, the pathway itself should berevised less often, perhaps every four years. Policies
that are chaotic, short-term or start and stopsuddenly are a source of increased uncertainty thatis deeply unhelpful to businesses considering thesorts of large long-term investment necessary toreduce and restrain emissions. Governments should
be mindful of this when designing policy anddrawing up low carbon pathways. There is a tension
between providing stability and remaining relevant
to a changing world, but governments can still
maintain a balanced and consistent approach.

Australian Chamber of Commerce and Industry
Australian Industry Group
BUSINESSEUROPE
Canadian Council of Chief Executives
Confederation of British Industry
Confederation of Indian Industry
Dansk Industri
Confindustria
Federation of German Industries – BDI
Iniciativa para el Desarrollo Ambiental y Sustenable – IDEAS (Mexico)
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5|PageKorea Chamber of Commerce & Industry
Mouvement des Entreprises de France
Nippon Keidanren (Japan Business Federation)
US Chamber of Commerce, Institute for 21st Century Energy
US Council for International Business

About BizMEF
The Major Economies Business Forum on Energy Security and Climate Change (BizMEF) is a partnership of major
multi-sectoral business organizations from major economies. Modeled after the government-to-government
Major Economies Forum, BizMEF is a platform for these groups to:promote dialogue and exchange views on climate change and energy security across a broad spectrumof business interests including major developed, emerging, and developing economies;highlight areas of agreement among participating organizations on the most important issues forbusiness in international climate change policy forums; and

share these views with governments, international bodies, other business organizations, the press, andthe public.

Organizations that have participated in BizMEF meetings represent business groups in Australia, Brazil, Canada,China, the European Union, Denmark, France, Germany, India, Italy, Japan, Kenya, Mexico, the United Kingdom,
and the United States. Collectively, BizMEF organizations represent more than 25 million businesses of every
size and sector. Because BizMEF partnering organizations represent a broad range of companies andindustries—including energy producing and consuming companies as well as energy technology and serviceproviders—the partnership is able to provide robust and balanced views on a range of issues.
For more information on BizMEF, please visit our website at: www.majoreconomiesbusinessforum.org.

December 7, 2010

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