9 Apr, 2008

Aviation, Tourism In Climate Change “Danger Zone”

Imtiaz Muqbil

Six major industry sectors – aviation, healthcare, tourism, transport, oil and gas and financial services — are in particular danger from climate change risks, claims professional services organization KPMG.

In this dispatch:

1. LETTERS TO THE EDITOR [In response to Travel Impact Newswire Dispatch headlined: Whither PATA? It’s Longest Serving Member Speaks]

2. AVIATION, TOURISM IN CLIMATE CHANGE “DANGER ZONE” – KPMG

3. WIND POWER CONTINUES RAPID RISE

4. BANGKOK CLIMATE CHANGE TALKS REACH AGREEMENT ON WORK PROGRAMME FOR 2008

5. U.N. BODY CONFRONTS NEW WORLD, MADE UP OF A MAJORITY OF URBAN DWELLERS

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1. LETTERS TO THE EDITOR

[In response to Travel Impact Newswire Edition 28 headlined: Whither PATA? It’s Longest Serving Member Speaks]

FROM JOHN SEMONE, FORMER MANAGING DIRECTOR FOR EUROPE AND THE MIDDLE EAST, PATA

First, I must congratulate you on the important issues that you raise in Travel Impact Newswire and wish you continued success with your informative reporting. Your interview with Alwin Zecha was most interesting and I therefore write you with a few points that may need clarification and may differ from Mr. Zecha’s statements.

As some of your readers may know, I was a PATA staff member for over 16 years. First serving as marketing director with, among many tasks, providing direct support to all PATA chapters in the Americas and Europe and, later, as managing director for Europe and the Middle East. Having worked closely with those chapters, I do not agree with Mr. Zecha’s assessment that the chapter membership numbers were bloated. The 17,000 figure quoted by Mr. Zecha is a bit high but my numbers in working with the 80 worldwide chapters was very close to 16,000. I could substantiate those numbers at one time with collection of membership rosters (names, addresses and company affiliation) which Jerry Picolla’s staff compiled in the San Francisco office. It was indeed a pretty accurate accounting of chapter members made by Ratnapala and Picolla at one time.

During the Ratnapala and Picolla leadership, those 80 worldwide chapters provided an enormous service to full PATA corporate members from Asia/Pacific by providing business opportunity venues in the form of workshops, seminars and the go-betweens (in Europe between major travel fairs such as WTM and ITB). Those chapter members were active in the sense that they represented the travel trade buyers in the Americas and Europe, a vital link for Asia/Pacific sellers. Without chapters support from north and South America and Europe, corporate members from Asia/Pacific would have had far fewer marketing opportunities. The chapters at one time were a viable force providing marketing support to corporate members (especially the hotel and tour operator category) until harsh and restrictive membership requirements were put into place under the McInerney leadership. A vital marketing link was eliminated by those restrictions, creating rapid decline and a disgruntled chapter membership. All this was well under way before the arrival of Peter de Jong.

Regarding the CEO Challenge, while it is admirable that PATA is again taking part in issues relating to global warming and sustainable tourism, it should be remembered that the conference held in Bali back in 1991, under the leadership of Kane Rufe, was a landmark for the tourism industry, dedicated to environmental and sustainable tourism issues. We had a wealth of keynote speakers, highly professional in the field of environmental issues, that positioned PATA and the membership as a leader with sustainable tourism concerns.

>From that conference later emerged the PATA Green Leaf Program under Lakshman Ratnapala’s leadership, which provided strong recognition for PATA and it’s members on a worldwide basis. The Green Leaf Program involved all sectors of the tourism industry and addressed to PATA members ways in which they could contribute to sustainable tourism. I believe the program met with considerable approval and success among the members.

>From the Green Leaf Program, now under the McInerney leadership, a sustainable committee comprising PATA member professionals was established. In my added role as PATA’s director for environment, culture and heritage, environmental workshops were included at each conference and, for two years a best practice brochure was published identifying, by sector category, what our members in Asia/Pacific were doing on issues of culture, heritage and environment.

And, indeed, members were amazed on what was being done within the PATA region. At that time, PATA established a close working rapport with numerous environmental agencies and organizations such as the UNEP, Green Globe, Conservation International and WWF. An active exchange of ideas through meetings and workshops was established between those groups and PATA. It would appear that with the arrival of Peter de Jong, environmental and sustainable tourism issues faded in favor of his new desired direction. Unfortunately, PATA dropped the ball when it held a leadership position on environment and global warming.

FROM A FORMER PATA MANAGEMENT STAFFER

Interesting piece indeed. All I can say is that there is one word to describe my reaction: disgusted. If that is the kind of self-serving that goes on in the boardroom, the organisation is doomed. No wonder nobody signs up and young people are not interested. If it were a commercial venture they all would have been fired. One hopes a new emerging generation can make some waves. Being part of a trade association is about the good of all members and the industry, but every comment Zecha made was about “me, me and more me”. This kind of self-interest is what has crippled PATA and kept its senior executives employed.

FROM A PATA MEMBER IN INDIA

Amazing insight…..After the recent survey done by PATA, it has been established that 60-70% of the membership consists of SMEs (under the 50 employee bracket). One important question however that needs to be put to PATA and the answer known to the membership is – What event does PATA have that allows smaller companies to benefit from the “networking opportunity” that PATA propagates as it its major member benefit ? Surely the US$ 1400 + travel + accommodation etc. cost for a 1 ½ day CEO challenge is too much for most member companies.

The whole premise for increasing membership fee a few years ago, by saying that if companies were to attend the Mart and the Annual Conference they would more than recover their membership fee, is now obliterated. How many members attend the Mart is a well known fact, at last count the Conference attendance was 800+.

So what is the real benefit of being a PATA member and what does one get, beside use of a logo, for spending US$ 1000 a year as membership fee? With so many associations out there, what is the compelling reason to spend on being a PATA member when that same money could be spent on real marketing activities?

FROM HIMMAT ANAND, CHIEF OPERATING OFFICER, INDIA & SOUTH ASIA, KUONI DESTINATION MANAGEMENT INDIA

A wonderful one and congratulations for putting it in such an interesting and live format. Great ! I had the pleasure of meeting Alwin way back in the early ’80s where he was going a PATA seminar in Khajuraho. Am sure he still has his great voice, which made hearing him so much more a pleasure. Do wonder why Pacific Leisure Group has not looked at India yet?

FROM VIJAY MENON, GENERAL MANAGER, DADABHAI TRAVEL, BAHRAIN

It gives me immense pleasure to say that Travel Impact Newswire is doing the best for the travel and tourism industry by keeping every aspect forwarded to their readers. Well done – keep it up.

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2. AVIATION, TOURISM IN CLIMATE CHANGE ‘DANGER ZONE’ – KPMG

Six major industry sectors are in particular danger from climate change risks, claims professional services organization KPMG. Aviation, healthcare, tourism, transport, oil and gas and the financial services sector all feature in the “danger zone” in a report on climate change risks from KPMG – meaning that they score highly on the risks which face them yet score poorly in terms of their preparedness to face these risks. Financial institutions are particularly exposed to climate risks through their investment portfolios and through the risk to reputation as consumer awareness grows.

In addition, KPMG claims that the 18 sectors included in the report – even the three deemed to be in the “safe area” – are not sufficiently prepared to deal with the new risks associated with climate change. The climate change risks that companies should be paying more attention to are physical, regulatory and reputational risks as well as the emerging risk of litigation; yet the scope and potential impact of these risks appears to be under-estimated across all sectors.

Commenting on the findings of the report, Alan Buckle, chief executive of Advisory KPMG Europe, said: “We have looked at business sectors right across the global economy and we found that there are huge differences between sectors in terms of the relation between climate change risks and risk preparedness. Industries may be relatively safe, they may be in the danger zone, or they may be in between – but wherever they are, risks tend to be underestimated.”

The report, entitled “Climate Changes Your Business” is some of the most comprehensive analysis of its kind to date. Its findings are based on a review of 50 authoritative published studies addressing the business risks and economic impacts of climate change at sector level. The published reports have been analyzed and a ‘risk score’ for each sector has been assessed. At the same time, the business sectors have been rated according to their preparedness for climate change impacts. Preparedness was measured using data compiled in the latest completed round of the independent Carbon Disclosure Project.

The report grouped sectors into three areas, dependent on the risks they face and their preparedness (see below). Due to the way the figures were compiled, these rankings effectively represent what financial institutions and businesses themselves think about climate change risks.

While the oil and gas sector is far better prepared than any of the other sectors in the ‘danger zone’, the climate change issues it faces make it the riskiest of all the 18 sectors. By contrast, transport is a far less risky sector but its level of preparedness is the worst of all the 18.

However, further analysis of the results by KPMG suggests that even the sectors in the “safe haven” may not be as safe as they would like to think. Alan Buckle continued: “Take a sector like food and beverages for example. This is supposedly a low risk sector yet recent events have shown that this industry is highly vulnerable to climate related risks such as increases in agricultural input costs. The idea therefore that this sector is relatively safe from climate change effects is likely to reflect a significant under-estimation of risk.”

“When considering how businesses report on these risks, it is striking that businesses consistently appear to gloss over certain climate risks even where they have well-established management techniques for dealing with other forms of risk.”

“Some risks are now materialising regardless of the actual rate of climate change, gaining a dynamic and pace of their own. Companies should seek to improve their understanding of how such risks affect their business and they must also mitigate such risks. It pays to be prepared. Companies which understand their climate risks will be best placed to manage those risks – and they will also be able to grasp the competitive advantage that comes with fuller and earlier understanding.”

The full report, Climate Changes Your Business, can be downloaded at www.kpmg.nl/sustainability

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3. WIND POWER CONTINUES RAPID RISE

by Janet L. Sawin, Worldwatch Institute

Global wind power capacity reached 94,100 megawatts by the end of 2007, up 27 percent from the previous year, and then topped 100,000 megawatts by April 2008. The roughly 20,000 megawatts installed in 2007 was 31 percent above the 2006 record for capacity additions. New wind installa­tions were second only to natural gas in the United States as an additional source of power capacity and were the leading source of new capacity in the European Union (EU).

The United States led the world in new installations for the third year in a row with a record-shattering 5,244 megawatts of wind capacity added, increasing cumulative installed capacity by 45 percent. Wind power represented 30 percent of new U.S. capacity additions last year, compared with 1 percent of the total just five years earlier. The nation’s wind capacity now totals 16,818 mega­watts, second only to Germany, and is enough to power 4.5 million U.S. homes. The surge in 2007 was driven by the federal production tax credit and by renewable energy mandates in 25 states and the District of Columbia. The federal credit is due to expire at the end of 2008, though an extension is widely expected. Texas is the nation’s top wind power generator, with 30 percent of total U.S. wind production last year, but six states now each have more than 1,000 megawatts of installed capacity.

Wind capacity in the European Union rose 18 percent in 2007, with new records in several countries. Wind power accounted for about 40 percent of new power installations across Europe. Additions of 8,554 mega­watts-an increase of 12 percent over 2006 installations-brought the EU’s total to 56,535 megawatts. Total wind capacity installed in Europe by the end of 2007 was enough to meet nearly 4 percent of the region’s electricity demand in an average wind year and will avoid about 90 million tons of carbon dioxide emis­sions annually. For the first time in several years, Europe’s wind market dropped below half of the global total as the EU accounted for only 43 percent of new additions worldwide; but Europe still has 60 percent of total global capacity.

Germany remains the world leader in wind power capacity, with a total of 22,247 mega­watts, almost 24 percent of the global total. However, Germany’s wind market experienced a signifi­cant slowdown in 2007. Rising turbine prices in conjunction with falling payments to wind-generated electricity have temporarily made the German market less attractive to developers than the U.S. and British markets are; Germany has also experienced an increasing scarcity of good onshore sites. Only 1,667 megawatts of new capacity were installed in 2007, 25 percent less than added during the previous year. Despite this, the share of electricity that Ger­many obtained from renewable sources-half of which comes from wind power-continues its rapid rise. Wind power generated the equivalent of 7.2 percent of Germany’s electricity consump­tion in 2007. Windy northern Schleswig-Holstein now aims for the wind to generate all of that state’s power by 2020, up from 30 percent today.

Spain led Europe in new installations in 2007, now ranking third worldwide in total wind capacity. An estimated 3,522 megawatts were added last year, bringing the nation’s total to 15,145 megawatts, enough to meet 10 percent of Spain’s electricity needs.

Other countries in Europe that experienced significant growth in 2007 include France (888 megawatts added), Italy (603), Portugal (434), and the United Kingdom (427), and each of these countries now has total capacity of well over 2,000 megawatts. The United Kingdom and Portugal, however, both experienced slower growth than in 2006.

Although Europe (mostly Germany and Spain) and the United States now account for 78 per­cent of the world’s installed wind power capacity, more than 70 nations-from Australia to Zimbabwe-now tap the wind to produce electricity.

The biggest surprise is China, which was barely in the wind business three years ago but which in 2007 trailed only the United States and Spain in wind installations and was fifth in total installed capacity. An estimated 3,449 mega­watts of wind turbines were added in 2007, bringing China’s provisional total to 6,050 megawatts and already exceeding the govern­ment’s target for 2010. (An estimated one fourth of this capacity is still not connected to the grid, however, due to planning problems.) Another 4,000 megawatts are expected to be added in 2008 and, based on current growth rates, the Chinese Renewable Energy Industry Association predicts that China’s wind capacity could reach 50,000 megawatts by 2015.

Elsewhere in Asia, India added 1,730 megawatts of new capacity and continues to rank fourth overall for total installations, with an estimated 8,000 megawatts. Other regions and countries experiencing significant growth include Canada (added 386 megawatts), New Zealand (151), Latin America, where Brazil added 161 mega­watts and Chile installed about 18 megawatts, and northern Africa, where Egypt added 80 mega­watts.

These dramatic increases in capacity took place against a backdrop of serious turbine shortages. Wind turbines require some 8,000 components, and suppliers of many of these parts need years to ramp up production. Parts shortages have affected the United States in particular, where numerous projects have been put on hold. As a result, several European companies that had the funds and fore­sight to lock in orders of new machines have taken this opportunity to buy up smaller companies and utilities to gain a foothold in the United States, where wide open spaces promise an enormous future market.

Manufacturers are now positioning themselves to increase production of gearboxes, rotors, and other components, and it is expected that this will eliminate the turbine shortage by sometime in 2009. For the short term, however, the turbine shortage could dictate how quickly the industry will grow.

These growing pains have affected the economics of wind power. Over the past 15 years, the costs of wind-generated electricity have dropped by 50 percent, while efficiency, reliability, and power rating have all experienced significant improvements. But costs have increased in recent years due to the turbine shortage, rising material costs, and increased manufacturing profitability. (In the United States, costs have also risen thanks to the falling value of the dollar relative to the euro.) Despite the higher costs, wind power remains competitive with new natural gas plants, and all conventional plants have seen similar construction cost increases. Wind power will become increas­ingly competitive with coal as more countries put a price on carbon.

The global wind market was estimated to be worth about $36 billion in 2007, accounting for nearly half of all investments in new renewable power and heating capacity last year. As many as 200,000 people around the world are currently employed by the wind industry. These numbers will only rise in coming years.

The EU is now committed to generating 20 percent of its primary energy with renewables by 2020, which means that these sources will need to provide about 35 percent of the region’s electricity in 12 years, up from 15 percent in 2007. Wind power is expected to account for most of that increase. And the potential for the United States, China, and many other countries is enormous.

The wind industry has consistently blown by past projections-BTM Consult ApS, for example, forecast in 2002 that global capacity would reach 83,000 megawatts by the end of 2007, far short of the 94,100 megawatts that it actually did achieve-and it could continue to do so for years to come.

Read the full release with source notes, and charts: http://www.worldwatch.org/node/5448?utm_campaign=vital_signs_online&utm_medium=email&utm_source=wind

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4. BANGKOK CLIMATE CHANGE TALKS REACH AGREEMENT ON WORK PROGRAMME FOR 2008

Bangkok, 4 April 2008, UNFCCC media release – The UN Bangkok Climate Change Talks ended Friday with agreement on a work programme that structures negotiations on a long-term international climate change agreement, set to be concluded in Copenhagen by the end of 2009. The Bangkok meeting also sent a clear signal that the use of market-based mechanisms, such as the Kyoto Protocol’s Clean Development Mechanism, should be continued and improved as a way for developed countries to meet emission reduction targets and contribute towards sustainable development.

“The train to Copenhagen has left the station.” said Yvo de Boer, Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC). “Not only do we have the certainty that critical issues will be addressed this year, we now have the bite-sized chunks which will allow us to negotiate in an effective manner.”

At the Bangkok meeting, delegates from 162 countries began fleshing out the “Road Map” agreed at UN Climate Change Conference in Bali last year, which launched negotiations on a long-term international agreement, along with strengthening ongoing work under the UNFCCC. This agreement is to be clinched in Copenhagen in 2009. The main elements of the stronger climate change deal include a shared long-term vision and enhanced action on mitigation, adaptation, technology and finance.

“Delegates brought their hopes and aspirations to Bangkok. You need a good beginning to get to a good end. We now have that good beginning,” said the UN’s top climate change official. “It is now crucial to create a better common understanding of key issues before Parties can move into the phase of discussing concrete text proposals for the envisaged agreement,” he added.

Whilst agreement was reached on an overall work programme for 2008 under the Convention, the process established under the Kyoto Protocol initiated work on the analysis of tools for developed countries to reach emission reduction targets after 2012, when the first commitment period of the protocol expires. The group also discussed ways to enhance the effectiveness of these tools and their contribution to sustainable development. One of the main outcomes of their discussion was an agreement that the use of emissions trading, the Clean Development Mechanism and Joint Implementation should be continued.

“This sends an important signal to businesses that the international carbon market spawned by the Kyoto Protocol will continue beyond 2012. Businesses have been asking for clarity on this issue and now they have it, making it possible for them to plan their investments accordingly,” said the UNFCCC Executive Secretary.

Parties also agreed to continue including forest and land use-related activities as a means to achieve emission reductions in the second commitment period. The group under the Kyoto Protocol will continue its work on the analysis of tools for developed countries to reach their emission reduction targets at its next regular meetings in June and August 2008.

Additional major UN climate change meetings in 2008 and 2009 According to the work programme agreed at Bangkok, parties will seek progress on all five identified elements of the Copenhagen agreement (a shared long-term vision and enhanced action on mitigation, adaptation, technology and finance) at each of the three sessions that will be organised this year. Its work will be facilitated by gatherings and other activities to deepen understanding and clarify elements contained in the Bali Road Map. In 2009 at least four sessions will take place, with a combined duration of up to eight weeks.

The second major UN climate change meeting this year after Bangkok, to be held in Bonn, Germany in June, will pay particular attention to the issue of advancing adaptation to climate change through finance and technology.

The Bonn session will look into ways to generate and mobilize the necessary financial and investment flows to both reduce emissions and adapt to the inevitable impacts of climate change. It will furthermore look into ways to scale up the development and transfer of low-emissions technologies to developing countries and to speed up the use and spread of such technologies.

The third major UN gathering in 2008 in August will look more closely into a number of crucial issues related to enhanced action on mitigation. One of them concerns reducing emissions from deforestation in developing countries, recognized to be responsible for around 20% of global emissions.

The Ghana meeting will address the issue of cooperative sectoral approaches and sector-specific actions.

The fourth session at the United Nations Climate Change Conference in Poznan, Poland, in December this year will address the issue of risk management and risk reduction strategies, technology and the key elements of a shared long-term vision for joint action in combating climate change, including a long-term target to reduce greenhouse gas emissions.

About the UNFCCC: With 192 Parties, the United Nations Framework Convention on Climate Change (UNFCCC) has near universal membership and is the parent treaty of the 1997 Kyoto Protocol. The Kyoto Protocol has to date 178 member Parties. Under the Protocol, 37 States, consisting of highly industrialized countries and countries undergoing the process of transition to a market economy, have legally binding emission limitation and reduction commitments. The ultimate objective of both treaties is to stabilize greenhouse gas concentrations in the atmosphere at a level that will prevent dangerous human interference with the climate system.

About the CDM: Under the CDM, projects that reduce greenhouse gas emissions in developing countries and contribute to sustainable development can earn certified emission reduction (CER) credits. There are currently more than 975 registered CDM projects in 49 developing countries, and another 2000 plus projects in the project registration pipeline. The CDM is expected to generate more than 2.7 billion CERs by the time the first commitment period of the Kyoto Protocol ends in 2012, each equivalent to one tonne of carbon dioxide.

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5. U.N. BODY CONFRONTS NEW WORLD, MADE UP OF A MAJORITY OF URBAN DWELLERS

New York, Apr 7, 2008 — As the number of people living in cities this year outranks the number living in rural areas for the first time, and 19 ‘megacities’ emerge with more than 10 million inhabitants, top United Nations officials today stressed the importance of understanding how successful cities have dealt with pollution, slums and other ills.

“Despite their problems, large cities produced better health outcomes than smaller ones,” said Sha Zukang, Under-Secretary-General for Economic and Social Affairs, as he opened this year’s session of the UN Commission on Population and Development.

He said that, as they confront additional population and uneven access to services and resources, local authorities must be able to tailor assistance to their particular settings.

Resources for planning must be made available, however, other officials warned. The Executive Director of the UN Population Fund (UNFPA), Thoraya Ahmed Obaid, said that the decline in international funding for family planning would slow global efforts to reduce poverty, improve health and empower women.

“In fact, funding for family planning as a percentage of all population assistance has dropped considerably, from 55 per cent in 1995 to 7 per cent in 2005,” she said. “The victims of this funding gap,” Ms. Obaid said, “are poor women in poor countries who cannot exercise their reproductive rights and plan their families. It is a serious problem that needs to be urgently addressed.”

The Commission’s session, focusing on the growing urbanization of the world population and its implications for development issues such as poverty and the environment, will run until 11 April.