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China hears carbon message

Fears that China's pre-Olympics carbon reduction initiatives were little more than a Games-related PR exercise have been dashed as observers note that far from reverting to previous practices, the Chinese government has heard the carbon message and is actively promoting a new responsibility towards climate change and the environment.

Just returned from a month-long speaking tour of Asia, Barloworld Optimus' Global Business Development Director Fraser Ironside says that widely-publicised measures to limit traffic flows in Beijing remain in place more than two months after the close of the Games, while pollution in the city has improved dramatically as a direct result.

What's more, he says, there's growing evidence that the nation is beginning to embrace key carbon reduction initiatives such as the UK based Carbon Disclosure Project – a coalition of 385 Institutional investors with $57 trillion assets under management – with Chinese companies now being targeted for carbon emissions reporting.

“We have to be content for the moment that only five out of 100 Chinese companies responded to the call, but it's a start and a significant one at that” he said.

He added that 'more concrete' evidence of the nation's escalating social responsibility is China's recent acknowledgement of the National Climate Change Programme and its own 5-year 20% energy reduction target by 2010.

Both moves coincide with the recent requirement for China Steel Corporation subsidiary Dragon Steel to pay Taiwanese $1.5 billion a year for a plant expansion to cover emissions costs under the Greenhouse Gases Reduction Act in Taiwan, which has already revealed a 15% emissions reduction target by 2014.

Fraser Ironside's comments come as the Solihull-based software developer and consultancy approaches the end of its first full year with a permanent Beijing consultancy base – a move that has aleady resulted in significant software and licensing gains for the company behind world-beating network modelling tool CAST, inventory optimisation tool Optimiza and the carbon optimization module CAST CO2.

Addressing more than 200 delegates at the influential CHaINA supply chain event in Shanghai this month, he said that growing social responsibility by the BRIC nations – Brazil, Russia, India and particularly China, in part driven by their recent inclusion into the Carbon Disclosure Project – is a significant development and a welcome boost to the Bali Roadmap formalised a year ago to find a UN Climate Treaty successor to Kyoto, pegged to conclude with the Copenhagen Summit in Dec 2009.

“Carbon measurement and reduction is now a global concern at board level for all the companies in the Carbon Disclosure Project and for the first time, Chinese companies are included in that list” he told delegates in his Green Stream presentation at the influential CHaINA supply chain event.

He says that in-line with other companies across the world, the business opportunities presented by 'being seen to be green' emerge as the likeliest drivers behind the growing social awareness now being demonstrated by China.

“Pressure is mounting from the Government front, from the corporate front and increasingly on the consumer front, while the message that tackling carbon exposure is likely to help companies' share prices while still creating long-term competitive advantage is starting to hit home” he said this week.

The move is seen as particularly significant as the 10-billion population nation is now viewed as a critical component of most international organisations' strategies, accounting for 6% of world GDP.

The Beijing Games have been hailed as a social and political triumph for the nation whose trade volume last year reached a record high $2.1 trillion – 23.6% up to the previous year; according to latest World Bank figures , China's per capita GDP is now $2,460 – up from $1,740 in 2005; and at the same time, the Federation of Logistics and Purchasing has put China's total logistics cost in 2007 at 4,540 billion Yuan – a rise of 18.2% compared with 2006.

But, he says, at around 10% of GDP, total logistics costs in China remain much higher than in America or Europe and on average, 90% of a manufacturer's time is spent on logistics, with only 10% on manufacturing.

“We've calculated that in China, a product is typically handled 27 times between supplier and end- customer during the distribution process, and on average, trucks only deliver 2740 tons a year with very low full-truckload percentage. But at last, clear evidence is emerging of its willingness to actively tackle the situation.

“The last few years have seen huge amounts invested in a new highway network with a plan to achieve 65,000 km by 2010, 85,000 km by 2020, 120,000 km by 2030, and 175,000 km by 2050 – a staggering total when compared to the US' existing Interstate highway network of 75,000km.

“In response Chinese companies are now intent on re-examining their supply chains with a view to deciding the optimal approach to get their products to their customers, and at the same time they've been listening to the sustainability message” he said.

Central to Barloworld Optimus' aggressive sales drive into China is optimal supply chain infrastructure tool CAST, used to evaluate and identify different supply chain strategies resulting in significant cost savings and service improvements, and its recently-launched CAST CO2 that's been shown to result in more than 20% reduction in carbon emissions coupled with a 9% decrease in costs.

As a result of his month-long speaking and fact-finding Asia tour, Fraser Ironside says that technology is now playing the lead role in reducing carbon as tighter new regulations governing carbon emissions take effect in the wake of last year's Bali summit.
Across the rest of the world, recent sustainability measures include the UK Climate Bill demanding 60% reduction in emissions by 2050; EU agreement to cut emissions by 20% by 2020; debate of the Lieberman-Warner Bill in Congress in the United States, aiming to reduce emissions by 63% of 2005 levels by 2050; independent California legislation implementing Carbon Taxes and requiring a 25% reduction by 2020; and a British Columbia Carbon Cap and Trade legislation introduced in Canada in April this year

Welcoming the revelation that Barack Obama is planning to invest in alternative fuels and renewable energy – including a plan to increase America's energy efficiency and create 5,000,000 new 'green' jobs – Fraser Ironside is also of the belief that other measures on the cards in the wake of the US presidential election include a speeding-up of federal carbon reduction targets as well as the introduction of local taxes and other measures including carbon trading.

Despite only being launched in March this year, major CAST CO2 deals have already been struck with Colgate Palmolive, Safelite, DHL Exel, CEVA, Logistics Bureau, Lexian, Belron and CDW.

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