Quit stalling and ditch the impossible dream of climate 'certainty'

Are you certain? Really? You're absolutely sure?

The old adage goes that only death and taxes are certain – and it's not far wrong. Few things are certain. Even those supposedly absolute laws of science, morality and faith are constantly subject to variations of interpretation, context and human doubt. And yet businesses crave certainty. Like a teenager lusting after the latest Hollywood pin-up, they are chasing something that will never, can never, materialise.

This desire for certainty is particularly apparent among the growing number of businesses lobbying for more ambitious and coherent national and international climate change policies.

In many ways this movement is deserving of near universal praise: its "pro" stance on regulation and co-operation marks one of the most significant developments in business thinking in decades and provides further evidence that many corporate leaders are ahead of their political counterparts in their understanding of the threat presented by global warming. And yet the repeated demands for "certainty" over future climate change policy, incentive structures, environmental legislation and green tax regimes is beginning to sound less like a reasonable call for clarity and more like an excuse for inaction.

These groups were at it again last month, with a host of entirely well-intentioned green business groups releasing a flurry of open letters to world leaders at the Davos World Economic Forum, and US senators mulling a proposed climate change bill. As the 83 US chief executives who signed up to the We Can Lead campaign for a US climate change bill put it: "Today's uncertainty surrounding energy and climate regulation is hindering the large-scale actions that American businesses are poised to make. We need strong policies and clear market signals that support the transition to a low-carbon economy and must reward companies that innovate."

These demands for greater certainty are entirely understandable. For decades climate change policies have been a volatile mess, characterised by initiatives and strategies that have ebbed and flowed like Silvio Berlusconi's hairline. With climate change and environmental issues oscillating up and down the political agenda, businesses inevitably struggled to make the case for long-term, low-carbon investment decisions that could be undermined within months by changes to legislation, taxation or incentive schemes.

These problems have been particularly acute in the case of the EU's emissions trading scheme, which – like so many of our financial mechanisms – appears to have been devised with such hubris that its architects never bothered to consider what might happen if a deep and lengthy recession occurred. The net result is that the price of carbon, the primary instrument for driving carbon-intensive firms to invest in alternative technologies, has proved so volatile that businesses have been able to delay low-carbon projects, citing uncertainty over the carbon price and hence the projects' economic viability. In this context, the growing calls for greater certainty in the form of a carbon tax or floor price for emission allowances from a number of energy companies and the Environmental Audit Committe of MPs is entirely justified.

More broadly, however, the calls for certainty over all aspects of climate change policy are looking at best dated and at worst like diversionary tactics designed to create an excuse for stalling low-carbon investments.