As an example of what economists call "market failure", climate change is hard to beat. Normally when something damages or disadvantages us, the market moves to solve and correct the problem. But with global warming, the very reverse is occurring.
Even if the economic and environmental consequences of climate change were immediately apparent, which in the main they won't be for some years yet, the consumer would still buy on price. Paying extra to save the planet is something which collectively we seem unwilling to contemplate unless forced. So we buy our cheap Chinese goods, even though China has become one of the fastest-growing sources of CO 2 emissions in the world. To buy the more expensive, greener variety seems just plain stupid when nobody else is doing it.
All these issues are the subject of a two-day Government/Business conference in London this week on the challenge of climate change. So far the business community has been reasonably supportive of the Government's various initiatives, but there were some warning shots across the bows yesterday.
John Sunderland, the president of the CBI, said that the UK emissions target for 2010 was unrealistic, given that the burden of achieving it is falling largely on heavy industry, while the target of a 60 per cent reduction in emissions by 2050 is too long-term and ill-defined to be of any use in business planning.
He broadly welcomed the principle of the European emissions trading scheme but questioned its usefulness when so many of the biggest sources of CO 2 emissions - from households to transport and small businesses - are left out.
Sir Digby Jones, his director-general, went further, to argue in a radio interview that all we do to address climate change in the UK and Europe is just whistling in the wind as long as America refuses to sign up to Kyoto. With good reason, the emerging economies of China and India will always refuse to play ball as long as the world's wealthiest nation and biggest polluter per head of population does nothing. In the meantime, we only put ourselves at a competitive disadvantage by claiming the moral high ground.
Yet I'm not sure he's right about this. Even George Bush is beginning to ease his position on climate change and we can reasonably assume that once he's gone, America will become more receptive to the idea of doing its bit.
Unless the science dramatically changes over the next few years, much tougher carbon controls will be a global reality 10 to 20 years from now, so there may be some merit in being ahead of the curve. To impose demanding standards unilaterally now means we'll be better prepared as a nation when they are imposed universally. It might also put us at the forefront of greener, more efficient technologies, for which there will plainly be a huge demand.
The fault with the present set-up is that heavy industry, which is already struggling to compete, is shouldering a disproportionate share of the load. That's plainly got to change.
Walk and surf? Thanks but no thanks
It's hard to credit from the perspective of these more sober times, but back in the autumn of the dot.com boom, the mobile phone companies forked out an astonishing £60bn for third-generation mobile phone licences in Europe, £20bn of it in the UK alone. This was not entirely wasted money, as the proceeds went to governments, to be spent wisely or otherwise. Even so, it's hard to think of the phenomenon as anything other than the biggest misallocation of capital in the modern corporate age.
Cheap at the price, all the mobile phone operators said at the time, though even then none of them seriously believed it. The auction system applied conspired to make them overpay, and because everyone thought that you had to have a 3G licence to stay in the mobile game, they were happy to do so. To the extent that there was a justification it was that 3G would open the doors to a myriad of new multimedia services that would hugely expand the revenues of mobile telephony. Heady days.
In the event, no one rushed to launch 3G services on the spectrum so expensively acquired, not just because they were slow to develop the applications, but also because the market simply wasn't there. Whether it exists today in any more robust a form than it did back then is an interesting question, but one after the other the main operators are now finally coming out with their 3G propositions.
Yesterday it was T-Mobile's turn to promise, with all the hyperbole reserved for such occasions, a total revolution in mobile telephony with a new service called Web 'n' Walk. This genuinely does seem to be an advance on anything else on the market right now in that it offers completely open internet access over your mobile phone. The others are all to a greater or lesser extent "walled gardens" with limits on your ability to surf.
The cost is £9 a month for 40MB of data usage, the equivalent of about 2,500 e-mails or 500 average Web pages. The reason T-Mobile and others are pushing these services is that voice and text messaging revenue, if not yet on the wane, is reaching the limits of its growth, in mature Western markets at least.
The mobile phone companies suggest otherwise, but I think we can safely assume that virtually everyone who wants and can afford a mobile phone now has one. Nor, despite the advantages of mobility, can voice over mobile remain immune to the pricing pressures afflicting voice telephony more generally. The differential between mobile and fixed line charges is bound to narrow.
Will the mobile internet fuel a new growth phase? Personally I can't see it, though T-Mobile's chief executive, Rene Obermann, certainly argues a good case. When mobile first appeared, nobody thought it ever likely to be more than a bit player in the voice telephony market. Now it owns that market, and eventually it will own the internet space too. The effect will be viral, he claims. Once you see your next door neighbour has got it, you'll want it for yourself too.
Well maybe, but there is a limit to how much people are prepared to spend on their mobile phones and many are already at it, particularly in the present environment of squeezed disposable incomes. Mobile internet is a nice, even useful thing to have, but it is hardly a killer application. For mobile, those application have always been voice and text messaging. It's hard to persuade people to sign up for more, and indeed the percentage of mobile revenue coming from anything else is at present insignificant. The internet you get through a big screen and a broadband connection, which is already quite expensive enough, thank you very much.
A whole host of rather more promising 3G applications are eventually promised, from the mobile as electronic wallet to the mobile as navigator, for instance in telling you where to get the cheapest petrol as you drive around the country. Yet competition and regulation will in all probability limit the returns that can be made from them. Possibly I'm being too sceptical, but to me it seems unlikely those 3G licences will ever justify the prices paid for them.
Saint-Gobain; good but irrelevant point
It will be nearly Christmas before we know the outcome of Saint-Gobain's £3.7bn hostile takeover bid for BPB. The Takeover Panel yesterday stopped the clock on the bid for up to seven weeks pending the outcome of competition deliberations by the European Commission.
I've got some sympathy with what Saint-Gobain says about BPB's latest offering to shareholders, which is close to being a scorched earth defence. Buy-backs don't alter the underlying value of a business one jot, and they can be dangerous is they involve taking on too much debt. Yet the argument is irrelevant. Saint-Gobain needs to bid quite a lot more to succeed.Reuse content