Turning Down the Heat
Action on Climate Change Challenges Business As Usual
By Dave Tilford
You've probably heard by now that climate change is happening. And it's bad. You've also heard (from everyone not paid to say otherwise) that human activity - in particular, energy generation, automobile emissions, and deforestation - represents the driving force. With the United States representing 4 percent of the world's population but emitting 22 percent of the greenhouse gases (GHGs), we're doing most of the driving.
We aren't handing over the wheel any time soon, either. We seem reluctant even to peer out the windshield to see what we're running over as we continue to accelerate along a ruinous course down the carbon superhighway. It's easy to get discouraged by the head-below-the-dashboard response from our national government.
Yet there is a counter-trend that can't be dismissed. Even here in the States there is a growing acceptance of responsibility among local governments and businesses. Forces are in play that may eventually override our federal government's lethargy.
An awful lot depends on how long that takes, of course. Scientists caution we don't know the full extent of what may happen, but preliminary assessments predict that climate change could drive one quarter of the planet's species into extinction. Studies also indicate that some of the world's poorest and most vulnerable human populations will be hardest hit.
Governments in Action
The Kyoto Protocol went into effect this past February, committing governments around the world to reducing their GHG emissions. As of this writing, 150 nations representing about 55 percent of the world's emissions had joined. The United States refused to participate.
For all the bluster about Kyoto's stringent requirements, its targets are modest in comparison to the level of the crisis. The treaty calls for curbing emissions 5.2 percent below 1990 levels by 2012. Meanwhile scientists claim cuts of 60 percent or more may be necessary. The Intergovernmental Panel on Climate Change estimates that, unchecked, the world will experience a temperature rise of 2.5 to 10.4 degrees by 2100. Even the low end will have serious negative consequences.
Some nations aren't waiting. By 2002, the United Kingdom had already successfully reduced its emissions by 15 percent from 1990 levels; Germany, by 19 percent, according to the nonprofit Climate Group. Far from halting the wheels of commerce and costing millions of jobs, since 2002 the UK economy actually grew by 30 percent while Germany created 450,000 new jobs. Other countries such as France and Sweden have long-term goals to cut emissions even more drastically by mid-century, reducing emissions by 60 to 75 percent from 1990 levels.
Even as the U.S. Senate's Committee on Environment and Public Works chairman insists that global warming is a "hoax," local governments are also stepping in to take responsibility. The mayors of 146 cities in 36 states - spanning the political spectrum and representing over 10 percent of the U.S. population - pledged to enforce Kyoto's U.S. targets in their own cities to reduce GHGs 7 percent below 1990 levels by 2010.
Many jurisdictions are achieving these ambitious goals: Seattle's government reduced GHG emissions by more than 60 percent by constructing green buildings and operating alternative fuel vehicles, and Seattle's public utility committed to zero net GHG emissions by the end of 2005. The government of Salt Lake City has become Utah's largest buyer of wind power in order to meet its own reduction target. New York City is investing heavily in hybrid- powered vehicles.
State governments have exhibited leadership as well. Nine Northeastern and Mid-Atlantic states banded together to form the Regional Greenhouse Gas Initiative. The initiative requires electric power generators to reduce carbon dioxide emissions and employs a multi-state cap-and- trade program with a market-based emissions trading system.
Voters are also getting involved. Last November, Colorado citizens became the first in the nation to approve a ballot initiative establishing a statewide renewable energy mandate. The measure requires Colorado utilities to provide 10 percent of their electricity from renewables by 2010. Sixteen other states have legislatively adopted renewable energy requirements.
California is motoring ahead of the national government in tackling auto emissions. In November, California's Air Resources Board adopted a rule requiring that new cars emit 30 percent less carbon dioxide by 2016. The rule is significant because it would force automakers to markedly increase fuel efficiency standards, even as federal legislators balk at mandating even minor increases. Predictably, automakers honked and are vigorously challenging the law in court. Meanwhile, other states are quietly hopping on board to adopt California's rule instead of weaker federal clean air standards. In May, Washington became the ninth state to do so, with Oregon poised to follow suit. Including Oregon, these "California rule" states represent 40 percent of the total new car market. If these laws hold up in court, the incentive for automakers would be to make cleaner cars for everyone rather than produce separate fleets for "California standard" markets.
Responsible Businesses
Governments aren't the only ones getting into the game. According to the Pew Center's Business Environmental Leadership Council, many companies are taking steps to reduce their emissions by implementing innovative programs in areas such as energy, carbon sequestration, and waste management. Company CEOs, from BP's Lord Browne to Ford's William Clay Ford frankly acknowledge that global warming must be dealt with. Some companies have expressed an interest in a national strategy that would save them the headache of having to divine regulatory futures or worry that long term progressive strategies might be undercut by competitors emphasizing short-term slash-and-burn profits.
While some companies (notably Ford) are having difficulty reconciling business models with lofty words, others have found ways to profit directly by cutting emissions. In 1998, energy giant BP announced an ambitious plan to reduce the company's GHG emissions 10 percent below 1990 levels by 2010. BP achieved its emissions goal nine years ahead of schedule, in 2001... and made a bundle of money in the process. An initial outlay of $20 million produced a profit of over $650 million for the company. BP feels another financial windfall might be on the horizon as it seeks to reduce emissions further by integrating a broader lifecycle perspective into its operations and transition more of its business toward renewables.
Even General Electric, not exactly a paragon of environmental virtue over the years, unveiled and publicized an "Ecomagination" initiative designed in part to significantly cut emissions. Far from mere window dressing, GE is staking a fair amount of its reputation and economic future on this campaign, which will more than double its research investment in cleaner technologies by 2010 and introduce more clean-tech products annually. Overall, GE plans to reduce its GHG emissions 1 percent by 2012 compared to 2004 levels. A 1 percent reduction may not sound like much - but based on the company's projected growth, GE's emissions would otherwise rise 40 percent by 2012.
Some companies have taken emissions reduction to an entirely different level. Geneva-based STMicroelectronics, one of the largest semiconductor companies in the world, has pledged to achieve zero net greenhouse gas emissions by 2010 while implementing a four-fold production increase. With annual revenues in excess of $6 billion, the company employs over 41,000 people in 24 countries. CEO Pasquale Pistorio outlined the company's environmental vision in 1993, and by 2001 ST had reduced electricity consumption and GHG emissions by nearly one third, and paper and water usage by nearly half, from their 1994 baseline. Vice President Georges Auguste states: "We believe firmly that it is mandatory for a total quality management driven corporation to be at the forefront of ecological commitment, not only for ethical and social reasons, but also for financial return."
Investors Speaking Up
Not long ago, Swiss Re, the world's second-largest reinsurer (insurer of insurance companies) warned that natural disasters aggravated by global warming were a severe threat to the economy at large, and recommended businesses employ many of the same strategies Kyoto signatories and progressive businesses are already taking.
Increasingly, environmentally conscious large-scale investors are sending the same message and want to know how companies are doing, emissions-wise. The California Public Employees Retirement System controls a $180 billion portfolio and requires all companies within its portfolio to publicly reveal data on their emissions. On an even larger scale, 143 investment groups representing $20 trillion in assets banded together to form the Carbon Disclosure Project (CDP) to gather data on the world's 500 biggest corporations and their plans to address climate change. CDP Project Coordinator Paul Dickinson says accumulating such information will help investors improve their understanding of climate change risks and opportunities. It also makes corporations take a fresh look at financial and public relations vulnerabilities.
The Investor Network on Climate Risk (INCR) represents another level of investor involvement that could go a long way toward shaping corporate behavior. INCR is coordinated by Ceres, a coalition of investment funds, environmental organizations, and other public interest groups that helps companies address social and environmental impacts. Ceres and the UN Foundation hosted a summit in May wherein two dozen leading U.S. and European institutional investors managing over $3 trillion in assets called upon U.S. companies, Wall Street firms, and the Securities and Exchange Commission to provide investors with comprehensive analysis and disclosure about the financial risks presented by climate change. The group also pledged to invest $1 billion in clean energy companies. According to Ceres president Mindy S. Lubber: "The fact that investors managing trillions of dollars of investments are taking these actions today is a powerful message that global climate change is an environmental threat and a financial threat, and that actions to mitigate these risks and maximize new market opportunities are needed now."
Taken together, these actions show change is possible where there is the will and proper incentives. The current level of action won't instantly reverse the problem, but as responsible voices in government and business speak out and shift their practices to account for their impact on the climate, the rules of the road begin to change. As citizens we must encourage and support companies working now to prevent global warming, and urge others - with our letters and our dollars - to do more to build on these successes.
Dave Tilford is Senior Writer for the Center for a New American Dream. Communications Associate Jennifer Errick contributed to this story.