Climate change—and efforts to mitigate it—are creating an increasingly uncertain future for businesses. The long-term effects of a warming climate are enormously difficult to predict. In the near term, however, new policies, technologies, and market preferences are already altering the competitive landscape of entire industries. That is creating opportunities for companies that effectively produce and manage low-carbon innovations in their markets—and threatening those that, by choice or circumstance, do not.
Today’s policy environment, particularly in the United States, is creating an extraordinarily uncertain environment for business decision-making. In the face of such uncertainties, corporate executives must still make decisions that affect their company’s strategy and competitive opportunities for years. The challenge is to walk a narrow line, investing in low-carbon innovation strategies that keep them competitive without moving too far ahead of the curve. Some companies, like those in the transportation sector, have some regulatory certainty in the form of fleet fuel economy standards, which enables them to commit to low-carbon innovations. But without such industry-wide standards in many sectors, the demand for low-carbon innovations is less clear.
Opportunities for low-carbon innovations exist throughout the economy, especially anywhere that energy is used in the manufacture, delivery, and consumption of goods and services. And with world energy consumption expected to grow by 40 percent in the next two decades,1 these opportunities are growing. The replacement value of today’s aging global energy supply infrastructure is estimated to be $12 trillion, and that of existing energy consuming technologies is even larger.2 Global revenues from new low-carbon energy solutions, energy efficiency technologies and services, and other climate-related businesses reached $530 billion in 2009, and are projected to surpass $2 trillion by 2020.3 Moreover, between 2010 and 2020, the projected cumulative total investment in clean energy generation alone is expected to reach $2.3 trillion.4 Companies able to bring low-carbon innovations to market quickly and at scale will gain early advantages over competitors, such as product leadership, higher market share, and influence over emerging policies and standards.
Leading companies are already bringing low-carbon innovations to a wide range of markets, offering valuable lessons for others facing similar opportunities and uncertainties. This report documents the challenges and best practices of these companies, distilling insights for other businesses pursuing low-carbon innovation strategies. It was developed by the report author, by Center staff, and with members of the Center’s Business Environmental Leadership Council (BELC). The research project included a detailed innovation survey of BELC members and other leading companies, a series of BELC workshops, broader research on innovation, and in-depth case studies of eight low-carbon innovation projects from four large multinational companies:
Taken in its entirety, the report presents a set of practical lessons for organizations pursuing low-carbon innovation strategies. The results should be of interest to corporate decision-makers who are developing or considering low-carbon innovation strategies and to others seeking to understand how companies can effectively bring low-carbon innovations to market, including financial analysts, institutional investors, state and federal officials, non-governmental organizations (NGOs), scholars, and participants in international efforts to address climate change.
The report is authored by Andrew Hargadon, the Charles J. Soderquist Chair in Entrepreneurship and Professor of Technology Management at the Graduate School of Management at University of California, Davis and a Senior Fellow at the Kauffman Foundation. He is the author of How Breakthroughs Happen: The Surprising Truth About How Companies Innovate (Harvard Business School Press 2003).
Check out our podcasts on low-carbon business innovation
|Learn about the top three technologies available today that will have the biggest impact on achieving low emissions growth.|
This Q&A orginally appeared on Singapore International Energy Week's website.
Q1. The Kyoto Protocol expires in 2012. Do you see an agreement on its successor during negotiations at Durban later this year? Or is an extension of the Kyoto Protocol or a move to a transitional framework a more likely outcome?
Eileen Claussen: The Kyoto Protocol has played an important role in advancing climate change efforts in some parts of the world. Most notably, the European Union established its successful Emissions Trading System and other policies in order to fulfil its obligations under the Kyoto Protocol. However, because developing countries are exempt from Kyoto's emission targets and because the United States has chosen not to join, the Protocol covers just one-third of global greenhouse gas emissions. Japan, Canada and Russia have made clear that they will not take on new binding targets post-2012 without commensurate obligations by the United States and the major developing countries, which are not prepared for binding commitments. Hence, there appears very little prospect of new Kyoto commitments being adopted in Durban.
While our ultimate aim should be a comprehensive and binding international climate framework, we must accept that getting to binding commitments will take time. The Cancún Agreements made important progress in strengthening the existing frameworks in the areas of finance, transparency, adaptation and technology. Further incremental progress in these areas will promote near-term action and will strengthen parties' confidence in one another and in the regime, thereby building a stronger foundation for a later binding agreement. At the same time, countries must continue strengthening political will and policies domestically. In Durban, parties should make concrete progress in implementing the Cancún Agreements--for instance, by establishing the Green Climate Fund and agreeing on stronger transparency measures--while affirming their intent to work toward binding outcomes.
Q2. Global GHG emissions increased by a record amount last year. Is the goal of preventing a temperature rise of more than 2 degree Celsius just a "nice Utopia" as IEA's Dr Fatih Birol put it?
EC: Long-term goals are tricky. On the one hand, they provide a rallying point to help focus attention and orient action, and a yardstick for measuring progress. On the other hand, they are meaningful only if they can be operationalized, and if interim efforts don't appear to be on track, people may be discouraged as a result and the will to act may actually weaken. In the case of climate, a temperature goal is appealing because it is easily related in the public mind to the core issue--global warming. But as a metric, it is several steps removed from the action that is needed: Reducing emissions. From a practical standpoint, a global emissions goal might be more helpful.
Countries' pledges to date clearly do not put us on the path to meeting the 2 degree goal. While achieving the goal is not yet out of the question, it would require a dramatic acceleration of efforts around the globe. The bottom line is that we know what direction we must go. Whatever our long-term goal--indeed, whether or not we have a long-term goal--the immediate challenge is the same: Ramping up our efforts as quickly as possible.
Q3. How much of an impact will the recent nuclear power crisis in Japan have on GHG emissions reduction?
EC: It is still too early to know what impact the Fukushima disaster will have on energy choices and greenhouse gas emissions around the world. The most dramatic example is the recent decision by Germany to completely phase out nuclear power. While many in Germany believe that the gap can be filled by renewable energy and improved energy efficiency, others are deeply concerned that the country will deepen its reliance on coal, making it impossible to achieve its ambitious greenhouse gas reduction goals.
Other countries must assess for themselves the implications of Fukushima for their energy futures. For those countries choosing to continue or deepen their reliance on nuclear power, the tragedy clearly offers lessons for improving safety. Given the continued growth in energy demand projected in the future, particularly in developing countries, it is difficult to imagine that we will be able to meet the world's energies needs and simultaneously meet the climate challenge without continued reliance on nuclear power. It is therefore imperative that we continue striving to enhance safety and solve the issue of long-term waste disposal.
Q4. Technology is seen as a key enabler to achieve low emissions growth. In your opinion, what are the top three technologies available today that can make the biggest impact?
EC: There are thousands of technologies available today that could make a huge impact with the right policy support, such as a price on carbon. But the problem, at least in the US today, is that it is unclear when such policy support will be forthcoming. So I will pick my top three based on the ones that need the least additional policy support to make a contribution, either because they yield multiple economic benefits beyond climate, or because they benefit from existing policy drivers.
a. Batteries in cars. Batteries can be used in vehicles in a variety of ways. While a battery-only vehicle may only be able to fill a niche market, hybrid vehicles that run on either gasoline or electricity will likely have broader appeal, and start-stop batteries, which turn off the gasoline engine while a vehicle idles, can be applied to just about any vehicle, achieving modest per-vehicle reductions that add up to significant reductions fleet wide. The combination of new US standards for fuel economy and GHG emissions and electric utility interest in selling electricity can drive battery costs down. The potential emission reductions are enormous, but they depend on cleaning up the electricity grid.
b. Information technology. IT can enable dramatic GHG reductions, for example through energy efficiency (e.g. smart buildings that turn on lights and HVAC when they're needed and turn them off when they're not), substituting videoconferencing for travel, and using wireless communication to optimize transportation routing for people and goods. Convenience and time savings are such powerful drivers of IT that it needs little incremental policy support.
c. Carbon capture and storage (CCS) for enhanced oil recovery (EOR) using CO2. CCS is technically available, and potentially a game changer, enabling us to continue to use fossil fuels but with very low CO2 emissions. CO2-EOR is already economic using naturally occurring CO2, and is close to economic using captured CO2. With very little policy support, EOR using captured CO2 could yield some near-term emission reductions while driving CCS costs down, thereby enabling enormous emission reductions in the future.
Q5. Energy efficiency has long been touted as the lowest hanging fruit to address the energy and climate change challenges. Many Asian countries have announced ambitious targets to cut their energy and carbon intensities. For example, as part of its 12th Five-Year Plan, China has indicated that it aims to cut energy intensity by 16 percent and carbon intensity by 17 percent in the next five years. Do you think Asian countries are doing enough? What more can they undertake to help combat climate change?
EC: Efficiency improvements that generate more economic output with less energy input are important for a variety of reasons, including energy supply security, pollution and greenhouse gas (GHG) emission reduction, and improvement of livelihoods. Countries such as Korea, China and India have taken significant measures to improve efficiency, with the result that the energy intensity of their economies has been lowering over the past decade.
Many energy efficiency measures are classified as "low hanging fruit," meaning the energy savings and other benefits they produce far outweigh the cost of investing in them. Asian countries are currently focusing on exploiting these low hanging fruit, notably in the industrial and power sectors, as well as in appliances and equipment, and large commercial and public buildings. Eventually, achieving additional energy savings will require more expensive investments, and targeting more difficult sectors, such as small and medium enterprises and households.
Asian governments will need to adjust policy tools to meet these new challenges. Policy certainty and appropriate price signals are important to ensure the efficiency improvement potentials of current investments are maximised. One way of providing these is through cap-and-trade type systems, such as those being considered or developed in China, India and Korea. This will also require the phase-out of subsidies that artificially decrease energy prices and encourage consumption rather than conservation. Though progress is slow, several Asian countries have taken or are taking steps in this direction as well.
Limiting the growth of or reducing energy consumption is, of course, essential. However, shifting to less carbon-intensive sources of energy is equally important in the medium to long term. As such, many Asian countries should also be commended for investing in developing less GHG-intensive energy sources.
The Center for Climate and Energy Solutions congratulates one individual, 14 organizations, and two partnerships who were publicly honored for their exemplary leadership in addressing climate change at the 2015 Climate Leadership Awards. The national awards program honors corporate, organizational, and individual leadership in reducing greenhouse gas emissions in internal operations and the supply chain.
"These companies, organizations, and individuals demonstrate that we can save energy, reduce emissions, and take decisive steps toward a low-carbon future," said C2ES President Eileen Claussen. "We hope their accomplishments will serve as an example for others to follow.”
The following awards were presented Feb. 24, 2015, at the Climate Leadership Conference in Washington:
Organizational Leadership Award
Individual Leadership Award
Excellence in Greenhouse Gas Management (Goal Achievement Award)
- The City and County of San Francisco, California
- The Clorox Company
- DPR Construction
- SC Johnson
Excellence in Greenhouse Gas Management (Goal Setting Certificate)
- Brown-Forman Corporation
- California Department of Water Resources
- Capital One Financial Corporation
- CH2M HILL
- The Clorox Company
- EMC Corporation
- The Hartford
- Tiffany & Co.
Innovative Partnerships Certificate
- Climate Leadership Conference home page
- EPA Climate Leadership Awards page
- Press Release annoucing 2015 Climate Leadership Award recipients
- Press Release announcing 2014 Climate Leadership Award recipients
- Press release announcing 2013 Climate Leadership Award recipients
- Press release announcing establishment of Climate Leadership Awards
The Pew Center's September 2011 newsletter highlights a new intiative focused on expanding carbon dioxide enhanced oil recovery, a new brief on international climate assistance, the lessons we can learn from Hurrican Irene, and more.
Press Release: U.S. EPA, Pew Center, and NGO Partners Unveil Award Criteria and Nomination Deadline for Climate Leadership Awards
September 14, 2011
Association of Climate Change Officers
The Climate Registry
U.S. EPA, Pew Center on Global Climate Change, The Climate Registry,
and the Association of Climate Change Officers Unveil Award Criteria and
Nomination Deadline for New Climate Leadership Awards
New national program will recognize corporate, organizational,
and individual leadership on climate change
Washington, DC – Today the U.S. Environmental Protection Agency (EPA), in partnership with The Climate Registry (The Registry), the Pew Center on Global Climate Change (Pew Center), and the Association of Climate Change Officers (ACCO), announced that the nomination period is open for the new Climate Leadership Awards.
The Climate Leadership Awards will support a legacy for EPA’s Climate Leaders program and will recognize exemplary corporate, organizational, and individual leadership in response to climate change. Nominations are due no later than October 21, 2011.
"With the creation of the Climate Leadership Awards, EPA is pleased to be joining with these exemplary organizations in recognizing extraordinary leadership in the reduction of greenhouse gases (GHG) in response to climate change," said Elizabeth Craig, EPA’s Acting Director of the Office of Atmospheric Programs.
Detailed criteria and the nomination forms for each of the five recognition categories are available online at www.epa.gov/climateleaders/awards/index.html. The categories are:
- Excellence in GHG Management (Goal Setting Certificate)
Recognizing organizations that publicly report and verify corporate GHG inventories and publicly set aggressive absolute GHG emissions reduction goals.
- Excellence in GHG Management (Goal Achievement Award)
Recognizing organizations that publicly report and verify corporate GHG inventories and achieve aggressive absolute GHG emissions reduction goals.
- Supply Chain Leadership Award
Recognizing organizations that have their own comprehensive GHG inventories and emissions reduction goals and can demonstrate they are at the leading edge of managing GHGs in their organizational value chains.
- Organizational Leadership Award
Recognizing organizations that exemplify leadership both in their internal response to climate change and through engagement of their peers, competitors, partners, and value chain.
- Individual Leadership Award
Recognizing individuals exemplifying extraordinary leadership in leading theirorganizations’ response to climate change and/or affecting the responses of other organizations.
Businesses with annual revenues over $100 million and governmental entities and academic organizations with annual budgets over $100 million are eligible for nomination in the first four recognition categories. In addition to meeting other criteria, nominees must be able to demonstrate that the bulk of their GHG management activities and achievements have occurred within the United States. In the case of the individual leadership award category, nominees must be employees of organizations that are eligible for the other categories and must reside within the United States.
The Climate Leadership Awards are designed to motivate, highlight and recognize actions that go beyond business as usual in the management and reduction of GHG emissions both in internal operations and throughout the supply chain. Together, the award winners will illustrate how leadership in the public and private sectors can help make the United States a more sustainable, low-carbon society.
Corporations, organizations, and individuals may self-nominate or nominate others for a Climate Leadership Award. Entrants may be nominated for multiple awards. Each category requires a separate submission. EPA and the NGO partners will hold a webinar at 10am PT/1pm ET on September 21, 2011 to discuss the award criteria, nomination process, and answer questions. (The presentation and recorded webinar are now available.)
More information about the awards and next week’s informational webinar is available at the EPA’s Climate Leadership Awards web page, www.epa.gov/climateleaders/awards/index.html.
An event to honor award recipients will take place on the evening of February 29, 2012 in Fort Lauderdale, Florida, in conjunction with the first annual Climate Leadership Conference, which will be held from February 29-March 1, 2012. The conference will feature thought leaders from the public and private sectors who will share key insights and innovative ideas on topics related to the awards such as: energy efficiency, clean energy, setting and achieving GHG reduction goals, engaging supply chains, addressing climate risks, and other practical applications for managing and reducing emissions. Conference details will be regularly updated at www.climateleadershipconference.org.
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About The Climate Registry
The Climate Registry provides organizations with hands-on, personalized service and resources to help them measure, verify, report and manage their GHG emissions in a publicly transparent and credible way. The Registry was established in 2007 as a 501 (c)(3) by US states and Canadian provinces and today is governed by a Board of Directors comprised of senior officials from 40 US states, the District of Columbia, 13 Canadian provinces and territories, six Mexican states and four Native Sovereign Nations. The Registry has more than 430 members who use The Registry’s services to measure and manage their emissions, as well as share policy information and best practices in carbon management. For more information see www.theclimateregistry.org.
About the Association of Climate Change Officers
The Association of Climate Change Officers is a 501(c)(6) non-profit membership organization for executives and officials worldwide in industry, government, academia and the non-profit community. ACCO’s mission is to advance the knowledge and skills of those dedicated to developing and directing climate change strategies in the public and private sectors, and to establish a flexible and robust forum for collaboration between climate change officers. For more information about ACCO, please visit www.ACCOonline.org.
Recently, I had the opportunity to attend as an observer the launch of the National Enhanced Oil Recovery Initiative, facilitated by the Center and the Great Plains Institute. In the short time since the launch, the EOR Initiative has generated notable
Carbon dioxide enhanced oil recovery (CO2-EOR) works by injecting CO2 into existing oil fields to increase oil production. It is not a new concept. In fact, around 5 percent, or 272,000 barrels per day, of all domestic oil produced comes from oil recovered using this technique, which was first deployed in West Texas in 1972. Decades of monitoring CO2-EOR sites have shown that in properly managed operations the majority of CO2 is retained in the EOR operation and not released to the atmosphere. One of the initiative’s goals is to better understand the role of CO2-EOR for carbon storage as this industry grows to produce more than 1 million barrels per day, or around 17 percent of domestic oil supply in 2030.
Will U.S. companies be ready to compete in the world markets of the future? Global clean energy markets pose a $2.3 trillion opportunity over the next 10 years, providing enormous potential for innovation in new technologies, products and business models. These opportunities will help us achieve the greenhouse gas emission reductions that scientists say are needed to mitigate the worst effects of climate change.
Yet the United States’ commitment to developing these markets for innovation is lagging. While the Pentagon is calling for improved energy security, the U.S. House of Representatives is proposing funding cuts for energy innovation that would reduce our reliance on fossil fuels. After surviving the FY 2011 federal budget battle by receiving $180 million out of the $300 million requested by the President, on June 15 the U.S. House Appropriations Committee voted to cut FY 2012 funding to $100 million for the Advanced Research Projects Agency-Energy (ARPA-E). The President had requested $550 million for the agency, which funds transformational energy technology research.
In Brief: Clean Energy Markets: Jobs and Opportunities
July 2011 Update (originally published February 2010)
Download this Brief (PDF)
This brief discusses how investment in clean energy technologies will generate economic growth and create new jobs in the United States and around the globe. The United States stands to benefit from the expansion of global clean energy markets, but only if it moves quickly to support domestic demand for and production of clean energy technologies through well-designed policy that enhances the competitiveness of U.S. firms.
Clean energy markets are already substantial in scope and growing fast. Between 2004 and 2010, global clean energy investment exhibited a compound annual growth rate of 32 percent, reaching $243 billion in 2010. Forecasts of investment totals over the next few decades vary according to assumptions made regarding the nature of future global climate policies. Over the next decade, assuming strong global action on climate change, cumulative global investment totals for clean power generation technologies could reach nearly $2.3 trillion.
Recognizing the potential of these markets, the European Union, China, and other nations are moving to cultivate their own clean energy industries and to position them to gain large market shares in the decades ahead.
- The European Union continues to lead the world in clean energy investments, spending nearly $81 billion in 2010. Since 2009, China has invested more money per year in clean energy technologies than the United States, investing $54.4 billion in 2010 compared to the United States’ $34 billion. Over 85 percent of today’s market for clean energy technologies is outside of the United States, primarily in Asia and Europe.
- Germany’s clean energy investments of $41.2 billion were the second most for any country in 2010, surpassing the now third-place United States.
- China now boasts the world’s largest solar panel and wind turbine manufacturing industries, accounting for nearly 50 percent of manufacturing for both technologies.
- Danish wind manufacturers produce close to 22 percent of annual global installed wind capacity.
These countries have taken deliberate steps to position themselves as leaders in the 21st century clean energy economy. History shows that it matters where industries are first established, and countries can use policy to foster domestic “lead markets” for particular industries, giving them the foothold that can lead to significant growth in global market share. In the United States, well-crafted climate and clean energy policy can give nascent clean energy industries such a foothold by creating domestic demand and spurring investment and innovation. Strong domestic demand creates not only export opportunities but also jobs – many of which must be located where the demand is, thus fostering domestic job growth even when industry supply chains are globally dispersed.
National climate and clean energy policy in the United States can help create jobs and domestic early-mover industries with the potential to become major international exporters. Such policy should provide incentives for investment in clean energy, for example through a clean energy standard, that requires a certain amount of electricity be obtained from clean energy sources, or a market-based mechanism that puts a price on carbon. The time to act is now: through policy leadership at home and abroad, the United States can position itself to become a market leader in the industries of the 21st century.
Click here for the press release.
In a unanimous (8-0) decision, the U.S. Supreme Court ruled in AEP v Conn that the state and land trust plaintiffs could not invoke a federal common law public nuisance claim against the five largest electric power companies. The plaintiffs in the case were seeking controls on the carbon dioxide emissions from the utilities’ power plants. Building on their 2007 decision in Mass v EPA, the Court held that Congress in passing the Clean Air Act had authorized federal regulation of greenhouse gas emissions and in doing so had effectively “occupied the field” thereby negating any common law claims. In a decision noteworthy for its brevity and clarity, the Court stated:
We hold that the Clean Air Act and EPA actions it authorizes displace any federal common law right to seek abatement of carbon dioxide emissions from fossil-fuel fired plants. Massachusetts made plain that emissions of carbon dioxide qualify as air pollution subject to regulation under the Act. (page 10)
by Eileen Claussen, President of the Pew Center on Global Climate Change
Energy is essential to human progress. Societies depend on it to maintain and improve quality of life, keep industries competitive and create jobs. But despite energy’s importance, we are not moving fast enough to make sure we can meet our future energy needs in ways that are affordable, sustainable and secure.
The status quo is not the answer. We need to move past the policy disputes of today and take bold action to build a clean-energy economy for tomorrow.
Fortunately, a handful of leading companies like GE have committed themselves to doing their part to achieve this goal. But these businesses need more certainty from government. They need to know that their investments are aligned with public policies that infl uence and shape domestic and world energy markets over time.
I am proud to see GE taking action on these issues despite today’s uncertainty and the mixed signals business is receiving from governments around the world. GE knows that transforming how we generate and consume energy is essential to protecting both the environment and our economic competitiveness. It’s time for others to follow GE’s lead so we can see dramatic growth in new clean-energy technologies in the years to come.
To view the full report, visit GE's website