REMARKS BY EILEEN CLAUSSEN, PRESIDENT, PEW CENTER ON GLOBAL CLIMATE CHANGE
7th IETA FORUM ON THE STATE OF THE GREENHOUSE GAS MARKET
September 27, 2007
Thank you very much. I am honored to be a part of IETA’s very impressive program. I was looking over the schedule for your three days here in Washington, and it’s really quite remarkable. The program here, and the success of this event, is just one more tribute to Andrei’s leadership of this great organization—he has steered IETA to a leadership role on the climate issue, and I wish him all the best in his new position.
Not only is the program very substantive and strong, but IETA seems to have a superior sense of timing, too. This forum is taking place at a truly amazing moment— a blizzard of climate activity and meetings, a flood of proposals for domestic and international action, the melting away of industry resistance. Scientists say to expect more extreme weather as a result of climate change, and it appears it’s already here.
And even though the China Olympics don’t start until next summer, we already have an Olympics competition going on as countries lay out their climate plans.
- Most countries, it appears, plan to compete in the biathlon – growing their economies while limiting emissions growth.
- Then there is the synchronized swimming event, where the countries of the EU will try to align their climate activities without the whole thing turning into a freestyle contest.
- And the United States, under the current Administration, is favored in the stationary target-shooting event. This, of course, is an event where you don’t really have to move from where you are now, but you make an awful lot of noise. And, of course, participation is entirely voluntary. We’ve actually become quite good at this here in America.
Seriously, this is a remarkable moment. Consider all of the other climate change-related events going on. Of course, we had the Secretary General’s sessions at the United Nations in New York at the start of the week, and right now, also here in Washington, there is President Bush’s meeting of major economies. In addition to these, there are all kinds of conferences and meetings: the Pew Center did two, the U.N. Foundation is doing one; the Brookings Institution did one. And there is also the annual meeting in New York on the Clinton Global Initiative, which includes a very substantive track on energy and climate change.
And, of course, these events follow fast on the heels of the Vienna climate change talks in August, and it is not long before the very important U.N. Climate Change Conference in Bali, where I hope we will see real progress toward an effective, post-2012 framework for international action.
I mention all of these other events because things are heating up on this issue in more ways than one. And progress, I believe, will depend on finding a way to bring people together and forge practical and effective climate solutions that can draw broad support. This is what I call the “sensible center.”
Now, I am sure all of you are familiar with Google maps. This is where you go online and you get detailed directions by typing in a starting and an ending address. Well, today, I’d like to borrow the Google maps approach and see if it can help us find our way to the sensible center, if it can provide some insights on how to get to the place where all of us (or at least most of us) want to go.
So first we need a starting address—and that’s easy enough. Let’s look at where things stand right now on this issue. And that means starting where every conversation about climate change must begin: with the science. All of us are familiar with the latest findings from the IPCC. “Warming of the climate system is unequivocal,” they tell us. They also talk about a 90-percent-or-greater chance that we (humanity) are the cause of this—and a 90-percent-or-greater chance that the world will see more hot extremes, heat waves and heavy precipitation events.
Just last week, we learned that Arctic sea ice is now at its smallest recorded extent. There is simply no denying any more that our climate is changing, and that human activities are largely to blame.
But, despite the science, despite knowing we have a very serious problem on our hands, we continue to burn coal at an alarming rate—China alone is building a new coal-fired power plant every week to 10 days. The world continues to consume 83 million barrels of oil per day. Here in the United States, we continue to debate back-and-forth about how to address this issue as a nation—Should we do cap-and-trade? Carbon tax? Voluntary approaches only? And, at the global level, we continue to wander about in this no-man’s land we’ve created between Kyoto’s short-term targets and what comes next.
All of this is part of our starting address—where we are now as we consider how to get to the place where we ultimately want to go. However, there are also signs of hope, signs of progress. Here in the United States, for example, we see an increasing number of states taking independent action to establish targets, experiment with trading, and otherwise reduce their contribution to the climate problem.
- California, as you all know, has an ambitious set of enforceable emission targets, and the state also is a part of the Western Climate Initiative, together with five other western states and the provinces of British Columbia and Manitoba, all are committed to agreeing on the design of a cap-and-trade program by next August.
- The Regional Greenhouse Gas Initiative, including 10 Northeastern and Mid-Atlantic states, aims to get going in 2009. Right now, the states are working on adopting the model rule and setting up auctioning and allocation.
- And think of Florida’s ambitious program and the 25 states with renewable portfolio mandates.
At the same time that we see these states taking the initiative, we see members of Congress putting forward very serious proposals (with bipartisan support) aimed at limiting emissions at the national level. We have had more than 120 hearings on climate change since January, and we have numerous bipartisan bills on the table and emerging. We are clearly on our way here in the United States—and our journey is aided, in large part, by corporate leaders embracing climate policies that in the past would have been universally condemned by U.S. industry.
So this is our starting address. And it is honestly a mixed-bag kind of a place. A place where we are not doing nearly enough to address this looming crisis, but where there are these signs of hope. Which brings us to the next question: Where do we want to go from here? What is our ending address? And our ending address, I believe, is a destination we all can agree on. That place may not have an exact zip code or street number, but we can describe it in enough detail, I believe, to get a solid set of directions.
It is a place where the United States and other major emitting countries are--each and every one of them--doing their part to protect the climate. It is a place where the world is united in pursuing the goal of the U.N. Framework Convention on Climate Change, which was signed by the United States and 190 other nations—nearly every nation on this earth. And that goal is to “avoid dangerous anthropogenic (or human-cased) interference with the climate system.”
As I said, the interesting thing about this place we want to get to is that there is no real dispute about it. It’s how to get there that’s in dispute. The only thing I can compare it to is going on a trip with your family and agreeing that you want to get to, say, Florida but disagreeing on the best route to take to get there. And so you have to go to that all-purpose, neutral resource, Google, to find out. At the Pew Center, we like to think of ourselves as providing the Google map toward practical climate solutions (and this will be my only sponsored link!).
So what would this Google map tell us about how to get to this place where we want to go, now that we have plugged in our starting and ending addresses? Well, finding the best route is not an easy task because there are a lot of people throwing out different directions to a climate solution. And, if we were to follow many of these directions, we would either veer way off course or, more likely, never reach our destination at all.
These directions tend to fall into opposite extremes. For example, some call for a mandatory, worldwide cap on greenhouse gas emissions with trading, where every major economy accepts a binding emissions target. Sounds great but it’s a political non-starter. At the other extreme, many people want the world to join hands and unite around an “aspirational goal” – such as an X percent reduction in global emissions by 2050. Don’t get me wrong: having an aspirational goal is not a bad thing. But if aspiration is all you’ve got, well, all you’ve got is aspiration. Under these proposals, no one is required to do much of anything. We might all feel good for having this goal but the lack of clear commitments would result in more of the same: a little movement that barely brings us closer to where we need to go.
The same opposing directions appear when the talk turns to emissions trading. Some say let’s give away all the allowances; others say auction all of them. Some say allow offsets for all projects that could conceivably reduce emissions. Others say don’t give credit for any offsets.
We know, based on Europe’s experience this past year, that we need a price on carbon that is high enough to give firms a reason to invest in new climate-friendly technologies. Yet we see proposals that talk about limiting that price to something that will motivate very little innovation.
Well, there’s another direction we can go—there is a route we can take that avoids all of these detours, and that takes us to our destination. It involves taking what is useful from all of these highways and by-ways, making the necessary compromises, and following a route that lets us go as fast as we can, and as directly as we can. For example, we can embrace an aspirational goal but we must back it up with international commitments that are binding but flexible. And, we can design a cap-and-trade program based on a hard-nosed look at what will be both economically viable and environmentally effective.
It’s not about aiming low, but rather about abandoning the impossible.
FOR EXAMPLE: It’s great to talk about the potential of voluntary approaches to reduce emissions, but history has shown that while they do deliver something, they don’t deliver the level of reductions we need. In the same way, it is pure fancy right now to expect developing countries to agree to binding limits on their emissions. It actually makes things harder when we lay out these expectations, because when developing countries refuse to join in the global effort because of a perception that they are being asked to do too much, then we lose the United States and others as well.
And so we need to look for the best route—both domestically and at the global level. Here in the United States, this means pushing ahead with plans for a cap-and-trade system. I know there has been some commentary recently about the relative merits of cap-and-trade vs. a carbon tax. But, once again, the thing we need to look at is what’s actually do-able, what gets us to the place we want to go, and what will actually pass?
Anyone who thinks this Congress or the next will come close to passing a substantial new tax (even if it is offset by other tax reductions and even if it is designed to achieve the very important goal of reducing U.S. emissions) … well, I have some 20-year-old carbon offsets to sell you. What’s more, the notion that designing a carbon tax is somehow simpler than designing a cap-and-trade program is simply not true. It’s just as complex. Plus, to top it all off, there is no environmental certainty in a tax – you enact it, and you have to wait and see what the effect will be, and you need to adjust it and keep adjusting it to get the effect you want.
With cap-and-trade, there’s certainty in what the cap will be—and, as a result, you know how much of a reduction in emissions you can expect.
What are the chances of cap-and-trade legislation passing the Congress? Well, I will tell you one thing. The chances improved in a big way when companies such as GE, Caterpillar, Chrysler, Duke, and DuPont all became part of the U.S. Climate Action Partnership. The USCAP plan would reduce U.S. emissions by 10 to 30 percent within 15 years, and by 60 to 80 percent before 2050. And, with a whole host of America’s leading companies behind it, I believe USCAP has been, and will continue to be, a significant game-changer. In fact, I feel confident that I can predict here today that enactment of a cap-and-trade measure is still plausible in 2008, and almost inevitable by the end of 2010.
Looking internationally, we see the same need for cool-headed, practical answers to the climate problem. The same need to find the sensible center. Looking at things in this way, we can see that the post-Kyoto framework must have two essential features. First, it must be based on binding international commitments; and second, it must be flexible in the sense that countries should be able to take on different types of commitments.
Why commitments? Because it’s the best and maybe the only way to deliver the level of effort needed to significantly reduce global emissions. Without commitments, countries can’t be confident that others are contributing their fair share to the global effort. And without that confidence, it’s hard for any one country to sustain an ambitious climate effort.
Why different kinds of commitments? Because countries are different – very different. Among the major economies, you have developed countries, developing countries, and economies in transition. Their per capita emissions range by a factor of 14; their per capita incomes by a factor of 18. The kinds of policies that work for some won’t work for others. It’s not one-size-fits-all.
So the post-2012 framework has to integrate different approaches. Binding emissions targets make sense for developed countries. But, as I said, it’s naïve to think that China, India, and the other emerging economies are going to agree to them anytime soon. Still, we need some form of commitment from those countries, so we have to be open to other possibilities. One possibility is policy-based commitments. A country like China, for instance, already has some ambitious national policies: an energy intensity goal, renewable energy targets, and fuel economy standards for cars that are stronger than those here in the U.S. What if China were to commit to fully implementing those policies in a binding international treaty? What’s key, I think, is that the commitment be credible, quantifiable, and verifiable.
This, again, is the sensible center … we need a new set of multilateral commitments. New kinds of commitments. Which brings us to the other major climate meeting here in Washington this week – the major economies meeting. What are we to make of it?
Well, one thing to be said for it is that it brings together the right group of countries. But what’s the real objective here? The administration has said its goal is to get a consensus among the major economies by the end of 2008 – just as the president’s about to leave office – contributing to a global deal under the U.N. convention in 2009. What kind of deal are they hoping to set up?
From all appearances, a very weak one. Just about the only thing the Administration thinks countries need to agree on is an aspirational long-term goal. And, as I have said, that’s not enough.
The best way to judge the value of the major economies meeting this week is whether it moves us toward or away from a new set of multilateral commitments. In other words, does it move us toward the sensible center, or not? That should, in fact, be the test of everything we do on the climate issue in the months ahead.
I know that some of us are better at following directions than others, but this is one time when we cannot afford to get lost. By staying on course to the sensible center, we can begin the long-overdue work of figuring out how to reduce domestic and international emissions as cost-effectively as possible — and in ways that deliver real results for the climate.
We’re just pulling out of the driveway right now, so fasten your seatbelts. It’s going to be a long and interesting ride. Thank you very much.
By Truman Semans, Director for Markets and Business Strategy, Tim Juliani and Andre de Fontaine, Markets and Business Strategy Fellows
Recent months have seen an explosion of activity on climate change, to the point where it is now almost impossible to pick up a newspaper without reading about a major new climate-related initiative from the business or policymaking community. This is not surprising, as it is clear that climate change will have economy-wide impacts, and create regulatory, physical, and reputational risks for a wide range of companies.
Manufacturing is not immune from these effects, for as a sector it represents nearly one-fifth (19 percent) of domestic direct emissions, and it is indirectly responsible for an additional 11 percent of emissions through electricity use. Furthermore, for powered manufactured goods such as appliances, electronics and autos, up to 90+ percent of emissions are created from product use, not their manufacture. Considering this greenhouse gas footprint, it is clear that manufacturing will be significantly impacted by any future climate change regulatory regime, and must now, as a sector, begin to confront the risks and opportunities that climate change presents. This includes awareness of and engagement in the national policy debate, as well as examining how climate can be factored into core business strategies.
Although a handful of scientists on the fringe continue to garner press attention with their contrarian views, the overwhelming majority of the scientific community believes that the warming in the atmosphere is unequivocal, and that the warming is human-induced. The latest report of the Intergovernmental Panel on Climate Change (IPCC) – a group of 2,500 climate scientists from across the globe that evaluate the peer-reviewed research on this issue – asserts that there is a greater than 90 percent certainty that most of the warming over the past century is human induced, and that a range of impacts are already being observed.
As the science has strengthened over the last decade, momentum has grown at the local, state and federal level to enact policies that reduce GHG emissions. Today, nearly all 50 states have enacted some form of climate-related standard, while the past several years have seen a steady increase in the level of Congressional attention to climate change.
A carbon-constrained future is imminent, a fact that many businesses now realize. In a survey of large corporations conducted during the development of the Pew Center’s 2006 report, Getting Ahead of the Curve: Corporate Strategies That Address Climate Change, 67 percent of businesses said they expect greenhouse gas regulations to take effect between 2010 and 2015.
A further 17 percent expect this before 2010. This implies climate legislation will pass Congress even sooner. The question now is not whether legislation will pass, but about its timing and the form it will take. Companies that prepare for this future will be the winners, while the rest will be left playing catch up.
Action on emissions
Manufacturing operations that are most likely to be affected by climate change regulations are those that result in significant direct greenhouse gas emissions (GHG), such as cement, iron and steel production, as well as those that are highly energy intensive, such as paper and chemicals operations. Climate change rules are likely to result in upward pressure on energy prices, which means that operational efficiency improvements will have greater benefit than in the past as a basis for advantage. Companies such as DuPont, which figures it has saved over $3 billion from efficiency since 1990, demonstrate the financial benefits embedded in these efforts. Manufacturers that produce highly efficient consumer products will also gain a competitive advantage over producers of similar, but more energy intensive goods and services.
Driven at least partly from a desire to influence the policy debate, a growing number of leading companies across many industries are now openly calling for national GHG limits. One of the most significant recent developments was the formation earlier this year of the U.S. Climate Action Partnership (USCAP). This coalition is an unprecedented collaboration of 23 major corporations and six leading nongovernmental organizations that is calling on Congress to enact mandatory, economy-wide climate protection legislation at the earliest date possible. Specifically, the group recommends Congress establish an emissions reduction pathway with short and mid-term targets equivalent to: between 100-105 percent of today’s levels within five years of rapid enactment; between 90-100 percent of today’s levels within 10 years; and between 70-90 percent of today’s levels within 15 years. Additionally, USCAP recommends a long-term reduction target of 60-80 percent below current levels by 2050.
USCAP believes a cap-and-trade system should be the cornerstone policy to meet these targets, but that additional policies should also be pursued in sectors such as transportation and buildings, in which the initial price signal from cap-and-trade will not be sufficient to reduce emissions and advance new technologies. The coalition also recommends that a federal technology research program be established that provides stable, long-term financing for low-GHG technologies. Additionally, Congress should urge the administration to engage in international negotiations with the aim of establishing emission reduction commitments by all major emitting countries.
The companies involved in USCAP, which include major manufacturers such as Alcoa, Caterpillar, Dow, DuPont, GE, John Deere, Johnson and Johnson – and the big three U.S. automakers – have chosen to become closely involved in the policymaking process because they realize, as the popular saying goes, “If you’re not at the table, you’re on the menu.” Yet, to earn a credible seat at the policymaking table, many companies have found they need to demonstrate their own commitment through meeting their own voluntary emission reduction goals. According to the Pew Center’s research, companies that have taken these steps report financial benefits from a range of climate-related programs, including energy efficiency improvements, process changes, fuel switching, and customer relations (see chart).
The Pew Center’s research found that the ultimate achievement related to climate is a game-changing strategy that allows a company to jump ahead of competitors by creating new markets or reshaping the rules of existing markets in their favor – for climate this means reshaping policy. And such strategies are beginning to emerge. GE and BP are working together to develop up to 15 clean-burning fossil-fuel based power plants that will separate and burn hydrogen while capturing and piping the resulting carbon dioxide into either deep geologic formations or existing oil wells to boost petroleum production. At the same time, BP is also partnering with DuPont to produce biobutanol, a biologically-derived, lower carbon transportation fuel that could replace ethanol for a wide-range of applications in the economy for significant market segments.
The consequences of climate change policy will be most severe for those who do nothing to prepare for it today. By engaging in the policy debate now, firms will help shape the carbon-constrained future in which they will operate. And while there is undoubtedly risk from climate regulation, there is also a great opportunity for the U.S. manufacturing sector to lead the world in producing new climate-friendly products and technologies, thereby helping not only the climate, but also the top and bottom lines.
Truman Semans is the Director for Markets and Business Strategy at the Pew Center on Global Climate Change. He manages the Center's Business Environmental Leadership Council (BELC), a group of 43 largely Fortune 500 corporations working with the Pew Center to address issues related to climate change, and directs Pew research on business and climate. He has consulted with McKinsey & Co. and served as the U.S. Treasury Department’s International Economist on global environment and natural resources.
Timothy Juliani and Andre de Fontaine are Markets and Business Strategy Fellows at the Pew Center on Global Climate Change. They work with the Center's BELC and engage in Pew Center analytic work on climate-related markets and investment issues.
July 18, 2007
Pew Center Contact: Katie Mandes, (703) 516-4146
PNM Contact: Don Brown, (505) 241-2849
PNM RESOURCES JOINS PEW CENTER'S BUSINESS ENVIRONMENTAL LEADERSHIP COUNCIL
New Mexico-Based Energy Company Supports Action on Climate Policy
WASHINGTON, D.C. - The Pew Center on Global Climate Change announced today that PNM Resources has joined the Pew Center's Business Environmental Leadership Council (BELC) and its efforts to address global climate change.
PNM Resources, an energy company with significant operations in New Mexico and Texas and a supplier of energy throughout the Southwest, has set environmental sustainability goals that include reducing carbon dioxide emissions by 7 percent below 2002 levels by 2009. The company also aims to cut nitrogen oxide, sulfur dioxide, and particulate matter emissions as well as reduce its use of fresh water for power production during the same time period. In addition, PNM Resources is a national leader in providing and promoting renewable energy. The PNM Sky BlueTM wind energy program ranks eighth in the nation in customer participation among investor-owned utilities.
As a founding member of the U.S. Climate Action Partnership (USCAP) along with the Pew Center, PNM Resources is playing an active role in formulating comprehensive policy solutions to address climate change. USCAP is an unprecedented collaboration of 25 major corporations and 6 leading nongovernmental organizations that is calling on Congress to enact legislation including a cap-and-trade system at the earliest date possible that slows, stops, and reverses the growth of greenhouse gases.
"Because climate change is a problem of such immense scale, successfully addressing it will require an extraordinary degree of collaboration and cooperation across industries, political parties, and international borders," said Jeff Sterba, Chairman, President, and CEO of PNM Resources and current chairman of the Edison Electric Institute. "This effort by the Pew Center puts that concept into action, and we are proud to be counted as a member."
"Leadership from major energy companies is critical to effectively deal with climate change," said Eileen Claussen, President of the Pew Center on Global Climate Change. "PNM Resources has a clear understanding of the growing risks from climate change, as well as the economic opportunities that new, clean technologies present. I welcome their expertise as we work to develop and enact sound climate policy in this country and globally."
Based in Albuquerque, N.M., PNM Resources serves 835,000 electricity consumers in New Mexico and Texas and 492,000 natural gas customers in New Mexico. Its subsidiaries are PNM, Texas-New Mexico Power, First Choice Power and Avistar. PNM Resources' stock (ticker symbol: PNM) is traded primarily on the New York Stock Exchange. For more information on PNM Resources visit its web site at www.pnmresources.com.
The BELC was established by the Pew Center in 1998, and the Center is a leader in helping these and other major corporations integrate climate change into their business strategies. The BELC is comprised of mainly Fortune 500 companies representing a diverse group of industries including energy, automobiles, manufacturing, chemicals, pharmaceuticals, metals, mining, paper and forest products, consumer goods and appliances, telecommunications, and high technology. Individually and collectively, these companies are demonstrating that it is possible to take action to address climate change while maintaining competitive excellence, growth, and profitability. The BELC is the largest U.S.-based association of corporations focused on addressing the challenges of climate change, with 44 companies representing over 3.8 million employees and a combined market value of $2.8 trillion.
The other members of the BELC are: ABB; Air Products; Alcan; Alcoa Inc.; American Electric Power; Bank of America; Baxter International Inc.; The Boeing Company; BP; California Portland Cement; CH2M HILL; Citi; Cummins Inc.; Deutsche Telekom; DTE Energy; Duke Energy; DuPont; Entergy; Exelon; GE; Georgia-Pacific; Hewlett-Packard Company; Holcim (US) Inc.; IBM; Intel; Interface Inc.; John Hancock Financial Services; Lockheed Martin; Marsh, Inc.; Novartis; Ontario Power Generation; PG&E Corporation; Rio Tinto; Rohm and Haas; Royal Dutch/Shell; SC Johnson; Sunoco; Toyota; TransAlta; United Technologies; Weyerhaeuser; Whirlpool Corporation; and Wisconsin Energy Corporation.
For more information about global climate change and the activities of the Pew Center and the BELC, visit www.c2es.org.
SPEECH BY EILEEN CLAUSSEN, PRESIDENT, PEW CENTER ON GLOBAL CLIMATE CHANGE
AMERICAN COLLEGE AND UNIVERSITY PRESIDENTS CLIMATE COMMITMENT SUMMIT
June 12, 2007
Thank you. I am very happy to be here and to welcome many of you to Washington. I don’t know if you saw it, but there was a recent report stating that Washington and other eastern U.S. cities will reach summer temperatures of 110 degrees over the next 50 years. In a related story, Washington is considering a new license plate slogan: Perspiration Without Representation.
And the interesting thing is we’re already seeing evidence of a changing climate in this part of the country. More and more species from the deeper South are making their presence known here in Washington, like crape myrtles and camellias, and a telegenic former Republican Senator from Tennessee. Think it’s a coincidence that our last two presidents are from Arkansas and Texas? They’re moving north, I tell you.
It’s gotten so bad that many people actually welcome a new Cold War with Russia. They think it will keep a lid on global warming. And now a congressman has been caught with money in his freezer. What better way to keep cool during a hot Washington summer than to slip an ice-cold hundred-dollar-bill into your pocket?
All joking aside, it is an honor to be here at your first Leadership Summit. I am delighted to see so many of the nation’s leading colleges and universities make the commitment that your institutions are making—you have set out to be a part of the solution to climate change, not a part of the problem. And I am certain that your leadership on this issue will inspire others to do their part as well.
Today, I want to use my remarks to talk about leadership and climate change. In my view, leaders are those who help us understand, in the words of the English biologist Thomas Huxley, that “the great end of life is not knowledge but action.” They help us see when the time has come to do something based on what we know about a challenge or about an opportunity that lies before us. Yes, aspiring to a fuller understanding of our world is to be admired. It helps to focus our attention, and to pinpoint our actions. But waiting for perfect knowledge is cowardice, not leadership.
Moving from knowledge to action. From what we know to what we must do. This is what I want to talk with you about today. And I want to start with a brief summary of what we know about the scope of the climate crisis and how to solve it.
Let’s start with the science. Most of you are familiar with the facts by now. The most recent report from the Intergovernmental Panel on Climate Change projected that global temperatures will increase between 3.2 and 7.2 degrees Fahrenheit by 2100. Sea levels will rise by as much as a foot to a foot-and-a-half. Many species will be lost. In addition, there is a 90-percent or greater chance that the world will see more hot extremes, heat waves and heavy precipitation events. And it is likely we will see more droughts as well.The science, in other words, is clear: if left unabated, climate change will have tremendous negative consequences for our country and our world.
The science also tells us there is no longer any doubt about what is causing this problem: greenhouse gas emissions from human sources—and, more specifically, from three key sectors: electricity; transportation, primarily automobiles; and buildings. Consider this: China is building a new coal-fired power plant every week to 10 days. And it’s not just China and other developing countries. Emissions have been growing in the U.S. as well—as of 2006, they were up nearly 18 percent compared to 1990.
This is what we know about the science, and it seems we are learning more every day. And we also know something else. We know there are solutions—real technologies that can deliver real reductions in greenhouse gas emissions. We know, for example, that we can reduce carbon dioxide emissions from cars. We know there are clean energy sources. We know there are ways to burn coal more efficiently, and ways to potentially store coal-related carbon emissions underground. And we know we can increase efficiency in the building sector.
But still there’s the same problem: we haven’t yet put all this knowledge we have to good enough use. And that, I believe, is where policy comes in. We need strong policies at the national and international levels, policies that make it absolutely clear that continuing with the status quo will have both an environmental and an economic cost.
In weighing what types of policies we need, I believe it’s important to look back at where we’ve been. Because in the same way that we know from the science that we need to take strong action to protect the climate, we know from history what policies will and won’t work.
The global effort to try and address this problem kicked off in 1992, you will recall, when another President Bush was in the White House, and when the nations of the world gathered in Rio de Janeiro for what was billed as the Earth Summit. This was the event where more than 150 countries signed an agreement called the United Nations Framework Convention on Climate Change.
The UNFCCC, as it is known, sets an ambitious long-term objective: to stabilize greenhouse gas concentrations in the atmosphere at a level that would – and I quote – “prevent dangerous anthropogenic interference with the climate system.” This is a goal that the United States, and virtually every other nation, has embraced.
As a first step to achieving this goal, industrialized countries agreed to a voluntary emissions target: they aimed to reduce their greenhouse gas emissions to 1990 levels by the year 2000. But before long, it became clear that the targets would not be met and that voluntary commitments could not deliver what was needed. So the United States and other countries began to negotiate a new agreement, one with binding targets, and they agreed at the outset that these new commitments would extend only to the industrialized countries, which so far have contributed the most to the problem.
Remember: this was more than 10 years ago, and already the world, including the United States, had recognized some very important things about responding to climate change. First, we recognized that voluntary action was not sufficient. Second, we recognized that we needed a global framework with binding commitments. And third, we recognized that, consistent with the Framework Convention, the developed world would have to take the lead.
Well, how quickly some of us forget.
Five years after the Rio summit, there was another international gathering on this topic in Kyoto, Japan. This was where the United States and other countries signed the new agreement known as the Kyoto Protocol. And what the Protocol did was to require developed countries to reduce or limit their emissions of greenhouse gases in relation to 1990 levels, with different countries agreeing to different targets. The agreement also included a number of features advocated by the United States to ensure countries a high degree of flexibility as they worked to achieve their targets. They could make actual emission reductions at home, buy emission credits from others, and use “sinks” such as farms and forests to remove carbon from the atmosphere.
This was another important principle that would serve us well to remember today: the need to combine binding commitments with flexible ways of achieving them.
During the negotiations in Kyoto, Vice President Al Gore flew to the ancient Japanese capital to help hammer out the deal. And the American negotiators ultimately agreed to a binding 7-percent reduction in U.S. emissions below 1990 levels by 2012.
But there was a problem: It was 1997, and U.S. emissions had already risen over 1990 levels by more than 8 percent. In other words, we had pledged to reduce our emissions by nearly 15 percent and we didn’t have any kind of program in place to do this, nor did we have the political will to put such a program into place.
Another problem was that the United States Senate, under the Byrd-Hagel resolution, had already voted unanimously—unanimously—that the United States should not sign any climate treaty that–quote–“would result in serious harm to the economy of the United States.” The resolution also put the Senate on record against requiring the United States and other developed countries to reduce emissions without also mandating—quote—“specific scheduled commitments … for Developing Country Parties within the same compliance period.”
So the fact of the matter is that the Kyoto Protocol had virtually no proponents on Capitol Hill. And the Clinton administration did next to nothing to try to bring about the ratification of this treaty that its people had made such a big deal of signing. We clearly were not prepared to deliver at home what we were promising abroad. Not a sterling example of leadership, I must say.
And then, in 2000, American voters elected another President Bush, and within months of entering office, his administration made a unilateral decision to reject the Kyoto Protocol—not to modify it, not to explain the changed circumstances, not to suggest an alternative, but to reject it out of hand. And in taking this step, the White House raised the ire of other nations that had persevered through years of difficult negotiations and that had acceded to U.S. demands early on that the treaty include emissions trading and other business-friendly mechanisms.
It took the Bush administration fully six years to put forward any kind of alternative to Kyoto, as it did in the run-up to the G8 meeting last week. And, adding insult to injury, the President’s proposal completely disregarded much of what we thought we had learned about how to spur effective global action on this issue—most importantly, the need for binding commitments that will truly change the world’s emissions growth path.
That, my friends, is not leadership. For a glimmer of real leadership, you have to look to the other end of Pennsylvania Avenue, where Congress is devoting an unprecedented amount of energy to developing legislation that would (finally) put the United States on track to addressing this issue in a serious way.
Already this year, there have been more than 70 hearings on the climate issue on Capitol Hill—serious, substantive hearings convened to help members of Congress draft mandatory climate legislation. In the U.S. Senate alone, there are five bills proposing some form of cap-and-trade program for greenhouse gas emissions, and a total of 80 bills that deal in some way with the climate change issue. And the leadership of the House has made it clear that they want to pass legislation as soon as possible.
I have given entire speeches this year on what’s happening on this issue on Capitol Hill, and I don’t want to do that here. But suffice it to say that Congress is taking this issue very seriously, and we may, in fact, see real climate legislation by 2008, and if not by then, almost certainly by 2010.
But, for real action on this issue, real effort to reduce emissions, you need to travel outside of Washington.
You can find leadership in Bentonville, Arkansas, for example, where executives at Wal-Mart have launched a program to reduce their company’s greenhouse gas emissions. And what is extraordinary about Wal-Mart’s entree to the climate arena is the magnitude of the company’s reach. Wal-Mart has pledged to work to reduce its emissions, both internally and externally, and the company’s external reach encompasses more than 40,000 suppliers. The ability of Wal-Mart to transform the debate and reduce energy use and emissions cannot be matched by most countries.
Among the company’s goals: reducing energy use in Wal-Mart stores by 30 percent, with a corporate goal of eventually being fueled 100 percent by renewable energy. Wal-Mart also is working to reduce the carbon footprint of its vehicle fleets. Wal-Mart operates 3,300 trucks. In 2005, these vehicles drove 455 million miles to make 900,000 deliveries to 6,500 stores. Wal-Mart has set a goal of doubling the fuel efficiency of its new heavy-duty trucks from 6.5 to 13 miles per gallon by 2015, thereby keeping some 26 billion pounds of carbon dioxide out of the air between now and 2020.
You can also find leadership on climate change in Fairfield, Connecticut, home to a little company called GE. As part of its Ecomagination initiative, GE has committed to doubling its investment in environmental technologies to $1.5 billion by 2010. This is the equivalent of starting a new Fortune 250 company focused exclusively on clean technology.
And you can find leadership in Sacramento, California. Not content with establishing an ambitious set of greenhouse gas emission targets—such as reaching 1990 levels by 2020—California lawmakers have gone the next step and passed legislation, with real enforcement, to give the targets the force of law.
Of course, California is not the only state to be exercising a leadership role on this issue. For example, 24 states, including large emitters like Texas, have required that electric utilities generate a specified amount of electricity from renewable sources. Twenty-eight states have climate action plans. And many states are working across their borders to reduce emissions in a cooperative way.
California and five other western states, for example, have agreed on a regional target for greenhouse gas emissions. By August 2008, the states will establish a market-based system to enable companies and industries to meet the target as cost-effectively as possible. A similar effort including 10 Northeastern and Mid-Atlantic states is aimed at reducing carbon dioxide emissions from power plants in the region.
And then there are 522 mayors representing 65 million Americans who are aiming to reach the U.S. Kyoto target of a 7 percent reduction below 1990 levels by 2012.
That is leadership. And we can also find leadership on the campuses of the colleges and universities that all of you represent. There are wonderful stories on the Presidents Climate Commitment website about colleges and universities reducing their emissions in real, tangible ways.
However, despite all the great things you are doing on your campuses, and despite the leadership of the states, cities and businesses I have mentioned, U.S. emissions still are trending up not down. Voluntary action is great, but it is not enough.
We need mandatory policies that will light a fire under what’s happening now to address this issue, policies that will take us to another level of action and commitment. In the view of the Pew Center, what we need more than anything else is an economy-wide cap-and-trade system. This is when you place a cap on emissions and allow companies to achieve their targets either by reducing emissions outright or by purchasing emission credits from others who may be able to do it more cheaply.
Cap-and-trade, in fact, is the focal point of an effort involving the Pew Center and other NGOs, along with a number of leading companies. The group, which now numbers 27, is known as the U.S. Climate Action Partnership (USCAP for short), and we have issued a cap-and-trade proposal with specific targets and timetables—a real plan of action to slow, stop and reverse U.S. emissions. In addition to cap and trade, the USCAP group embraced an array of other policies aimed at building a low-carbon energy economy.Another example of leadership.
Another example of people and organizations making the shift from knowledge to action on this issue.
But whether we are talking about USCAP, or about what is happening in the states—or, indeed, about the things you are doing on your college and university campuses—the leadership ranks on this issue remain far too thin. And this is where you come into the picture in your role as educators.
Responding to global climate change will be a decades-long challenge. We know a great deal about how to get started solving this problem right now, as I have said. But we still need to learn more. We need to learn more about how to develop and deploy new, low-carbon technologies around the world. We need to learn more about what types of policies will drive technology development. And yes, we need to learn more about the science of climate change so we can refine our understanding of exactly what’s happening, and what it will take to avert and adapt to this crisis.
Your institutions will be the places where much of this learning takes place. America’s colleges and universities are the incubators for the next generation to lead the climate fight. It is crucial that you lead by example through efforts to limit your own emissions. And it is crucial that you educate your students about what you are doing—if only to show them that progress is possible. But even more crucial is that you make sure this next generation is able to gain the knowledge it needs to act on an issue that will have a profound impact on their lives and on the world they inherit from us.
Climate change is an issue that touches on science, policy, technology, ethics, international relations and other fields of study. That means encouraging a multidisciplinary approach to the study of climate change. It means enabling students and professors to work across the disciplines so they can see how all the pieces fit together. It means creating new majors, new academic programs that enable students and professors alike to give this topic the attention it deserves. It means following the words of the Presidents Climate Commitment that all of you have signed by—I quote—“integrating sustainability into the curriculum.”
And it also means looking at what you can do outside the classroom to educate your students and others—by facilitating and encouraging dialogues on this issue on your campuses.
“Education is not the filling of a pail, but the lighting of a fire,” said the poet William Butler Yeats. We need to light a fire in this next generation so they can see the urgency of this issue, explore solutions, speak out for action, and act.
Today, I am pleased that the climate debate has moved from focusing on what we know to what we must do. Now, the challenge is to build a common understanding among the young and not-so-young alike …. a common knowledge of what it is going to take to address this enormous problem … and a shared sense of responsibility on the part of today’s—and tomorrow’s—leaders.
Meeting this challenge will take perseverance, and yes, a certain amount of perspiration as well. But I believe we are up to the task. Thank you very much.
C2ES's Business Environmental Leadership Council (BELC) was created in 1998 with the belief that business engagement is critical for developing efficient, effective solutions to the climate problem. We also believe that companies taking early action on climate strategies and policy will gain sustained competitive advantage over their peers.
Starting with 13 companies, the BELC is now the largest U.S.-based group of corporations focused on addressing the challenges of climate change and supporting mandatory climate policy. The BELC is comprised of industry leading, mostly Fortune 500 companies across a range of sectors with combined revenues of $2 trillion and 3.5 million employees. Many different sectors are represented, from high technology to diversified manufacturing; from oil and gas to transportation; from utilities to chemicals.
While individual companies hold their own views on policy specifics, they are united with C2ES in the belief that voluntary action alone will not be enough to address the climate challenge. In 2011, the BELC members accepted the following guiding principles:
- We accept the scientific consensus that climate change is occurring and that the impacts are already being felt. Delaying action will increase both the risks and the costs.
- Businesses can and should incorporate responses to climate change into their core corporate strategies by taking concrete steps in the U.S. and abroad to establish and meet greenhouse gas (GHG) emission reduction targets, and/or invest in low and zero GHG products, practices and technologies.
- The United States should significantly reduce its GHG emissions through economy-wide, mandatory approaches, which may vary by economic sector and include a flexible, market-based program. Complementary policies may also be necessary for sectors such as buildings, electricity generation, forestry, agriculture, and transportation that will help drive innovation and ease the transition to a low-carbon economy.
- Climate change is a global challenge that ultimately requires a global solution. An international climate framework must establish fair, effective, and binding commitments for all developed and major developing economies.
|Visit our low-carbon innovation project to learn about the most effective methods used by companies today to bring low-carbon technologies to market|
Many companies are not waiting for government mandates. They are taking steps to reduce their emissions right now by implementing targets and other innovative programs in areas such as energy, carbon sequestration, and waste management.
For additional content on these strategies, read Corporate Governance and Climate Change: Making the Connection, a March 2006 report profiling the efforts of 100 leading companies, including 21 BELC companies, to address climate change. The report was released by the investor coalition Ceres.
For more detailed information on the BELC companies, please visit the Company Profiles in this section.
For details on how companies are bringing low-carbon innovations to market, visit the Innovation Project.
The following reports focus on some of the key issues confronting businesses as they address the climate change challenge. The reports (all pdfs) were produced by companies, investment firms and other non-governmental organzations and do not necessarily reflect the views of the Center.
The following reports are from other nongovernmental organizations and companies and are organized under seven categories:
- Corporate Governance
- Investor Resources
- Clean Technology and Low Carbon Economy
- Sector-Specific Resources
Ceres: Corporate Governance and Climate Change: Consumer and Technology Companies (December 2008). This Ceres report is the first comprehensive assessment of how 63 of the world’s largest consumer and information technology companies are preparing themselves to face this colossal challenge. The report employs a “Climate Change Governance Framework” to evaluate how 48 US companies and 15 non-US companies are addressing climate change through board oversight, management execution, public disclosure, GHG emissions accounting and strategic planning and performance.
Ceres: Corporate Governance and Climate Change: The Banking Sector (January 2008). This report is the first comprehensive assessment of how 40 of the world’s largest banks are preparing themselves to face the colossal challenge posed by climate change. It pays particular attention to how corporate executives and board directors are addressing the governance systems that will be needed to minimize climate risks while maximizing investments in solutions that mitigate and help society adapt to climate change.
Ceres: Corporate Governance and Climate Change, Making the Connection (March 2006). In this report, Ceres surveys 100 of the world's largest companies in 10 industry sectors and uses a "Climate Change Governance Checklist" to evaluate how these companies are addressing the issue.
Carbon Disclosure Project: CDP4 (2006). The Carbon Disclosure Project is a forum used by institutional investors to request information on greenhouse gas emissions from some of the world's largest companies. This report, the fourth in a continuing series, contains data on individual company's CO2 emissions and mitigation plans, and also includes analyses of new climate developments.
Deloitte & Touche LLP: The Risk Intelligent Energy Company: Weathering the Storm of Climate Change (October 2007). The energy industry has always dealt with risk. However, when the scope, complexity, and interdependency of risk factors increase, or when an emerging risk simultaneously presents significant opportunities, more comprehensive and integrated approaches are necessary. This Deloitte & Touche LLP paper provides insight into identifying key climate change risks, discusses how a Risk Intelligent approach to Enterprise Risk Management helps to manage these risks, and offers guidance on how to adapt business models to the implications of climate change.
Harvard Business Review: Competitive Advantage on a Warming Planet (March 2007). This article by Jonathan Lash and Fred Wellington of the World Resources Institute argues that companies that manage and mitigate their exposure to the risks associated with climate change while seeking new opportunities for profit will generate a competitive advantage over rivals in a carbon-constrained future. This article offers a systematic approach to mapping and responding to climate change risks. (Please note: clicking on the link above will take you to HBR’s download center where you can purchase the article for $6).
The Climate Group: Carbon Down, Profits Up (2007). The Climate Group, an international non-governmental organization, in the third edition of its "Carbon Down, Profits Up" report, describes actions taken by many companies to reduce greenhouse gas emissions. The report also highlights the advantages gained by firms that take early action to address climate change.
Business for Social Responsibility: Offsetting Emissions: A Business Brief on the Voluntary Carbon Market (December 2006). This report from Business for Social Responsibility is intended for companies considering the purchase of voluntary offsets for their greenhouse gas emissions. It offers clear steps that guide early assessments and enable corporate decision makers to become educated consumers within voluntary carbon markets.
Ceres and the Investor Network on Climate Risk: Managing the Risks and Opportunities of Climate Change: A Practical Toolkit for Corporate Leaders (January 2006). This Ceres toolkit provides a guide for corporations interested in developing climate strategies. It lists a series of steps corporations should take and includes case studies of companies that have successfully established such strategies.
California Management Review: Climate Change Strategy: The Business Logic Behind Voluntary Greenhouse Gas Reductions (2005). Many companies are taking advantage of the lack of a mandatory U.S. GHG emission reduction program to set targets at their own pace and in ways that complement their own strategic objectives, writes Dr. Andrew Hoffman of the University of Michigan in this California Management Review (CMR) article. They are doing so in order to prepare for the long term should GHG emission reductions become mandatory, while at the same time attempting to reap near-term economic and strategic benefits should new regulations not emerge. (Please note: clicking on the link above will take you to CMR's download center where you will be given the option of purchasing the article.)
Business Roundtable: Every Sector, One Resolve (September 2004). This is a progress report on BRT's Climate RESOLVE program, which is a multi-sector, CEO-led initiative to promote voluntary action to reduce the GHG intensity of the U.S. economy. BRT reports that as of July 1, 2004, 107 companies were taking action to reduce their emissions under the RESOLVE program.
Harvard Business Review: Winning the Greenhouse Gas Game (April 2004). Companies voluntarily reducing their greenhouse gases are helping to shape the governmental regulations that are coming soon. Dr. Andrew Hoffman of the University of Michigan and author of C2ES report "Getting Ahead of the Curve: Corporate Strategies That Address Climate Change" writes in this Harvard Business Review (HBR) article that if companies do not act now, they will find their competitors will write the rules for them. (Please note: clicking on the link above will take you to HBR's download center where you will be given the option of purchasing the article.)
Ceres: From Risk to Opportunity 2008: Insurer Responses to Climate Change (April 2009). Hundreds of new insurance initiatives, including coverage for green buildings, renewable energy, carbon risk management, and officers’ liability are being offered to tackle climate change and rising weather-related losses in the U.S. and globally, according to this report by the Ceres investor coalition.
Swiss Re: The Economic Justification for Imposing Restraints on Carbon Emissions (August 2007). This insights report discusses why government intervention is needed to impose restraints on carbon emissions and why an international policy is necessary. According to the authors, cap-and-trade policy is likely to be the most successful way of reducing carbon emissions. The report examines the economic reasons for government intervention, as well as mitigation policy options and issues.
Marsh: A Change in the Weather (January 2007). This article from insurance services company Marsh looks at the unique legal and regulatory risks climate change poses to companies. It also examines the fact that corporate behavior is being scrutinized more closely by shareholder activists.
Trucost: Carbon Counts US: The Carbon Footprints of Mutual Funds in the US (April 2009). Trucost’s analysis of 91 US mutual funds, with a combined value of $1,551,067 million, reveals a wide variation in carbon footprints. The highest carbon fund is found to be 38 times more carbon intensive than the lowest. The research covers 75 of the largest equity funds and 16 major sustainability/SRI funds, and examines greenhouse gas emissions associated with eight investment styles. The study highlights opportunities to manage fund carbon risk as climate change regulations are introduced.
Standard & Poor's: CreditWeek Special Issue: The Credit Impact of Climate Change (May 2007). Features of this S&P special report on the credit impact of climate change include the varied credit effects of a portfolio approach to coping with climate change, the costs of potential regulatory compliance and their effect on U.S. utility credit, and the impact of stringent environmental legislation on the world's automakers.
New Energy Finance: Global Clean Energy Investment Overview (September 2006). In this report, New Energy Finance, a financial services firm that specializes in low-carbon energy, analyzes the latest trends in clean energy investing. Investment in renewable energy and low-carbon technologies has more than doubled over the last two years, according to the report.
World Wildlife Fund and the Allianz Group: Climate Change and the Financial Sector: An Agenda for Action (June 2005). WWF and the Allianz Group -- a financial services firm -- teamed to produce this report, which identifies risks for the financial community arising from climate change and provides recommendations for how the sector can turn these risks into opportunities. Special attention is paid to financing low-carbon energy projects.
Goldman Sachs: Energy, Environmental and Social Index (February 2004). This report identifies specific environmental and social issues likely to be material for company competitiveness and reputation in the oil and gas industy, and attempts to quantify their potential impact on stock prices. Goldman Sachs concludes that BP and Royal Dutch Shell stand out for their environmental and social track record compared to their industry peers.
Ceres: Mutual Fund Industry Opposition to Climate Change Resolutions Begins to Thaw (April 2008). The mutual fund industry’s previously apprehensive attitude toward climate change shareholder resolutions is beginning to change as Wall Street starts to recognize the financial risks and opportunities of global climate change. This report analyzes the 2004-2007 voting records of 1,285 funds of 62 leading mutual fund firms, which illustrate that historic opposition toward such resolutions is softening. Some fund firms support many climate resolutions outright, and others abstain on most or all resolutions after opposing them in the past. Still, many mutual funds are acting inconsistently on climate change -- offering new climate-related funds and research products while continuing to oppose virtually all climate-related resolutions.
Goldman Sachs: Capital Markets at the Crossroads (September 2006). In this presentation to the Clinton Global Initiative, Goldman Sachs says that an “Eco-Efficiency Premium” may now be increasing as more investors focus on environmental characteristics when making investment decisions. Goldman Sachs also believes that opportunities in climate change and investing will continue to grow.
Goldman Sachs: Environmental Portfolio Strategy (August 2005). This paper provides a primer on socially responsible investing (SRI), with a particular focus on the investment implications of climate change. Goldman Sachs argues that climate change is an issue that all investors should consider, not just those interested in the SRI market.
ACEEE: The Size of the U.S. Energy Efficiency Market: Generating a More Complete Picture (May 2008). This report frames energy efficiency as an invisible powerhouse and an underappreciated investment opportunity. ACEEE seeks to quantify the size and scope of current investments in energy efficiency technologies both in terms of dollars invested and labor employed. The core question driving the current assessment is “How Big Is Energy Efficiency in the U.S.?” Despite the many obstacles and challenges, the authors develop estimates of current spending on efficiency and discuss how those investments compare to annual investments in conventional energy supply. The results suggest that the U.S. is not aware of the role that energy efficiency has played in satisfying our growing energy service demands. (Registration is required to view the full report.)
McKinsey & Company: Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost (December 2007). McKinsey & Co. worked with leading companies, industry experts, academics, and NGOs to develop a detailed, consistent fact base estimating costs and potentials of different options to reduce or prevent GHG emissions within the United States over a 25-year period. The study finds that the U.S. could reduce GHG emissions in 2030 by 3.0 to 4.5 gt of CO2e using tested approaches and high-potential emerging technologies. These reductions would involve pursuing a wide array of abatement options with marginal costs less than $50 per ton. Further information can be found at McKinsey's Climate Change Special Initiative.
Appollo’s Fire: Igniting America’s Clean Energy Economy (March 2007). This Web site, established by Congressman Jay Inslee and Bracken Hendricks, a senior fellow at the Center for American Progress, contains stories from businesspeople, engineers and others, who are working to advance the clean energy economy. Visitors to the site can submit their own stories about how they are promoting clean energy and helping fight global warming.
World Business Council for Sustainable Development (WBCSD): Water, Energy and Climate Change (March 2009). This report makes the case for collaborating on solutions for climate change, energy and water, making the case that the problems are naturally linked, and that solutions should also be connected.
Carbon Disclosure Project: CDP Supply Chain Report 2009 (March 2009). This CDP report presents the results of an initiative aimed at identifying and addressing opportunities to reduce emissions of greenhouse gases in the supply chain.
World Business Council for Sustainable Development (WBCSD): Energy Efficiency in Buildings: Business Realities and Opportunities (August 2007). This WBCSD report summarizes the first year’s work of the Energy Efficiency in Buildings (EEB) project co-chaired by Lafarge and United Technologies Corporation. It presents a picture of the challenge of energy use in buildings and a preliminary, high-level approach to addressing that challenge.
Harvard Business Review: Building the Green Way (June 2006). Well designed green buildings yield lower utility costs, greater employee productivity, less absenteeism, and stronger attraction and retention of workers than standard buildings do. So building green is no longer a pricey experiment; just about any company can do it on a standard budget by following the 10 rules outlined by author Charles Lockwood, in this Harvard Business Review (HBR) article. (Please note: clicking on the link above will take you to HBR's download center where you will be given the option of purchasing the article.)
World Resources Institute: Hot Climate, Cool Commerce: A Service Sector Guide to Greenhouse Gas Management (2006). This report offers a step-by-step approach for service sector companies that want to reduce their greenhouse gas emissions. It includes information on quantifying emissions and offers recommendations on how to reduce those emissions.
Many of our BELC companies have greenhouse gas (GHG) reduction targets. Some of these companies have achieved their targets and are currently evaluating new goals, while other companies are considering first-time targets. To learn more about the process of GHG target-setting, read our report Corporate Greenhouse Gas Reduction Targets (pdf).
ü Achieved Targets o In Progress
o An additional 7 percent reduction in energy consumption at our large air separation units per quantity of gas produced by 2015.
o An additional 7 percent reduction in fuel and feedstock consumption per quantity of hydrogen produced at our hydrogen, carbon monoxide and synthesis gas plants by 2015.
ü Reduce GHG emissions by 25 percent from 1990 levels by 2010 through improved resource use. Actual reduction was 26 percent.
o Reduce GHG emissions by 50 percent from 1990 levels by 2010 through improved resource use, assuming success with commercializing inert anode technology.
o Reduce total US GHG emissions by 4 percent from 2008 to 2013
o Starting in 2010, reduce 2005 levels of total CO2 intensity in Alcoa's Global Primary Products business (refining and smelting) by 20% by 2020 and 30% by 2030.
o RerRerrr Reduce the intensity of GHG emissions by 20 percent from 2008 levels by 2015.
o Reduce GHG emissions per volume of water it produces by 16 percent from 2007 levels by the year 2017.
ü Reduce total U.S. GHG emissions by 9 percent from 2004 levels by 2009. Actual reduction was 18 percent.
ü Reduce GHG emissions by 7 percent in energy and utility customers’ operations from 2004 levels by 2008.
ü Reduce total U.S. GHG emissions by 18 percent from 2004 levels by 2009.
o Reduce its absolute GHG emissions by 15 percent from 2011 to 2015, based on its 2010 baseline
o Bayer HealthCare will decrease its absolute GHG emissions by 5 percent from 2025 levels by 2020
o Bayer CropScience will decrease its absolute GHG emissions by 15 percent from 2025 levels by 2020
o Bayer MaterialScience will decrease its specific GHG emissions per ton of sold prodict by 25 percent from 2025 levels by 2020
o Reduce CO2 emissions from vehicles by 20 percent from 2007 levels by 2012
ü Reduce GHG emissions from operations by 10 percent from 1990 levels by 2010.
o Maintain net GHG emissions at or below 2001 levels over the next decade.
ü Reduce global GHG emissions by 25 percent per dollar revenue from 2005 to 2010. Actual reduction was 28 percent.
o Reduce CO2 emissions from its production activities by 20 percent from 2007 levels by 2015 emissions by 10 percent from 2005 levels by 2011.
o Reduce its CO2 emissions from its new European passenger fleet by 30 percent from 2007 levels by 2016
o Reduce the fuel consumption by heavy-duty commercial vehicles by an average 20 percent per ton-kilometer by 2020 compared to the base year of 2005.
ü Improve CO2e per RTM (revenue-ton mile, i.e. one payload of passengers or cargo transported one mile) by 10 percent from 2000 levels by 2010. Actual improvement was 28.2 percent.
o Delta will set a new goal for 2015.
ü In 2010, slightly more than half (56 percent) of Dominion’s total electricity production was fossil-fired. The rest was carbon-free nuclear and renewable energy.
ü Between 2000-2010, we reduced the average CO2 emissions rate per unit of output at our generation fleet by about 21 percent, while fleet capacity grew significantly. Dominion attributes this achievement to the balance and diversity of our fuel mix, combined with sustained productivity improvements at our power stations and a growing reliance on conservation and efficiency programs. Dominion expects its carbon intensity to continue to decline as the pieces of its climate change strategy fall into place in the coming years.
ü Since 2000, Dominion has added over 2,600 MW of non-emitting nuclear generation and over 3,500 MW of new lower-emitting natural gas-fired generation
o Dominion is proceeding with expanding the DSM program, a community solar program, and demonstration of smart grid technologies.
o Dominion has announced the retirement or conversion of 2,668 MW of coal fired power generation
o Reduce global intensity (Btu/lb) of its operations by 25 percent by 2015 based on a 2005 baseline.
o Reduce GHG intensity 2.5 percent per year from 2005 to 2015.
ü Reduce or offset power plant CO2 emissions by 5 percent from 1999 levels by 2005.
o Reduce CO2 emissions intensity (tons/megawatthour) of its electricity generation three to five percent from a 2000-2002 levels by 2012
o Reduce the carbon intensity (tons of CO2 emitted per net megawatt-hour of electricity produced) of the total generation fleet from 0.63 in 2005 to 0.50 by 2020.
o Reduce total global GHG emissions of Duke's US generation fleet by 17 percent from 2005 levels by 2020.
ü Reduce GHG emissions by 65 percent from 1990 levels by 2010. Actual reduction was 67 percent.
ü Hold total energy use flat at 1990 levels through 2010. Actual use in 2010 was 19 percent below 1990 levels
o Reduce total global GHG emissions by 15 percent from 2004 to 2015
o Source 10 percent of global energy use from renewable resources by 2010.
ü Stabilize CO2 emissions from U.S. generating facilities at 2000 levels through 2005. Actual reduction was 23 percent below target.
ü Reduce total U.S. GHG emissions from operating plants by 20 percent from 2000 levels by 2010.
ü Reduce total U.S. GHG emissions by 8 percent from 2001 levels by 2008. Actual reduction was more than 35 percent.
o Reduce, offset or displace more than 15 million metric tons of GHG emissions per year by 2020
o Reduce energy usage at company facilities by 23% from 2008 levels by 2020
o Reduce total global GHG emissions by 1 percent from 2004 levels by 2012.
o Reduce intensity of GHG emissions by 30 percent from 2004 levels by 2008.
o Reduce total global GHG emissions by 25 percent from 2004 levels by 2015
o Improve energy efficiency by 30 percent from from 2004 levels by 2012
ü Reduce on-site GHG emissions by 18 percent from 2005 levels by 2006. Actual reduction was 31 percent.
ü Reduce PFC emissions by 10 percent from 1995 levels by 2010.
o Reduce the combined energy consumption of operations and products 20 percent below 2005 levels by 2010.
o Reduce the GHG emissions from HP-owned and HP-leased facilities 20% below 2005 levels by 2013 on an absolute basis. HP has set an interim target to reduce the energy consumption in its facilities by 7% (the remaining percentage in this goal) below 2008 levels by the end of 2010.
o Reduce the energy consumption and associated greenhouse gas (GHG) emissions of all its products to 40 percent below 2005 levels by the end of 2011
ü Reduce global average net specific CO2 emissions by 20 percent from 1990 levels by 2010.
o Reduce CO2 emissions per ton of cement by 25 percent, compared to 1990 levels, by 2015
ü Achieve an absolute 10 percent reduction in PFC emissions from semiconductor manufacturing processes from 2000 levels by 2005.
ü Reduce average annual CO2 emissions equivalent to 4 percent of emissions associated with worldwide annual energy use from 2000 levels by 2005. Actual reduction was 6.2 percent.
ü Achieve annual energy conservation savings equal to 3.5% of IBM’s total operational energy use. Actual reduction or avoidance was 5.4 percent in 2009.
o Reduce total global GHG emissions (from operational energy used and PFC emissions from semiconductor operations) by 7 percent from 2005 levels by 2012.
o Reduce total global GHG emissions (from operational fuel and electricity use) by 12 percent from 2005 to 2012
o Reduce total PFC emissions from semiconductor operations 25% from 1995 levels by 2010
o Reduce total emissions reduction of 6% from a baseline of the average annual North American GHG emissions from 1998 - 2001, by 2010
ü Reduce PFC emissions by 10 percent from 1995 levels by 2010. Actual reduction by 2010 was 45 percent in absolute terms and over 80% on a per chip basis
ü Reduce global GHG emissions by 30 percent per production unit from 2004 levels by 2010. Acutal reduction by 2010 was 45 percent below 2004 levels on a per chip basis.
ü Reduce the absolute global-warming gas footprint from Intel operations 20% below 2007 levels by 2012. Actual reduction as of the end of 2010 was 40 percent
ü Reduce GHG emissions per dollar revenue by 30 percent from 2002 to 2012. This was achieved in 2008.
o Reduce GHG emissions per dollar of revenue by 30 percent from 2008 levels by 2018
ü Reduce US GHG emissions rate 21 percent from 2001 levels by 2008.
o Reduce US GHG intensity 27 percent from 2009 levels by 2024
ü Reduce CO2 emissions by 31% from 2000 levels by 2010.
o Reduce tons of CO2 megawatt hour from 0.8 tons to 0.5 tons by 2025, with an intermediate goal of 0.7 tons by 2015.
ü Reduce overall energy use at 88 facilities by 18 percent from 1999 levels by 2003.
ü Reduce annual sulfur hexafluoride (SF6) emissions by 50 percent from 1998 levels by 2002.
ü Reduce SF6 emissions by 60 percent from 1998 levels by year-end 2007.
o The company expects to meet California’s requirement that 20 percent of electric sales come from qualifying renewable energy resources, which emit no or minimal GHG emissions, by 2010.
o PG&E has customer energy efficiency savings goals for the three year period 2010 to 2012 of 3,100 GWh.
o PG&E has customer energy efficiency savings goals for the three year period 2010 to 2012 of 48.9 million therms.
o Reduce energy use at PG&E offices and service yards by 25 percent from 2009 levels by 2014
o Administer the California Solar Initiative, part of a statewide program to install 3,000 megawatts of new customer-owned solar by 2017.
o Sign contracts for 1,360,777 million metric tons of greenhouse emission reductions by 2011 for ClimateSmart program customers. As of the end of 2009, the ClimateSmart program has successfully contracted for almost 1.2 million metric tons of GHG emission reductions.
o Develop up to 500 megawatts (MW) of solar photovoltaic (PV) power by 2010
o Reduce CO2 emissions, or equivalents, by 7 percent per megawatt hour from 2002 levels by 2009.
o Obtain 10 percent of total energy comes from renewable sources by 2011 and 20 percent by 2020.
ü Reduce on-site GHG emissions per ton of product by 4.8 percent from 1990 levels by 2001.
o Reduce total GHG emissions per ton of product by 4 percent from 2003 levels by 2008.
o Reduce energy use per ton of product by 5 percent from 2003 levels by 2008.
o Reduce GHG emissions per unit of commodity production in by six percent from 2008 levels by 2013. Further reduce GHG emissions per unit of commodity production by 4 percent by 2015
ü Reduce GHG emissions from operations by 10 percent from 1990 levels by 2002.
o Maintain GHG emissions from operations at 5 percent below 1990 levels through 2010. In 2009, its direct (scope 1) emissions were around 35% below its 1990 level
ü Reduce energy consumption per unit of production by 15 percent from 2000 levels by 2005.
ü Reduce energy consumption, measured in Btus per building square foot (Btu/ft2) by 18 percent by 2011 from a 2001 baseline. Achieved in 2007.
ü Reduce energy consumption, measured in Btus per building square foot (Btu/ft2) by 26 percent by 2011 from a 2001 baseline. Achieved in 2011.
o Reduce energy consumption, measured in Btus per building square foot (Btu/ft2) by 32.6 percent by 2011 from a 2001 baseline.
o Reduce total energy use in North American operations by 27 percent per vehicle produced from 2002 levels by 2011. Not on target.
o Reduce CO2 emissions per unit of production from U.S. assembly operations by 10 percent from 2002 levels by 2012. Not on target.
o Reduce energy consumption by 10% from all Toyota Canada facilities by 2010
ü Reduce GHG emissions to 1990 levels by 2000.
ü Beginning July 1, 2007, reduce GHG emissions intensity by 12 percent from average intensity between 2003 and 2005.
o Achieve zero net GHG emissions from the company’s Canadian operations by 2024.
o Reduce GHG emissions by 40 percent from 2000 levels by 2020 through greater reliance on renewable fuels.
April 18, 2007
Pew Center Contact: Katie Mandes, (703) 516-4146
Citi Contact: Val Hendy, (212) 559-3362
CITI JOINS PEW CENTER'S BUSINESS ENVIRONMENTAL LEADERSHIP COUNCIL
Global Banking Giant Pledges to Take Immediate Action
WASHINGTON, D.C. – The Pew Center on Global Climate Change announced today that Citi has joined the Pew Center's Business Environmental Leadership Council (BELC) and its efforts to address global climate change.
One of the world's pre-eminent financial services companies, Citi has committed to a 10 percent reduction in GHG emissions by 2011, invested in and financed alternative energy and clean technology, and published equity research that highlights the relevance of climate change to various sectors of the global economy.
In a February 2007 position statement, Citi wrote that climate change poses significant potential risks to the global economy that require urgent action. Citi recognizes that climate change requires a global solution – and that U.S. national action and leadership are critical elements of a successful effort.
The company also supports a market-based national policy to reduce GHG emissions. As their February 2007 climate policy states, "Citi recognizes that establishing a price for carbon dioxide and other greenhouse gases is essential for reflecting the impacts of these emissions…Given the necessity to address emissions from all regions of the U.S. and the world, a national legislative framework will be the most effective and economically efficient response for the United States.”
"The leading financial firms have the most influential voice of any in the business community when it comes to core economic concerns,” said Eileen Claussen, President of the Pew Center on Global Climate Change. "I am delighted that Citi has committed to public leadership on this issue. By calling for a strong, market-based U.S. climate policy and new global approaches, they are protecting the long-term interests of their customers and the communities they touch.”
"Citi is honored to be joining the Pew Center's Business Environmental Leadership Council to work together with Pew and other companies on the critical issue of climate,” said Chuck Prince, Chairman and Chief Executive Officer, Citi Inc. "Citi recognizes the importance of business leadership on environmental issues, has demonstrated its value through initiatives such as the Equator Principles, and looks forward to contributing to this important work led by Pew, learning from our peers, and further developing Citi's responses.”
The BELC was established by the Pew Center in 1998, and the Center is a leader in helping these and other major corporations integrate climate change into their business strategies. The group is comprised of mainly Fortune 500 companies representing a diverse group of industries including energy, automobiles, manufacturing, chemicals, pharmaceuticals, metals, mining, paper and forest products, consumer goods and appliances, telecommunications, and high technology. Individually and collectively, these companies are demonstrating that it is possible to take action to address climate change while maintaining competitive excellence, growth, and profitability. The BELC is the largest U.S.-based association of corporations focused on addressing the challenges of climate change, with 43 companies representing over 3.8 million employees and a combined market value of $2.8 trillion.
The other members of the BELC are: ABB; Air Products; Alcan; Alcoa Inc.; American Electric Power; Bank of America, Baxter International Inc.; The Boeing Company; BP; California Portland Cement; CH2M HILL; Cummins Inc.; Deutsche Telekom; DTE Energy; Duke Energy; DuPont; Entergy; Exelon; GE; Georgia-Pacific; Hewlett-Packard Company; Holcim (US) Inc.; IBM; Intel; Interface Inc.; John Hancock Financial Services; Lockheed Martin; Marsh, Inc.; Novartis; Ontario Power Generation; PG&E Corporation; Rio Tinto; Rohm and Haas; Royal Dutch/Shell; SC Johnson; Sunoco; Toyota; TransAlta; United Technologies; Weyerhaeuser; Whirlpool Corporation; and Wisconsin Energy Corporation.
For more information about global climate change and the activities of the Pew Center and the BELC, visit www.c2es.org.
CLIMATE CHANGE POLITICS: A LANDSCAPE TRANSFORMED
SPEECH BY EILEEN CLAUSSEN, PRESIDENT, PEW CENTER ON GLOBAL CLIMATE CHANGE
XERISCAPE COUNCIL OF NEW MEXICO, MARCH 9, 2007
ALBUQUERQUE, NEW MEXICO
It is wonderful to be here in Albuquerque. I am honored to be a part of this conference, and to kick off Session III of these proceedings.
And what a journey you have been on. Your agenda shows that you have moved from the Desert Dryland of Session I through the Middle Ground of Session II . . . and today you have reached Session III: Oasis. I am just glad this Convention Center has ample parking for all of your camels.
Your journey reminds me of an old New Yorker cartoon. It shows a caravan in the desert with the camels piled high. A child in the group asks his mother the age-old question: “Are we there yet?” And the irritated mother replies: “Of course not, we’re nomads!”
So let me begin by paying tribute to the Xeriscape Council of New Mexico for bringing all of us—all of you—together. The Council understands that, when it comes to issues of how we use water and how we interact with the natural environment, we simply cannot continue blindly on our current course. We cannot keep treating the environment as an instrument for meeting our every whim and need. Or, at least, we cannot do this and expect our actions not to have repercussions, some of them quite severe.
I am here this morning, of course, to talk about climate change. And, given the Council’s interest in water issues, I want to talk a little bit about the relationship between climate change and water supplies. But, mostly, I want to talk about politics.
Now, I know what you’re thinking. You’re thinking: Oh, great. Someone is here from Washington to talk about politics. As if we don’t get enough politics in the news already.
But what I want to talk about is the politics of climate change—and how the political landscape in this country is changing in favor of stronger action to protect the climate. And it is changing for the same reason that events such as this conference are attracting more and more participants. Because people recognize that we have some very serious environmental problems on our hands—and because people see that there are solutions.
Of course, I am talking about people like you. And I am also talking about people like New Mexico’s governor, Bill Richardson.
Just last week, as I am sure you know, Governor Richardson joined with the chief executives of four other western states in a bold agreement to reduce greenhouse gas emissions and address climate change. I’ll talk more about this later, but for now I merely want to alert you to the fact that solutions to climate change are sprouting up right here in your own backyard. New Mexico and its neighbors, in fact, are at the vanguard in showcasing the new politics of climate change that I want to talk about today.
But let me start with a few words about water. Earlier this year, a United Nations panel called the Intergovernmental Panel on Climate Change (IPCC) issued a highly anticipated report on the current science of climate change. This report represents the combined efforts of hundreds of top scientists from around the world. And it received a great deal of attention in the media—chiefly, for confirming once and for all that sea level and global temperatures both increased at an accelerating pace during the 20th century.
Also newsworthy was the fact that the IPCC expressed a much higher level of confidence than in past reports (a greater than 90-percent certainty, in fact) that the changes we are seeing are the result of human actions. The primary culprit, of course, is emissions of carbon dioxide and other greenhouse gases from the burning of fossil fuels.
But there was other news in the IPCC report as well—and a lot of it had to do with water. For example, the report confirmed that mountain glaciers and snow cover have declined on average in both the northern and southern hemispheres. It also found that more intense and longer droughts have been observed over wider areas since the 1970s, particularly in the tropics and subtropics.
And that just covers what has happened to date. The IPCC also issued projections for the decades ahead. And, again, the news is not good. Global temperatures, according to the report, will rise by 3.2 to 7.2 degrees Fahrenheit by 2100, and sea levels will rise one-half to two feet. In addition, there is a 90-percent or greater chance that the world will see more hot extremes, heat waves and heavy precipitation events. And it is likely that we will see more droughts as well.
There it is: the dreaded D-word. The likelihood of more droughts is an obvious concern for people across the Southwest. The American Meteorological Society held a briefing on the IPCC report the other week in Washington, and Dr. Richard Seager of Columbia University made some very sobering points.
He said the report essentially confirms that the southwestern United States began a transition to a drier climate at the end of the 20th century, and that a new, drier climate is, in fact, well established as the 21st century gets under way. According to state-of-the-art models, conditions approximating a perpetual 1950s-style drought are likely to become the new climate of the Southwest in the decades to come.
In other words: If you want to keep a garden in New Mexico, and if you’re not into xeriscaping now, there is a 90-percent or greater chance you will be soon. There is no doubt about it: the changing climate will have serious implications for the Southwest. It will affect development, the allocation of water resources, cross-border relations with Mexico, everything.
And that’s just the forecast for the Southwest. Looking more broadly, the most recent IPCC report confirms beyond any reasonable doubt that climate change is a real problem, that it is caused in large part by human activity, and that it will accelerate in the years to come. If there is any silver lining in the contents of this report, it is this: the IPCC has provided the latest in a long line of scientific studies and pronouncements that have helped to change the political landscape on this issue in favor of solutions. And that is what I would like to talk about during the remainder of my remarks.
In his January State of the Union address, President Bush called global climate change a “serious challenge.” And, while his answers to the challenge fall far short of doing what’s needed, it is a remarkable rhetorical (and political) u-turn for this White House to even acknowledge that this is a challenge, let alone a serious one.
The reason for the u-turn can be found in part, as I said, in the increasing scientific certainty about climate change. Every month, it seems, the scientific case for action has become stronger—to the point that no responsible, thinking person can any longer deny that this is a real problem.
But science is not the only force that has compelled this White House and others to see that it is in their political interest to go public with their concern about this challenge. Equally important, I believe, is the fact that this Administration has become politically isolated on this issue, as governors and congressional leaders have stepped up and not only acknowledged the challenge but tried to shape real solutions.
The announcement last week by the five Western governors is a perfect example of this. People are not happy about the lack of leadership on this issue from Washington, and they’re setting out to fill the void.
Under the western governors’ agreement, New Mexico would join with Arizona, California, Oregon and Washington to set a regional target for greenhouse gas emissions. And, by August 2008, the states will establish a market-based system to enable companies and industries to meet the target as cost-effectively as possible. These five states combined emit more carbon dioxide than Canada, while accounting for more than 11 percent of total U.S. emissions. So this is a significant achievement.
New Mexico also is one of 12 U.S. states that have adopted their own statewide targets for capping and, ultimately, reducing their greenhouse gas emissions. And New Mexico’s are among the most ambitious targets out there--emissions will reach 2000 levels by 2012, they will be 10 percent below 2000 levels by 2020, and 75 percent below 2000 levels by 2050.
In December, Governor Richardson signed an executive order to help the state reach its targets. Among the steps he approved were the creation of a greenhouse gas registry, advances in technology to capture and store carbon emissions from power plants, and the promotion of renewable fuels.
New Mexico is the first major coal, oil and gas-producing state to set targets like these. New Mexico also is working with its neighbors in Arizona on a plan called the Southwest Climate Change Initiative. The goal: to pursue collaborative opportunities to reduce emissions.
The residents of this state deserve to be proud of all of the forward-looking things that are happening right here to address climate change. But New Mexico is not alone among the states. Over the past several years, lawmakers from coast to coast have been embracing new programs and policies to reduce their states’ greenhouse gas emissions.
California, like New Mexico, established an ambitious greenhouse gas emissions target—and California has gone the next step and passed legislation, with real enforcement, to give the targets the force of law. California also has taken steps to begin regulating carbon dioxide emissions from cars and trucks (a policy that 10 other states are poised to follow if it survives a legal challenge from the automakers). If the courts uphold it, California’s new standard for vehicles will reduce annual greenhouse gas emissions in the state by 30 million tons by 2020.
Many, many states are taking steps to rein in their emissions. For example, 22 states, including large emitters like Texas and California, have required that electric utilities generate a specified amount of electricity from renewable sources. Twenty-eight states have climate action plans.
And other states are working across their borders in the same spirit as New Mexico and its western neighbors. Seven Northeastern and Mid-Atlantic states have signed their own regional initiative. Known as RGGI, it is aimed at reducing carbon dioxide emissions from power plants in the region.
Now, you might think that one state’s actions could not possibly affect a global problem like climate change. But if you combine the RGGI states with the five western states that are taking collaborative action, that’s 22 percent of U.S. emissions that could soon be subject to emission targets under a market-based system. If all of these states were a single country, they would be the fourth largest emitting nation in the world. And consider this: California’s emissions exceed those of Brazil. Texas comes out ahead of Canada, the UK and Mexico. And Illinois produces more CO2 than the Netherlands.
States are a significant part of the climate problem, and many of them are showing they can be a significant part of the solution as well.
The states also are showing that it is politically possible to take action on this issue. In November, Governor Richardson was reelected to office with the support of 69 percent of New Mexico voters. It was the largest margin of victory for any governor in the history of the state. Think his support for serious action on climate change hurt him at the polls? Doesn’t look like it.
The same goes for California Governor Arnold Schwarzenegger. Polls have confirmed that his strong support for climate action helped him enormously with California voters in the 2006 election. The governor won the election with a strong 56-percent majority of the vote, vs. 39 percent for his Democratic opponent.
So, yes, the politics of climate change are different today. And it is not only because state leaders are stepping up and advancing solutions to the problem. Business leaders, too, have gotten into the act—making the case that it is possible to protect the climate while also protecting—and, in many cases, advancing—our goals for economic growth.
At the Pew Center, we work with a council of leading businesses that are committed to protecting the climate. Our Business Environmental Leadership Council began with 13 companies; it now includes more than 40 companies representing more than 3 million employees and with a combined market value of over $2.4 trillion. Members include a who’s who of U.S. corporate leadership, from Alcoa and GE to IBM and Intel, and many more. What are these companies doing to protect the climate? Here are a couple of examples: Over the last 20 years, Alcoa has reduced the electricity required to produce a ton of aluminum by 7.5 percent. Another Council member, IBM, has instituted energy conservation measures that resulted in a savings of 12.8 billion kilowatt hours of electricity between 1990 and 2002. The resulting reduction in carbon dioxide emissions: 7.8 million tons. And the resulting savings to the company’s bottom line: $729 million in reduced energy costs.
We can’t cut emissions? These companies don’t think so. And they’re showing it’s possible to do so in ways that do not compromise economic growth.
For many if not all of these companies, addressing climate change is about both opportunity and risk. Many business leaders see real risks to their operations from climate change. According to the global insurance giant, Allianz, climate change already is increasing the potential for property damage at a rate of between 2 and 4 percent every year. Tourism, agriculture, insurance, finance … all of these industries (and more) face serious and compelling risks. And consider the risks for electric utilities and other businesses that do nothing to address this issue now—and then are forced to play a costly game of catch-up down the road as governments finally (and inevitably) get serious about reducing emissions.
On the other hand, there are also many obvious opportunities tied to developing and deploying new and emerging low-carbon technologies. GE, for example, has committed to doubling its investment in environmental technologies to $1.5 billion by 2010. That is the equivalent of starting a new Fortune 250 company focused exclusively on clean technology.
Ten years ago, corporate America was a reliable ally for those opposed to any kind of serious action to address climate change. Well, that’s just not the case any more. And, in fact, many of the companies we work with are combining independent, voluntary action to reduce their emissions and develop climate-friendly technologies with high-profile public support for new policies to protect the climate.
Just last month, several of the businesses on our Council joined with the Pew Center and others in a high-profile appeal for U.S. government action to address climate change. The group is known as the U.S. Climate Action Partnership, and this wasn’t just a blanket call for government to do something. Rather, the USCAP group issued a specific proposal with specific targets and timetables—a real plan of action to slow, stop and reverse U.S. emissions.
Among the companies that were part of this unique call-to-action was Albuquerque’s own PNM Resources. PNM, of course, is the energy holding company whose utility and energy subsidiaries provide power to 941,000 homes and business in New Mexico and Texas.
Now, think for a moment about how an announcement like this changes the political landscape on this issue. When Fortune 500 CEOs take a stand for policies that in the past were tagged by private sector leaders as extreme or unwarranted, and worse, it moves the politics to a new place. Like the state leaders who have come out in favor of strong and effective policies, the business leaders we’re working with are sending a clear message to Washington, and the message is this: We must act to address this issue now, and we can do it without putting our economy at risk.
And Washington, finally, is beginning to listen. Beyond the President’s rhetorical bows to climate change, our nation’s elected leaders are laying the groundwork for substantive action on this issue in the months and years ahead. In 2005, the U.S. Senate passed a bipartisan measure calling for a national, mandatory, market-based program to slow, stop and, ultimately, reverse the growth in U.S. greenhouse gas emissions. Although the measure was nonbinding, it marked the first time the Senate has gone on record to support mandatory action on this issue.
And now, there is a new Congress in place with leaders who are strong supporters of climate action. The change at the top of the U.S. Senate committee with jurisdiction over climate change is a case in point. Gone as chairman is Senator James Inhofe of Oklahoma, who infamously referred to climate change as a quote-unquote “great hoax.” Replacing him is Senator Barbara Boxer of California, who could not pose more of a contrast as author of one of the most aggressive climate bills yet introduced in Congress.
In addition to Senator Boxer at the head of the Environment and Public Works Committee, we now have a Senate Majority Leader and a Speaker of the House who consistently have supported mandatory climate action. And we have leaders of other key committees on both sides of Capitol Hill who have expressed their support for action.
House Speaker Nancy Pelosi has signaled her intention to have the House pass a climate bill by July 4. And the biggest political development of the year on this issue may be that Congressman John Dingell of Detroit now agrees that it’s time to act.
As chairman of the powerful House Committee on Energy and Commerce, Congressman Dingell has long been considered an obstacle to serious action on climate change. But now he is saying that his committee will report a bill by early June. And his support for action, I believe, is very likely to bring in other Democrats who have been less than enthusiastic, and more Republicans too.
What all of these developments point to, if all the stars align, is a so-called “cap-and-trade” bill emerging from Congress, potentially before the 2008 elections. In the Senate alone, there are currently five bills proposing some form of cap-and-trade program for greenhouse gas emissions
Cap-and-trade, as most of you know, is a policy that requires emissions reductions while allowing companies to trade emission credits. The most important benefit of this approach: it establishes a value for emissions reductions, as well as an economic advantage for technologies that can achieve them.
The cap-and-trade model already has proven successful in this country in reducing emissions of the pollutants that cause acid rain. We know it can work. Cap-and-trade, in fact, is how California intends to achieve its emission targets. It is also the basis for the multi-state plans I mentioned here in the West and back East as well.
So there is, in fact, a great deal of movement on this issue in Washington. And there is additional pressure for solutions due to the upcoming 2008 Presidential contest. (Well, I suppose you can’t call it an “upcoming” contest anymore—sadly for all of us, it is already well under way).
In any case, on the Democratic side you have a number of candidates who have pledged to make climate change an important part of their platforms. And, among the Republicans there is U.S. Senator John McCain, who co-wrote the first cap-and-trade bill in the U.S. Congress way back in 2003. Conveniently, his measure currently is co-sponsored by two colleagues named Obama and Clinton (meaning we could see at least one point of agreement during the 2008 presidential debates).
Given the support for climate action among these high-profile contenders for President, I believe that the words “cap and trade” will become an important part of the political dialogue in this country in the lead-up to the 2008 election. And I also believe that, given the changed politics on this issue, it is plausible that the United States could have this kind of mandatory policy in place by 2008, and it’s likely we will have such a policy by 2010.
But implementing a cap-and-trade policy, while critical, is not all we need to do. We need a wider range of policies. We need to invest in research to develop some of the most critical, long-term, climate-friendly technologies. And we need policies to ensure that technologies that reduce emissions can gain a solid foothold in the marketplace.
And then there are policies aimed at specific sectors of the economy. For example, governments around the world have adopted more stringent policies than the United States to reduce tailpipe greenhouse gas emissions and/or increase the fuel economy of cars and trucks. Even China has higher standards than we do. If all of these countries are doing this and we aren’t, that says to me that it’s possible—that, despite the automobile companies’ resistance, technologies exist to reduce emissions from this sector. And by adopting tougher but reasonable standards, we can hasten the rollout of cost-effective, commercially available technology to reduce vehicle emissions.
It is also going to take international policies. This, too, is not in question. Climate change is a global problem requiring global action. Even if we were to get smarter about reducing the United States’ contribution to climate change, global energy use will continue to surge and climate change will remain a significant threat. We cannot protect the climate without a global framework that enlists all countries to do their part to reduce emissions, and that provides poorer countries with the support they need to do so.
And, in fact, a number of countries around the world already are taking action on this issue, which is another factor that has changed the political landscape here in the United States. The European Union, for example, has adopted its own emissions trading scheme. And countries like the United Kingdom have embraced ambitious goals for reducing their emissions and developing low-carbon energy sources.
While all of these other countries are moving forward, however cautiously, and trying to figure out how to reduce their emissions, the United States until now has remained largely on the sidelines. And we have remained on the sidelines despite the enormous risks that climate change poses for our economy—and the enormous economic opportunities as well.
As both the risks and the opportunities become clearer to U.S. leaders, the political landscape will continue to change. And we will see our country come around, once and for all, and embrace real action to protect the climate—and to ensure that our water supplies and other resources are protected as well.
And, by real action, I am talking about more than a prevention-only approach. Although reducing greenhouse gas emissions is critical to limiting the ultimate damage caused by climate change, it is clear that we must also adapt to what is already here and coming in the near future. The latest IPCC report tells us that, even if we stopped emitting greenhouse gases today, the average temperature of the earth would continue to rise significantly for decades to come, precipitation patterns would continue to change, and sea level would continue to rise for hundreds of years because of the inertia in the climate system. Obviously, we will not stop emitting greenhouse gases today, so the changes to come will be significant. We are going to have to adapt.
By reducing your water demand, you—the xeriscape community—are in the vanguard of the grassroots adaptation movement. But in the same way that voluntary action alone is not enough to prevent the worst effects of climate change, voluntary action alone will not ensure we can adapt. There is an essential role for government and public policy, including lots of planning at the local and state levels for droughts, storms, water shortages, extreme heat and other consequences. Water supplies, storm drainage, peak power capacity, emergency care and relief systems, evacuation planning—all of these and more will have to be enhanced.
There will be large costs associated with adaptation but there will be no choice, as the alternative is simply to suffer. Fortunately, we do have an opportunity, through aggressive mitigation, to minimize both the ultimate costs of adaptation and the amount of human suffering that our children and grandchildren will have to endure in the future. Every dollar spent avoiding climate change will save more dollars spent later on adapting to and repairing the damage.
Looking forward, the challenge of reaching agreement on effective national climate policies is not all that different from the challenges you face as gardeners. We need to prepare the soil by making our opinions known. We need to turn all of these buds and shoots I have talked about into healthy, thriving plants. And we need to pay close attention to issues of design—how we design policies to work together in the most effective ways.
In closing, I will go back to the question posed by the child in the caravan of camels: “Are we there yet?” And the answer is, we are certainly not. But unlike the nomads in the cartoon, we at least have a clear destination. We just need to get going.
Thank you very much.