Business

Building Solutions to Climate Change

Cover Buildings In Brief

November 2006

This In-Brief describes how the built environment can make an important contribution to climate change mitigation while providing more livable spaces.  It concludes that with current technologies and the expansion of a few key policies, significant reductions in greenhouse gases can be realized in the near term.  Furthermore, combining technology research and development with clear and sustained climate and energy policies would drive more dramatic reductions over time.

Press Advisory

Download the In-Brief (pdf)

This In-Brief draws heavily on the Pew Center report entitled Towards a Climate-Friendly Built Environment.

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Press Advisory: Pew Center Addresses Building Industry at Denver Conference

Media Advisory
November 16, 2006

Contact: Katie Mandes, (703) 516-0606

BUILDING SECTOR IS FOUNDATION OF U.S. CLIMATE CHANGE SOLUTIONS

Pew Center Addresses Building Industry at Denver Conference


Denver, CO- Energy used in residential, commercial, and industrial buildings produces about 43 percent of U.S. emissions of carbon dioxide, and these emissions are growing as Americans build more buildings and bigger homes. This makes the building sector the largest source of American emissions of the greenhouse gases (GHGs) that cause climate change.  Numerous stakeholders have begun acting to address the built environment’s role in climate change, and it is imperative that their commitment to green principles and innovation increases so that the building sector can reduce its contribution to climate change.

During a speech yesterday at the Greenbuild International Conference and Expo in Denver, Colorado, Eileen Claussen, President of the Pew Center on Global Climate Change, called on the building sector to play a more definitive role in America’s efforts to address climate change. “Building standards need to be strengthened and we need to factor the very real threat of climate change into every new building that is constructed.  Low or zero emission buildings should be our goal.”  Ms. Claussen challenged the sector to provide the foundation for U.S. climate solutions. The speech was given in conjunction with the release of a new In-Brief by the Pew Center entitled “Building Solutions to Climate Change.”

The In-Brief describes how the built environment can make an important contribution to climate change mitigation while providing more livable spaces.  It concludes that with current technologies and the expansion of a few key policies, significant reductions in greenhouse gases can be realized in the near term.  Furthermore, combining technology research and development with clear and sustained climate and energy policies would drive more dramatic reductions over time.

Ms. Claussen implored the building community to take the lead in cutting emissions of greenhouse gases. “If we do it right, protecting the climate could mean new industries, new markets, and new jobs for localities, states, and nations that successfully position themselves as centers of innovation and technology development for a low-carbon world.”

A copy of the latest In-Brief, “Building Solutions to Climate Change,” is available on the Pew Center’s web site, www.c2es.org.

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The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States’ largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.

Corporate Strategies Workshop

Promoted in Energy Efficiency section: 
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"Getting Ahead of the Curve: Corporate Strategies That Address Climate Change" Corporate Strategies Workshop

October 18, 2006
Washington, DC

At this workshop, over a hundred business, academic, and NGO leaders convened to discuss the findings of a new Pew Center report, Getting Ahead of the Curve: Corporate Strategies That Address Climate Change. View the agenda by clicking here.

The report, authored by Dr. Andrew Hoffman of the University of Michigan, lays out a step-by-step approach for companies to reshape their core business strategies in order to succeed in a marketplace where greenhouse gases (GHGs) are regulated and carbon-efficiency is in demand. A number of key themes surfaced from the report and workshop discussions:

  1. Timing needs to be strategic. Some companies acknowledge the dangers of starting too early on climate action, while others highlight the risks of starting too late.
  2. The ultimate goal is a game-changing strategy. Such a strategy allows a company to leap far ahead of competitiors by creating or reshaping key markets that they can dominate. This requires a concerted effort, combining key functional areas of a company, such as research and development, marketing, supply chain management and policy engagement.
  3. An appropriate level of commitment needs to be made. While the companies in this report are leaders in their industries, some caution against getting too far ahead of the competition.
  4. Companies need to influence policy. Any policy that regulates GHG emissions will constitute a major market shift, setting "new" rules of the game. Companies in the report feel they cannot leave the ultimate form of such regulations to chance and must earn a seat at the policy making table.
  5. Companies need to create business opportunities. Companies with a history of climate-related activity are shifting their strategies from a focus on risk management and bottom-line protection to instead emphasize business opportunities and top-line enhancements.
  6. Climate strategies cannot be an add-on to business as usual. Instead, sustainable climate strategies must be fully integrated into core business activities.

Corporate Strategies Workshop Agenda

Lunch Keynote Speaker

  • John Ranieri, Vice President and General Manager of Bio-Based Materials -- Energy and Specialties, DuPont (pdf of presentation - 10MB).

Overview of report process, key findings, and future research

  • Andy Hoffman (pdf), Holcim (US) Professor of Sustainable Enterprise, University of Michigan
  • Truman Semans (pdf), Director for Markets and Business Strategy, Pew Center on Global Climate Change
  • Representatives from Report Case Study Companies
    • Randy Armstrong, Manager, Compliance Assurance, Shell Oil Company
    • Eric Kuhn, Manager, Climate Change Programs, Duke Energy
    • Ed Mongan, Director, Energy and Environment, DuPont
    • Mark Way, Head, Sustainability Issue Management & Reporting Team, Swiss Re

Click here to view streaming video of a subsequent workshop on the Pew Center's Corporate Strategies report held November 10, 2006, at the University of Michigan, which featured a detailed question and answer period between conference attendees and case study company representatives.

Panel #1: McKinsey & Company

  • Kenneth Ostrowski, Director of the Americas Electric Power and Natural Gas Practice, McKinsey & Company (Chair)
  • Jon Creyts, Principal, McKinsey & Company
  • Rick Duke, Engagement Manager, McKinsey & Company
  • Per-Anders Enkvist, Associate Partner, McKinsey & Company
  • Christoph Grobbel, Senior Practice Expert of the European Electric Power and Natural Gas Practice, McKinsey & Company
  • Steve Mitnick, Senior Advisor, McKinsey & Company

The presentations from the McKinsey & Company panel discussion are confidential. Those interested in McKinsey's work on climate change should contact Sally Lindsay, Senior Practice Manager, McKinsey & Company (202-662-2201, or Sally_Lindsay@mckinsey.com).

Panel #2: Perspectives on Sustainability, Legal, and Communications Dimensions of Climate Change

  • Chuck Bennett, Senior Research Associate, The Conference Board
  • Ken Berlin, Attorney and Partner, Skadden, Arps, Slate, Meagher & Flom LLP
  • Bob Knott, Executive Vice President, Edelman

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Press Release: Pew Center Releases Guide to Developing Climate Related Business Strategies

Press Release
October 18, 2006

Contact: Katie Mandes, (703) 516-0606

PEW CENTER RELEASES COMPREHENSIVE GUIDE TO DEVELOPING CLIMATE CHANGE RELATED BUSINESS STRATEGIES

Report Shows Inaction No Longer a Viable Option

Washington, DC -- The Pew Center on Global Climate Change today released, “Getting Ahead of the Curve: Corporate Strategies That Address Climate Change,” a how to guide for corporate decision makers as they navigate rapidly changing global markets. The report presents an in-depth look at the development and implementation of corporate strategies that take into account climate-related risks and opportunities.

The report, authored by Andrew Hoffman of the University of Michigan, lays out a step-by-step approach for companies to reshape their core business strategies in order to succeed in a future marketplace where greenhouse gases are regulated and carbon-efficiency is in demand. The research shows a growing consensus among corporate leaders that taking action on climate change is a sensible business decision. Many of the companies highlighted in the report are shifting their focus from managing the financial risks of climate change to exploiting new business opportunities for energy efficient and low-carbon products and services.

Relying on six highly detailed, on-site case studies, as well as results from a 100-question survey completed by 31 companies, the report offers a unique and in-depth look at the development and implementation of corporate strategies that address climate change. The featured case studies include Alcoa, Cinergy (now Duke Energy), DuPont, Shell, Swiss Re, and Whirlpool Corporation.

One of the clearest conclusions is that businesses need to engage actively with government in the development of climate policy. Of 31 major corporations polled by the report author, nearly all companies believe that federal greenhouse gas standards are imminent, and 84 percent of these companies believe regulations will take effect before 2015. The report offers policy makers insight into how companies are moving forward on climate change and how they can most effectively engage in the policy discussion.

“If you look at what is happening today at the state level and in the Congress, a proactive approach in the policy arena clearly makes sound business sense” said the Pew Center’s Eileen Claussen. “In the corporate world, inaction is no longer an option.”

Lessons learned at each step of the strategy development process are presented and four overarching themes emerge:

  • Strategic timing – For some there is a danger of starting too early; others highlight the risks of starting too late.
  • Establishing an appropriate level of commitment – For many companies, uncertain demands from government, the marketplace, and the financial community–coupled with limited hard data and models to guide aggressive action–make it challenging to support extensive expenditures on GHG reductions.
  • Influence policy development – Any policy that regulates GHG emissions will certainly constitute a major market shift. Early action is seen as a way for companies to gain credibility and leverage participation in the process of policy.
  • Creating business opportunities – positioning to capture emerging opportunities and gain competitive advantage

The research draws from the experience of companies in the Pew Center’s Business Environmental Leadership Council (BELC). The BELC, with 42 companies representing over 3 million employees and a combined market value of more than $2.4 trillion, is the largest US-based association of corporations actively pursuing solutions to climate change. Wal-Mart and Goldman Sachs also gave input.

Representatives from Shell, Alcoa, Duke Energy, DuPont, Swiss Re and Whirlpool Corporation spoke about their companies’ corporate strategies to address climate change today at the National Press Club in Washington DC.

The 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 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.

A copy of this and other Pew Center reports is available at www.c2es.org.

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The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States’ largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.

Press Release: Bank of America Joins Pew Center's Business Environmental Leadership Council

Press Release
October 17, 2006

Pew Center Contact: Katie Mandes, (703) 516-4146
Bank of America Contact: Shirley Norton, (415) 622-4041

BANK OF AMERICA JOINS PEW CENTER’S BUSINESS ENVIRONMENTAL LEADERSHIP COUNCIL

Financial Industry Leader Commits to Advancing Climate Change Solutions

WASHINGTON, D.C. – The Pew Center on Global Climate Change announced today that Bank of America has joined the Pew Center’s Business Environmental Leadership Council (BELC) and its efforts to address global climate change.

One of the world’s leading financial institutions, Bank of America adopted a climate change position recognizing that “climate change and atmospheric pollution represent a risk to the ultimate stability and sustainability of our way of life.” The company has set a goal to reduce direct greenhouse gas emissions from its operations by 9 percent from 2004 levels by 2009. In addition, Bank of America is constructing a state of the art 2.1 million-square-foot tower, designed to be one of the most environmentally responsible high-rise office buildings, which will serve as the headquarters for Bank of America’s operations in New York City.

“The financial industry is essential to a successful climate strategy in the United States,” said Eileen Claussen, President of the Pew Center on Global Climate Change. “Bank of America recognizes that climate change poses both risks and opportunities to economies and societies around the world, and I am delighted to have their expertise and support as we work to craft reasonable climate policy in this country.”

“We hold the core belief that we should contribute to the communities in which we work and live and that healthy communities create good business opportunities,” said Anne Finucane, Bank of America Global Marketing and Corporate Affairs executive and head of the company’s environmental council. “We strive to create initiatives that apply business practices to good environmental behavior.”

Bank of America serves individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The company serves more than 54 million consumer and small-business relationships with more than 5,700 retail banking offices. The company serves clients in 175 countries and has relationships with 98 percent of the U.S. Fortune 500 companies and 79 percent of the Global Fortune 500. Bank of America Corporation (NYSE: BAC) is listed on the New York Stock Exchange.

The BELC was established by the Pew Center in 1998. 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 now the largest U.S.-based association of corporations focused on addressing the challenges of climate change, with 42 companies representing over 3 million employees and a combined market value of more than $2.4 trillion

The other members of the BELC are: ABB; Air Products; Alcan; Alcoa Inc.; American Electric Power; 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. For more information about Bank of America’s commitment to the environment, visit http://www.bankofamerica.com/environment/.

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The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States’ largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.

Getting Ahead of the Curve: Corporate Strategies That Address Climate Change

Corporate Strategies Report Cover

Read what the
Harvard Business Review
has to say about the Report (pdf).

Getting Ahead of the Curve: Corporate Strategies That Address Climate Change

Prepared for the Pew Center on Global Climate Change
October 2006

By:
Andrew J. Hoffman, The University of Michigan

This report serves as a "how to" guide for corporate decision makers as they navigate rapidly-changing global markets. The report presents an in-depth look at the development and implementation of corporate strategies that take into account climate-related risks and opportunities.

Download the Entire Report (2MB pdf)
Download the Executive Summary (pdf)
View presentations from the October 18, 2006, Corporate Strategies Workshop

The report is comprised of two main sections:

1. The Synthesis Report lays out a step-by-step approach for incorporating climate change into corporate strategies and is based on results from a 100-question survey completed by 31 companies, six in-depth case studies, outside literature on corporate strategy, and input from the Pew Center's Business Environmental Leadership Council (BELC).

Synthesis Report (1.5MB pdf)

2. The Case Studies section features an in-depth look at the strategy-making process of these six companies:

Cinergy (now Duke Energy) (pdf)
Swiss Re (pdf)
DuPont (pdf)
Alcoa (pdf)
The Shell Group (pdf)
Whirlpool Corporation (pdf)

Foreword

Eileen Claussen, President, <?xml:namespace prefix = st1 />Pew Center on Global Climate Change

There is a growing consensus among corporate leaders that taking action on climate change is a responsible business decision. From market shifts to regulatory constraints, climate change poses real risks and opportunities that companies must begin planning for today, or risk losing ground to their more forward-thinking competitors. Prudent steps taken now to address climate change can improve a company’s competitive position relative to its peers and earn it a seat at the table to influence climate policy. With more and more action at the state level and increasing scientific clarity, it is time for businesses to craft corporate strategies that address climate change.

In this Pew Center report, author Andrew Hoffman of the University of Michigan has developed a “how to” manual for companies interested in developing effective climate strategies. One of the clearest conclusions is that businesses need to engage actively with government in the development of climate policy. After years of inaction, momentum is growing at the federal level to pass mandatory climate legislation. Nearly all the companies surveyed in this report believe that federal legislation is imminent, and 84 percent of those believe federal standards will take effect before 2015. With a number of new climate bills forthcoming, it is clear that Congress has entered the design phase for legislation. Now is the ideal time for the corporate sector to engage constructively with lawmakers to ensure that sensible policy is developed to reduce greenhouse gas emissions at the lowest possible cost.

And constructive engagement is tightly linked with another compelling theme of this report: the shift of companies’ focus to creating climate-related market opportunities. Companies with a strong history of reducing emissions are shifting their focus from risk management to exploring new business platforms. They understand better than their peers that new markets will be created and existing ones will change. There will be winners and losers. The shape of climate legislation will be the strongest factor in determining how the market rewards innovators of climate-friendly products and services, as well as how it punishes laggards. More than ever, integrating climate issues into corporate strategy is a necessary aspect of managing risk and seizing competitive advantage.

The Pew Center would like to thank Mike Lenox, Forest Reinhardt, and Paul Tebo for their comments on an earlier draft of the report; Alcoa, Cinergy (now Duke Energy), DuPont, the Shell Group, Swiss Re, and Whirlpool for agreeing to be profiled for the case studies in the report; all the companies that completed the Corporate Strategies Survey; and the many member companies of our Business Environmental Leadership Council that provided comments and guidance throughout the research process.

 

Exexutive Summary

This report compiles the experience and best practices of large corporations that have developed and implemented strategies to address climate change. Based on a 31-company survey, six in-depth case studies, a review of the literature, and experience gained by the Pew Center in working with companies in its Business Environmental Leadership Council (BELC), the report describes the development and implementation of climate-related strategies. It is primarily a “how to” manual for other companies interested in developing similar strategies. But the report will also be of value to investors and analysts in evaluating the effectiveness of company strategies for managing climate risk and capturing climate-related competitive advantage. Finally, it will offer policymakers insight into corporate views on greenhouse gas (GHG) regulation, government assistance for technology advancement, and other policy issues. Although the report focuses primarily on U.S.-based multinationals, it considers the global context of climate change and related market transformation.

The report describes eight specific steps clustered into three stages that describe the various components of a climate-related strategy. Table ES1 summarizes these steps, which include assessing emissions and exposure to climate-related risks, gauging risks and opportunities, evaluating action options, setting goals and targets, developing financial mechanisms, engaging the organization, formulating policy strategy, and managing external relationships. The report is organized along the framework presented in the table, though it must be emphasized that individual companies do not necessarily follow the steps shown in a linear fashion.

Lessons learned at each step of the strategy development process are presented throughout the report. Taken together, four overarching themes emerge from the survey results and case studies. The first is the importance of strategic timing. Some companies acknowledge the dangers of starting too early on climate action, while others highlight the risks of starting too late. Despite continuing uncertainty, there is general consensus among the companies in this report that recent changes in the level of external awareness about climate risks, state government action, momentum toward stronger federal policy, and consumer demand for cleaner and more efficient products make it imperative to act now. Well-timed strategies can prepare companies for eventual regulation and create flexibility for longer-range strategic options.

A second theme is the importance of establishing an appropriate level of commitment. While the companies in this report are leaders in their industries, some caution against getting too far ahead of the competition. For many companies, uncertain demands from government, the marketplace, and the financial community—coupled with limited hard data and models to guide aggressive action—make it challenging to support extensive expenditures on GHG reductions. Therefore, many companies justify early action on other grounds: the managerial imperative to undertake low-risk initiatives that produce immediate or near-term cost benefits; their fiduciary obligation to address risks from climate change and from related regulations, particularly to the extent these could affect future asset values and market positioning; and socially and ethically responsible business values—that is “doing the right thing.”

Corporate Strategies Table Strategies Development
Click Here to see a larger image (PDF)

A third theme for many companies is the need to influence policy development. Any policy that regulates GHG emissions will certainly constitute a major market shift, setting new “rules of the game” and changing the competitive landscape. Companies in this report feel they cannot leave the ultimate form of such regulations to chance. All policies are not equal; they will, by their nature, favor certain actions, companies, and industries. Early action is seen as a way for companies to gain credibility and leverage participation in the process of policy development, and thereby have a measure of control over their future business environment.

A fourth and final theme is the importance of creating business opportunities. Companies with a history of climate-related activity are trying to shift their strategies from a focus on risk management and bottom-line protection to instead emphasize business opportunities and top-line enhancements. Firms that incorporate climate change into their core business strategies will be in the best position to take advantage of emerging opportunities and gain competitive advantage in a changing market environment. Sustainable climate strategies cannot be an add-on to business as usual; they must be integrated with a company’s core business activities.

In the end, it is the consensus of the companies in this report that climate change is driving a major transition—one that will both alter existing markets and create new ones. As in any such transition, there are risks and opportunities, and there will be winners and losers. In this context, a growing number of companies believe that inaction is no longer a viable option. All companies will be affected to varying degrees, and all have a managerial and fiduciary obligation at least to assess their business exposure to decide whether action is prudent.

About the Author

Andrew J. Hoffman
Holcim Professor of Sustainable Enterprise
University of Michigan

Dr. Hoffman is the Holcim (US) Professor of Sustainable Enterprise at the University of Michigan; a position that holds joint appointments at the Stephen M. Ross School of Business and the School of Natural Resources & Environment. Within this role, Professor Hoffman also serves as Faculty Co-Director of Michigan’s dual-degree (MS/MBA) program of the Frederick A. and Barbara M. Erb Institute for Global Sustainable Enterprise. Professor Hoffman’s research deals with the nature and dynamics of change within institutional and cultural systems. He applies that research towards understanding the cultural and managerial implications of environmental protection and sustainability for industry. He has published over fifty articles/book chapters and four books.

Prior to joining the faculty at the University of Michigan, Professor Hoffman was an associate professor of organizational behavior at the Boston University School of Management, a visiting professor at the Kellogg School of Management and Reykjavik University and a senior fellow with the Meridian Institute. Prior to academics, he worked for the US Environmental Protection Agency (Region 1), Metcalf & Eddy Environmental Consultants, T&T Construction & Design and the Amoco Corporation.

 
 
 
 
Andrew J. Hoffman
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Press Release: Marsh, Inc. Joins Pew Center's Business Environmental Leadership Council

Press Release
July 13, 2006

Pew Center Contact: Katie Mandes, (703) 516-4146
Marsh, Inc. Contact: Al Modugno, (212) 345-2448

MARSH, INC. JOINS PEW CENTER ON GLOBAL CLIMATE CHANGE

Leading Insurance Services Firm Raises Awareness of Global Environmental Risk

WASHINGTON, D.C. – The Pew Center on Global Climate Change announced today that Marsh, Inc. has joined the Pew Center’s Business Environmental Leadership Council (BELC) and its efforts to understand and address the impacts of global climate change.

Marsh, the world’s leading risk and insurance services firm, recognizes climate change to be one of the most significant emerging risks affecting businesses worldwide, and has urged its clients and other companies to take action to address the issue.  In April, Marsh released “Climate Change: Business Risks and Solutions,” a 32-page report that describes the potential impact of climate change on business risk, including the strong threat of increasingly volatile weather conditions; impacts on commercial insurance markets, business resources, personnel, and corporate preparedness; and increasing legal and regulatory pressures.  Additionally, in a groundbreaking February 22, 2006 conference call with its global clients, Marsh Chairman and Chief Executive Officer Brian Storms committed the company to be a leading source of climate risk information and solutions.

“The insurance industry is uniquely positioned to face both the risks and opportunities presented by climate change,” said Eileen Claussen, President of the Pew Center on Global Climate Change.  “Marsh recognizes the responsibility that leading companies have in developing solutions to deal with the most dangerous impacts of climate change. We look forward to working with them as they continue to engage their clients and colleagues in this critical issue.”

“Climate change is a complex global issue at the intersection of science, risk, and public policy,” said Storms.  “It is a challenge that our clients – and the world – will face for a very long time.  Our collaboration with the Pew Center, and the leading companies that work with it, is an important step in our long-term commitment to addressing this issue.”

Marsh, the world’s leading risk and insurance services firm, has nearly 30,000 employees and annual revenues approaching $5 billion. The firm provides advice and transactional capabilities to clients in over 100 countries. Marsh is a unit of Marsh & McLennan Companies (MMC), a global professional services firm with more than 60,000 employees and annual revenues of approximately $12 billion. MMC also is the parent company of Guy Carpenter, Kroll, Putnam Investments, and Mercer. MMC’s stock (ticker symbol: MMC) is listed on the New York, Chicago, Pacific and London stock exchanges. MMC’s web site address is www.mmc.com. Marsh’s web site address is www.marsh.com.

The BELC was established by the Pew Center in 1998.  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 now the largest U.S. based association of corporations focused on addressing the challenges of climate change, with 41 members representing $2 trillion in market capitalization and over 3 million employees. 

The other members of the BELC are: ABB; Air Products; Alcan; Alcoa Inc.; American Electric Power; 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; 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.

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The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States’ largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.

An Agenda for Climate Action

AN AGENDA FOR CLIMATE ACTION

SPEECH BY EILEEN CLAUSSEN
PRESIDENT, PEW CENTER ON GLOBAL CLIMATE CHANGE

YALE SCHOOL OF FORESTRY AND ENVIRONMENTAL STUDIES
NEW HAVEN, CONNECTICUT

MARCH 30, 2006

Thank you very much.   It is great to be here at Yale.  I want to open my remarks today with some polling numbers.  And I know what some of you may be thinking.  You’re thinking this is a typical Washington thing to do: talk about polls.  And you’re thinking about how polls really don’t get at the real issues.  And you may be right, particularly in this era of television and internet insta-polls.  

I was watching BBC Television shortly after the death of Slobodan Milosevic and the announcer asked viewers to call in with their opinions on this question: “How will Milosevic’s death affect the future of peace in the Balkans?”   And I thought that’s really a fairly sophisticated question.  Sort of the kind of essay question you might have to respond to here at Yale.  And fairly typical, I imagine, of BBC’s expectations of its audience.

In contrast, if you turn on CNN or FOX or one of the other American cable networks, the questions tend to be of the quick yes or no variety.   Here is an actual CNN online poll I found on the Internet: “Would you consider having microchips implanted in your body?  Yes or no.”  I can only imagine how someone might use these results.   

But seriously, I think we can all learn something from looking at the polling on an issue such as climate change, especially when it reveals a clear divergence between public opinion and what is happening in Washington to address this issue.

Just a couple of weeks ago, a national survey showed that Americans of all political beliefs are not happy with the U.S. government’s leadership (or lack thereof) on the issues of global warming and alternative energy. More than three out of four – including two out of three conservatives – said the federal government is not doing enough on either of these issues. And nearly nine out of ten agreed with the following statement—and I quote: “U.S. leaders should take steps to reduce carbon pollution now and speed up the conversion to renewable energy and other alternatives.”

Nine out of ten people. That’s higher than the proportion of dentists who recommend sugarless gum for their patients who chew gum. Seriously, it is an overwhelming majority of Americans. And they all want to see something done to address the climate issue and to put America on a path to a low-carbon future.

Of course, President Bush and Vice President Cheney say they don’t pay attention to polls – and this is one time when I believe them. Because if they were to pay attention to polls, they would be doing something serious to solve the climate problem. In ever-increasing numbers, Americans recognize that we are facing a potential crisis here, and they are looking to their elected leaders in Washington to shape solutions.

I am here today to talk about what those solutions might entail—and I want to do that by focusing on a comprehensive plan to reduce greenhouse gas emissions in the United States that the Pew Center released in February. But I want to start with a brief look at the science of climate change, as well as what is happening now at both the state level and nationally.

Then I want to reserve the rest of my remarks to talk about the Pew Center’s Agenda – because what is happening right now in this country is clearly not enough.

The Science of Climate Change

So first the science. The polling data I talked about shows a pronounced shift in Americans’ views on the climate issue and what to do about it. And the main reason for this shift is not that people are beginning to notice that it’s getting warmer or that the pond over at the town park just isn’t freezing as much in the winter as it used to.

No, what’s happening is that people are beginning to pay attention to the science on this issue. And they are coming to understand that there is no longer any doubt about it: climate change is a very real and very serious problem.

Scientists now know for certain that the globe has been warming for the past century. They also know that human activities, mainly the burning of coal and oil, but also agriculture and deforestation, have dramatically increased concentrations of heat-trapping gases in the atmosphere

In just the past year, the science linking observed climate change directly to human activities has become increasingly solid. And the impacts of climate change, distributed across the globe, are occurring in patterns that can only be explained by human activities and not by natural variations in regional climate. During the first half of the 20th century, natural factors may have been as important as anthropogenic factors. Unfortunately, the more dramatic warming that has occurred since then has been dominated by the human influence. The science is now clear on this point.

But what is really changing how people view this issue is that the impacts we are seeing now—today—are happening much sooner than anyone might have anticipated even a decade ago. These changes were predicted, but even the scientists who made the predictions are surprised at the rate at which they are now occurring.

What do we know about the impacts of climate change?

We know that ice cover around the world is changing at an unprecedented rate. Just last month, new satellite-based measurements of ice flow in Greenland were published in the Journal Science. And what they showed is that the second largest land-based ice sheet in the world is losing ice twice as fast as scientists had estimated before these new measurements were available. This ice sheet, if completely melted, could raise global sea level by almost 20 feet. That would permanently flood not just New Orleans, but virtually all of America’s major coastal cities.

We also know that we are experiencing a worldwide loss of mountain glaciers, a trend that is accelerating. By mid-century, most mountain glaciers may be gone.

We know that hurricanes are becoming more intense, not just in the Atlantic, which gave us Katrina and Rita, but in all oceans where hurricanes occur.

We know that ecosystems around the world are showing signs of responding to climate change. One study found that 130 species - both plants and animals - have responded to earlier spring warming over the last 30 years. These organisms have changed their timing of flowering, migration and other spring activities. More startling than this, however, climate change is also driving some species to extinction. For instance, in the past 20 years dozens of species of mountain frogs in Central America have disappeared because of a disease that formerly did not occur where they live. Early this year, a paper in the journal Nature revealed that the disease-causing organism, a fungus, has spread to higher elevations as a result of climate warming. This paper not only provides an example of climate change driving species extinct, but also strong scientific evidence that climate change is promoting the spread of diseases to new areas. In the authors' own words, "With climate change promoting infectious disease and eroding biodiversity, the urgency of reducing greenhouse-gas concentrations is now undeniable."

And these are, if I may say this, just the tip of the melting iceberg.

So the bottom line is this: The earth is warming; the impacts—once only predictions—are now upon us and are likely to worsen; and human activity is largely to blame.

U.S. Action on Climate Change

So we have all this science, and we have Americans responding to it by saying that our government needs to do more. How has our government responded? Well, at the state level at least, the response has been encouraging. For example:

Twenty-one states and the District of Columbia have enacted renewable energy mandates requiring utilities to generate a share of their power from renewable sources.

  • Twenty-eight state governments have adopted climate action plans; 15 have programs or policies in place to reduce, sequester or register greenhouse gases; and nine states have statewide targets for reducing their emissions.

Connecticut, I am pleased to say, has done all of these things. And more. As many of you know, Connecticut, along with six other northeastern states has signed onto a regional initiative called RGGI that is aimed at reducing carbon dioxide emissions from power plants in the Northeast. This is the first “cap and trade” program to control these emissions in the United States. It couples a mandatory cap on emissions from the electricity sector with a market-based trading program that will allow companies to achieve their reductions at the lowest possible cost.

So Connecticut is really out in front on this issue—and all of you should be proud to live in a state with leaders who understand the need for climate action.

Among the other states that are taking this issue seriously, I have to mention California.

Like Connecticut, California has established greenhouse gas emissions targets, and they are very ambitious. And that state also has taken steps to begin regulating carbon dioxide emissions from cars and trucks. (a policy that Connecticut will follow if it survives the automakers’ legal challenge)

And then there is New Mexico, a major coal-producing state. NM has established its own targets, and has also announced a partnership with neighboring Arizona to jointly reduce greenhouse gas emissions and address the impacts of climate change in the Southwest.

These are just a few examples of the kinds of things states are doing. Now, you might think one state’s actions cannot possibly affect a global problem like climate change. But consider this: California’s emissions top those of Brazil. Texas comes in 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, including Connecticut, are showing they can be a significant part of the solution as well.

So what about our national government? To what extent have our leaders in Washington embraced the need for action? Well, I have some good news and some bad news.

First the good news: During the U.S. Senate’s debate on energy legislation last year, senators approved 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. The legislation was sponsored by senators Domenici and Bingaman, the chair and the ranking Democrat on the Senate Energy Committee. And although it was a nonbinding measure, it marked the first time the Senate has gone on record to support mandatory action on this issue. That is an important achievement – and now Senators Bingaman and Domenici are seeking input on how to create a mandatory climate program that gets real results.

Still in play is the cap and trade legislation proposed by Senators John McCain and Connecticut’s own Joseph Lieberman. And now Senator Dianne Feinstein has joined the issue as well, offering her own version of a cap and trade climate policy. And we are helping others in Congress develop other proposals. So clearly, we’ve seen an up-tick in Congressional interest in this issue. Granted, these proposals may not become law right away, probably not before 2008, but I believe it is only a matter of time before limits on greenhouse gas emissions are in place.

So that’s the good news: people on Capitol Hill, especially in the Senate, are looking at this issue and thinking hard about how to address it.

The bad news is that the White House and leadership of the House of Representatives are strongly opposed to addressing climate change in any significant way. As a result, I do not believe anything substantive is likely to come out of Congress on this issue for some time. I would like to be proved wrong, but it is hard for me to see any leadership on this issue coming from the White House during the remainder of its term.

Despite the President’s famous statement in his State of the Union Address that America is addicted to oil, Washington does not seem truly ready to fight the addiction. The Administration’s budget proposals don’t come anywhere close to providing the shot in the arm we need to accelerate clean energy research in this country. (Again, this is despite the American public’s clear interest in alternative energy solutions.) More importantly, even if the technology programs were properly funded, they simply are not enough.

And this is the problem with what has been happening on this issue to date, whether at the state or the federal level. In addition to being late to start, what we are talking about and doing is simply not enough. As I said, I applaud what many of the states are doing, and I am pleased to see members of Congress beginning to understand the need for action. But we need to remember what this is about.

James Hansen, the NASA scientist who is one of the world’s leading experts on climate change, says we have just 10 years to begin reducing greenhouse gases before global warming reaches what he calls a tipping point; the tipping point, as the phrase implies, is the point from which we may not be able to avert a catastrophe. To forestall a climate crisis, we must stabilize greenhouse gas concentrations in the atmosphere. And what does that mean? According to the Intergovernmental Panel on Climate Change, it means limiting the concentrations to about 550 parts per million –roughly double the pre-industrial level of atmospheric greenhouse gases.

To get to that level, we need to reduce global CO2 emissions by 55 to 85 percent below what is currently projected. Fifty-five to 85 percent. And we need to do this at the same time that energy demand around the world is growing at an unprecedented rate. We need to act now to come up with ways to limit emissions growth without endangering economic growth. And make no mistake: The United States, which is responsible for one-fourth of global emissions, needs to play a leadership role.

And that is going to require a fundamental shift. We need to move from an economy based on traditional burning of fossil fuels to one based on more energy efficiency; increased use of low-carbon energy sources; and the capture and storage of carbon from fossil fuels. This is not something that one piece of legislation, or even one strategy or one approach, will accomplish. We need a comprehensive approach.

An Agenda for Climate Action

In February, the Pew Center released the first comprehensive plan to reduce greenhouse gas emissions in the United States. Our Agenda outlines an ambitious yet practical approach to addressing this issue. It is based on seven years of Pew Center analysis and work with leading businesses and policymakers.

The number-one lesson we have learned from this work: There is no single technology fix, no single policy and no single sector that can solve this problem on its own. For example, addressing emissions from the utility sector is key, but doing only that leaves out about 60 percent of emissions. In the same way, if we adopt policies to limit emissions from transportation and do nothing else, we’re hitting just 30 percent of the problem—which is significant, of course, but it is not enough.

The Pew Center’s Agenda outlines 15 specific recommendations in six overarching areas where the United States must take action. These six areas are: 1) science and technology; 2) market-based programs; 3) sectoral emissions; 4) energy production and use; 5) adaptation; and 6) international engagement.

I want to provide you with a better sense of what our Agenda is about by highlighting some of the recommendations in each of these six areas.

In the area of science and technology research, we call for increased and stable funding to spur technological innovation. Because it is important to spend this money wisely, we suggest the use of a “reverse auction.” Unlike a traditional auction, where buyers bid against each other to purchase an item, a reverse auction allows providers of goods or services—in this case, new, climate-friendly technologies—to compete for a pot of money by offering emissions reductions.

Since 1998, California has used reverse auctions to promote development of renewable energy. The program collects money through a charge on electric power, and solicits bids for renewable projects, with the money going to the bidder that can provide the renewable energy at the cheapest rate. Thus far, there have been 81 successful bids to produce renewable energy through this competitive and cost-effective system.

Second, we believe it is critically important to enact a mandatory cap and trade program that applies to large stationary sources – power-plants and major manufacturing facilities. Our work over the years has shown that market mechanisms such as emissions trading allow companies to reduce emissions in the cheapest, most efficient manner possible.

What a cap and trade system does in essence is send a signal to the market. It tells the market that there is a value in reducing emissions. And it tells inventors and investors that there is profit in creating and deploying climate-friendly technologies. It creates an essential pull for new technologies to enter the market. The push for those technologies, in turn, comes from the funding of innovation, through mechanisms like the reverse auction. And we need both the push and the pull to achieve real and cost-effective results. A cap and trade system coupled with a reverse auction is a great example of a comprehensive approach.

But the fact is that a cap-and-trade system by itself, and particularly at the level that would be politically practical, is not enough. In fact, many of the current proposals for cap-and-trade programs, tend to leave out the transportation sector, which is of course a major source of emissions.

And this is why the Pew Center’s Agenda also calls for sectoral approaches such as transforming the much-maligned Corporate Average Fuel Efficiency (or CAFE) program. CAFE, as you know, sets average fuel efficiency levels for carmakers across their fleets. But the standards have not changed significantly in over 20 years. And, because SUVs and light trucks now make up as much as half of the new-vehicle product mix, the average fuel economy of all the cars and light trucks sold in America—import and domestic— is no better today than it was in the early 1980s. Although NHTSA is currently considering changing the way it classifies different kinds of light trucks, it is unclear what that will translate into as far as actual emission reductions. But I am fairly sure it won’t be enough.

We recommend strengthening and converting the United States’ current fuel economy standards to a set of tradable standards based on greenhouse gas emissions. If you are looking to protect the climate, focusing on emissions rather than fuel efficiency seems more logical. By creating a market for emissions reductions through trading, and at the same time supporting the development of low-emission vehicles and fuels (the push and pull approach)—you can reduce the cost of getting the job done.

Of course, it is not only in the transportation sector where additional action is needed.

Our plan proposes tighter standards for appliance and equipment efficiency, as well as incentives for the manufacture of more climate-friendly products. Similarly, for the building sector, we call for stricter building codes to decrease energy use. We even touch on the role of the agriculture and forestry sectors in keeping carbon out of the atmosphere through climate-friendly practices. Again, all sectors of the economy have a role to play in this, and it is going to take all sectors to achieve the results we need.

But all sectors are not equal when it comes to having a hand in the climate problem and its potential solutions. One sector stands head and shoulders above the rest, and that is, you guessed it, energy. Eighty-percent of US greenhouse gas emissions come from the combustion of fossil fuels. The ways in which we generate, distribute and use energy have a profound impact on our emissions of greenhouse gases—and that is why the Pew Center’s Agenda reserves a special set of recommendations for this all-important sector. Our recommendations cover all of the major energy sources.

Let’s start with coal. And we need to be realists here. Coal is responsible for 50 percent of our nation’s electricity. It is cheap and it is plentiful and I believe (along with many others) that it will continue to play a role in meeting U.S. and global energy needs for years to come. Let’s look for a moment at our current and projected energy mix and needs. If we assume coal will continue to contribute roughly half of U.S. electricity requirements; and you look at the projected growth of energy demand in this country - by 2025 the U.S. will need to grow our coal capacity by 60% - that would mean emissions from U.S. coal burning alone in 2025 would equal 15% of our current global emissions. Globally, the numbers are even more dramatic. China is even more dependent on coal for electricity than the US. It contributes to 75% of their electricity needs, and despite efforts to ramp up generation in gas, renewables and nuclear, the overall share of coal in the mix is unlikely to change significantly. Think about this: China is building new coal power plants at a rate of one plant per week.

So we need to get serious—and I mean very serious—about reducing emissions from coal-fired power plants. First, we need to build the very best, most efficient coal burning power plants possible to reduce emissions per kWh of electricity. And then we have to prove that the carbon dioxide that still is emitted from these plants can be captured and stored (sequestered) in geological formations where it can be kept from entering the atmosphere for centuries or millennia.

We recommend an aggressive program of research, development and demonstration for these technologies. A few random demonstration projects done at a leisurely pace clearly are not enough. We need to build the most efficient plants and we need a concerted public-private effort to demonstrate that capture and sequestration can work, and then we have to insist that it be done.

But dealing with coal alone is not enough. Because capture and storage technologies are not quite ready, we need to work on expanding the role that renewables play in our energy future. We should also concentrate on expanding natural gas supplies and using natural gas more efficiently. And we will need to solve the problems associated with nuclear power. For each energy source, we propose specific measures in areas from R&D to incentives to regulation that can help expand the suite of carbon-friendly technologies that are necessary to put us on a low-carbon path.

It is of course important to understand that none of the things I have talked about can fully prevent all of the potential effects of climate change. In fact, as I mentioned at the start of my remarks, many impacts are already being seen. This is why, at the same time that we are working to reduce emissions in order to minimize the effects of climate change, we also need to develop a national strategy to adapt to those effects. Climate change is happening, and it is going to affect everything from agriculture to public safety and public health. Without a strategy, as well as a system for identifying the early warning signs of climate problems confronting our country, we are going to be caught unprepared.

Finally, the Pew Center’s Agenda, while primarily focused on domestic actions, also calls for greater U.S. participation in international negotiations on this issue. It is obvious now that there is no chance the United States will sign on to the Kyoto Protocol. Kyoto, of course, is the 1997 agreement that sets country-by-country targets for reducing emissions for industrialized countries. However you feel about Kyoto, the fact remains that climate change is a global problem that demands a global solution. It also needs a longer-term solution; Kyoto includes targets only through 2012.

We need to engage every country that is a major source of these emissions, not just the United States but China and India as well. And we need to come up with ways to make the process fair and equitable for all involved.

Finding common ground on global approaches to the climate problem has been the focus of a special Pew Center initiative we launched a couple of years ago and released in Montreal in December. I don’t want to spend a lot of time on it here, but we organized a dialogue-with business and political leaders from the United States, the United Kingdom, Germany, Japan, Australia, China, India, Mexico, Brazil, and other countries. And a key take-away from the group is that we need a more flexible framework than Kyoto, something that allows different countries to take on different types of commitments, all under the umbrella of a common global framework.

Working with us on global approaches are Senators Lugar and Biden, the majority and minority leaders in the Senate Foreign Relations Committee. And I cannot speak highly enough of what these Senators have done. They sent senior staff to participate in our dialogue. They co-sponsored a resolution urging US leadership in the international negotiating process, and are committed to getting a majority of Senators to support it this year. And they expect to hold hearings this year on energy security and climate change.

So those are the recommendations in the Pew Center’s Agenda. Once again, they cover the areas of: 1) science and technology; 2) market-based programs; 3) sectoral emissions; 4) energy production and use; 5) adaptation; and 6) international engagement.

The Role of Business

What I want to emphasize about this agenda is that this isn’t pie-in-the-sky thinking. All of the steps we are recommending are eminently doable. We just need the political will to do them.

And, if we do these things thoughtfully, this transition can actually become a platform for new economic growth, new jobs, new manufacturing and service industries, and new roles for sectors such as agriculture and forestry in our nation’s efforts to protect the climate.

America’s business leaders appear to understand this. They know that a mandatory program to limit and reduce greenhouse gas emissions in the U.S. is inevitable, and they know it is in their best interests to see that the program is designed intelligently and fairly.

That’s why so many of them stood with us at the event in February where we unveiled our Agenda. And why so many companies responded to Senator Bingaman and Domenici’s call for proposals and suggestions to fashion legislation setting mandatory caps on U.S. emissions of greenhouse gases. And that is why last June, five Fortune 500 companies provided testimony on climate to the Science Committee of the House of Representatives. ;

There are two unifying themes in these examples of corporate and investor leadership. First, most corporate leaders know that greenhouse gas regulation is inevitable. Second, they know that properly designed mandatory climate policies are consistent with sound business planning and good corporate governance. As more companies and investors come to this realization, pressure will mount for other companies to take a more responsible stance on the climate issue. And as corporate leadership aligns with activity at the state and international level, pressure will grow for serious policy change at the federal level.

Why? Because these companies want to ensure that the burden of responding to the climate problem is evenly shared across all sectors of the economy. And they also want another thing: they want certainty. Businesses, particularly electric utilities that have to make significant up-front investments in power plants, are saying they need to be able to plan for the future-and they cannot plan effectively without knowing what kind of policies this country is going to adopt to control emissions.

I opened my remarks with some polling data that shows Americans clearly understand the need for action on this issue. And I have concluded with examples of how business leaders, too, are concerned and how they’re beginning to take action. And, when you consider what many of the states are doing to address this issue, you realize that the one place where climate change still hasn’t achieved priority status is in Washington. Yes, we have seen a fair amount of discussion of this issue. And, yes, there are policymakers who take it seriously and who want to shape solutions.

But we need solutions now. We don’t have time to wait. Climate change policy in this country is at a crossroads, and the American public, together with visionary business and state leaders, are pointing us in the direction we need to go.

The sooner we get started by reversing our current course and adopting a serious and comprehensive approach to addressing this problem, the better off and the safer we will be. And the sooner we’ll begin transforming our economy for the realities and the opportunities that lie ahead.

And so, I will leave you today with another bit of polling described by Jay Leno. "According to a survey in this week’s Time magazine, 85% of Americans think global warming is happening. The other 15%" according to Leno, "work for the White House." Thank you very much. I welcome your questions.

Press Release: Agenda for Climate Action

Press Release
February 8, 2006

Contact: Katie Mandes, (703) 516-0606

PEW CENTER ON GLOBAL CLIMATE CHANGE RELEASES FIRST COMPREHENSIVE APPROACH TO CLIMATE CHANGE

All Sectors Must Share in Solution

WASHINGTON, D.C. – The Pew Center on Global Climate Change released the first comprehensive plan to reduce greenhouse gas emissions in the United States.  The Agenda for Climate Action identifies both broad and specific policies, combining recommendations on economy-wide mandatory emissions cuts, technology development, scientific research, energy supply, and adaptation with critical steps that can be taken in key sectors.  The report is the culmination of a two-year effort that articulates a pragmatic course of action across all areas of the economy.  

The report calls for a combination of technology and policy and urges action in six key areas:  (1) science and technology, (2) market-based programs, (3) sectoral emissions, (4) energy production and use, (5) adaptation, and (6) international engagement.  Within these six areas, the Agenda outlines fifteen specific recommendations that should be started now, including U.S. domestic reductions and engagement in the international negotiation process.  All the recommendations are capable of implementation in the near-term. 

The report concludes that there is no single technology fix, no single policy instrument, and no single sector that can solve this problem on its own.  Rather, a combination of technology investment and market development will provide for the most cost-effective reductions in greenhouse gases, and will create a thriving market for GHG-reducing technologies.  To address climate change without placing the burden on any one group, the report urges actions throughout the economy. 

“Some believe the answer to addressing climate change lies in technology incentives.  Others say limiting emissions is the only answer.  We need both,” said Eileen Claussen, President of the Pew Center.

Emissions in the United States continue to rise at an alarming rate.  U.S. carbon dioxide emissions have grown by more than 18% since 1990, and the Department of Energy now projects that they will increase by another 37% by 2030. 

Joining the Pew Center at the announcement were representatives from the energy and manufacturing sectors.  Speaking at the release were:  David Hone, Group Climate Change Adviser, Shell International Limited; Melissa Lavinson, Director, Federal Environmental Affairs and Corporate Responsibility, PG&E Corporation; Bill Gerwing, Western Hemisphere Health, Safety, Security, and Environment Director, BP; John Stowell, Vice President, Environmental Strategy, Federal Affairs and Sustainability, Cinergy Corp., Ruksana Mirza, Vice President, Environmental Affairs, Holcim (US) Inc.; and Tom Catania, Vice President, Government Relations, Whirlpool Corporation.

Recommendations:

While actions are needed across all sectors, some steps will have a more significant, far-reaching impact on emissions than others and must be undertaken as soon as possible. 

  • A program to cap emissions from large sources and allow for emissions trading will send a signal to curb releases of greenhouse gases while promoting a market for new technologies.
  • Transportation is responsible for roughly one-third of our greenhouse gas emissions, and this report addresses this sector through tradable emissions standards for vehicles.
  • Because energy is at the core of the climate change problem, the report makes several recommendations in this area: calling for increased efficiency in buildings and products, as well as in electricity generation and distribution.  Incentives and a nationwide platform to track and trade renewable energy credits are recommended to support increased renewable power.  In recognition of the key role that coal plays in U.S. energy supply, the report calls for the capture and sequestration of carbon that results from burning coal. Nuclear power currently provides a substantial amount of non-emitting electricity, and is therefore important to keep in the generation mix. The report recommends support for advanced generation of nuclear power, while noting that issues such as safety and waste disposal must also be addressed.
  • While most of the recommendations focus on mitigation efforts, the report acknowledges that some impacts are inevitable and are already being seen. As a result, it proposes development of a national adaptation strategy to plan for a climate-changing world. 
  • Finally, despite the importance of efforts by individual countries on this issue, climate change cannot be addressed without engagement of the broader international community.  The report recommends that the U.S. participate in international negotiations aimed at curbing global greenhouse gas emissions by all major emitting countries.

Other recommendations include: long-term stable research funding, incentives for low-carbon fuels and consumer products, funding for biological sequestration, expanding the natural gas supply and distribution network, and a mandatory greenhouse gas reporting program that can provide a stepping stone to economy-wide emissions trading. 

The full text of this and other Pew Center reports is available at http://www.c2es.org.  

###

The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States’ largest philanthropies and an influential voice in efforts to improve the quality of the environment.  The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change.  The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.

Emissions Trading and Offsets

Emissions Trading, JI, & CDM Solutions

The following is a brief overview of emissions trading, joint implementation and CDM solutions undertaken by members of C2ES's Business Environmental Leadership Council (BELC).

For more information on each of these companies efforts to address climate change, please see the Businesses Leading The Way section of this Web site.

Air Products and Chemicals

  • Air Products and Chemicals, Inc. is involved in all stages of development of EU regulations, country-based voluntary greenhouse gas reduction schemes within the EU, and energy tax incentive regulations such as the Dutch ‘convenant’ system and UK Climate Change levy.

  • Air Products and Chemicals, Inc. participates in national and international trade associations to ensure progress can be made in addressing climate change and sustaining economic growth by adopting reasonable government policies and programs that do not impede the free market’s ability to develop cost-effective solutions.

  • Air Products has actively followed various emissions trading mechanisms and recently executed its first purchase of CO2 credits for an operation in the UK.

Bank of America

  • Bank of America Merrill Lynch operates an active carbon market services business that provides risk management, market access and liquidity, and strcutured finaces to a variety of corporaye clients looking to offset emissions or manage their carbon exposure. 

  • Bank of America Merrill Lynch, has an option to purchase several million CERs (certified emission reductions) over a 10-year period, all of which will be generated in sub-Saharan Africa. In addition to holding compliance value from their eligibility in the European Union's Emissions Trading System (EU ETS), the carbon credits are “highly charismatic” in that they are earned through the replacement of CO2 producing kerosene lamps with innovative rechargeable light emitting diode (LED) lighting technology - a clean, safe, and environmentally sound solution that is affordable to those without access to the electricity grid. 

  • Bank of America Merrill Lynch facilitated a carbon credit agreement with four Chinese wind farms located in the Shandong, Hebei and the Inner Mongolia provinces of China, owned by Guohua Energy Investment Company, a subsidiary of China Shenhua Energy Company, the largest coal mining enterprise in the country. The wind farms, operational since 2009, have been registered with the United Nations and have the ability to generate more than 1.5 million carbon credits by 2012.

BP

  • BP believes that the use of flexible market mechanisms, such as emissions trading and the CDM, provide a cost-effective means of reducing greenhouse gas emissions.  BP operated an internal emissions trading system between 1999 and 2001 that helped reduce operational GHG emissions by 10%.  The system covered all BP operations across the globe and provided a number of insights and learning.

  • BP’s UK Upstream and Petrochemicals assets are now part of the UK Government ’s emissions trading scheme (ETS). BP carried out the first trades in the UK ETS and has also helped customers trade in the market. BP is currently applying the evolving Clean Development Mechanism (CDM) rules and proced ures to a BP solar project in Brazil, with the intention of registering the project with the CDM Executive Board. BP is currently piloting CDM projects for a range of technologies.

  • BP is currently applying the evolving CDM rules and procedures to a real BP solar project in Brazil, with the intention of registering the project with the CDM Executive Board.  BP is currently piloting CDM projects for a range of technologies and believe clear accounting principles need to be created and internationally agreed, for the use of CER’s and other types of GHG emission reduction credits, to realise value from lower carbon technologies and for compliance use in meeting mandated and voluntary GHG emission caps.  

  • BP will continue to take part in wider industry and stakeholder alliances and to share our experience with flexible mechanisms since 1997 in order to aid the development of national and regional systems.

Delta Air Lines, Inc.

  • In 2012, Delta will begin participating in the European Union’s Emissions Trading Scheme (EU ETS). All airlines flying to, from or within the EU will pay CO2 emission allowances for their flights. Aviation will be the second-largest industry covered by these regulations. Delta is the seventh-largest airline (in terms of emissions) subject to the regulations and will be required to either reduce its CO2 emissions or purchase allowances for those emissions. Delta submitted traffic and CO2 emissions reports for 2010 and intends to fully comply with the regulation.

DTE Energy

  • DTE Energy, along with other partners, is involved in the Rio Bravo Carbon Sequestration Project to protect 65,000 acres of endangered rainforest in Belize.  The project combines land acquisition and sustainable forestry and is expected to sequester approximately 2.4 million metric tons of carbon over 40 years.

DuPont

  • DuPont has been active in working with others to pilot emissions trading systems and has concluded a number of trades through the use of bi-lateral agreements and on the emerging carbon exchanges.  DuPont is a member of the Chicago Climate Exchange and the International Emissions Trading Association.  In the winter of 2002, DuPont donated 120,000 tons of CO2-equivalent emissions credits to the Salt Lake City Organizing Committee. This allowed the Winter Olympics to offset their emissions and be declared "climate neutral." 

Entergy

  • Entergy and Elsam, the largest Danish electricity supplier, executed an international trade in CO2 allowances under the Danish climate change program.  Under the transaction, Entergy purchased 10,000 Danish allowances from Elsam and will remove the allowances from the market, eliminating 10,000 metric tons of CO2 emissions. 

Royal Dutch/Shell

  • Royal Dutch/Shell Group developed and used a pilot internal emissions trading system (STEPS) to gain experience and understanding in the use of and structure for emissions trading. The system, which ran from 2000 to 2002, allowed trading between a number of Group entities located in Annex 1 countries. The system covered over 33 million metric tons of CO2e from over 22 separate sites, accounting for almost two-thirds of Shell's developed country emissions or over one-third of its global emissions.

  • Shell has shifted emphasis from internal mechanisms to real external instruments and has established an Environmental Products Trading Business (EPTB). The Shell Group has entered the UK Emissions Trading System, and as a result, key Shell UK upstream production facilities now have a GHG emissions cap. Shell Trading, with Nuon, executed the first trade in EU CO2 allowances in February 2003.

  • The EPTB is also actively developing a CDM business for the Group.

TransAlta

  • In August of 2004, TransAlta announced the purchase of 1.75 million tonnes of GHG candidate Certified Emission Reductions (CERs) from the Chilean agricultural company Agrosuper.  The purchase requires the registration of the project with the Clean Development Mechanism Executive Board.  Once completed, this agreement will represent the first Canadian purchase of CERs under the Kyoto Protocol. 

  • TransAlta develops and trades for approximately 4 million tons of CO2 equivalent per year in offset projects, with 80 million tons currently under contract.  Offset projects include gas recovery, energy efficiency, ruminant methane, landfill and coal mine gas to electricity, forestry, and soil sequestration, among others.  In a recent upgrade of its U.S. operations, TransAlta reduced its CO2 emissions by an amount equal to the annual emissions of 27,800 cars, and sold the resulting credits to a U.S. integrated oil company.

  • TransAlta contributes to the development of a greenhouse gas emissions reduction market by engaging in selling fractions of its portfolio. 

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