Business FAQs

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Why is it important for businesses to have a global climate change regime in place sooner than later?

  • In the absence of a global climate change regime, most companies will forge ahead with existing programs to reduce their emissions, encourage greater energy efficiency, begin a switch to less carbon intensive fuels, and continue to develop alternative energy technologies. 
  • However, what they may not do is to undertake activities that are dependent on the Kyoto rules. For example, some industries are eager to pursue emissions-reducing power projects in other countries. But they are unlikely to move ahead vigorously until they know what kinds of projects will be eligible for credits under the Protocol. Similarly, there are many companies in a variety of industries that would like to begin participating in global emissions trading. And while they may begin these activities, they will hold off on major transactions until the climate negotiations paint a clearer picture of exactly how the market in emissions might work. Top

What sectors emit the most GHG emissions?  

  • As of the year 2000, in the United States, generation of electricity was responsible for 33% of total GHG emissions; transportation 27%, industry 19%, agricultural 8% commercial establishments 7%, and residences 5%.   When emissions due to the generation of electricity are allocated to the sectors which use the electricity; the industrial sector was responsible for 30% of GHG emissions, transportation 27%, the commercial sector 18%, the residential sector 16%, and agriculture 8%.  (Percents do not add to 100 due to rounding).  Source: U.S. EPA, Inventory of Greenhouse Gas Emissions and Sinks: 1990-2001, April, 2003.   Vegetation and soils lower net emissions to 12% below emissions from other sources. Top

What are emissions inventories and why do companies do them?

  • By properly accounting for their GHG emissions and removals (sinks), corporations have an opportunity to establish a foundation for setting goals and targets; provide a baseline to measure progress; evaluate cost-effective greenhouse gas reduction opportunities; clearly communicate with their stakeholders; contribute to the development of accurate national inventories; and provide data that support flexible, market-oriented policies. Top

How do companies set an emissions reductions target?

  • It varies by company.  Some companies just make an educated guess of how much they think they can reduce their emissions if they start trying.  Others take careful inventory of their emissions from each of their business units and identify specific opportunities for reductions, and then add up those opportunities to inform their target.  Companies also have to make strategic decisions as to what kind of target they set.  Whether they target GHGs directly, or indirectly through electricity use; whether they set an absolute target or one that is relative to product units or sales; and whether they target their own emissions or those of their suppliers, are strategic decisions that depend on the specific characteristics of their business. Top

Why do companies set emissions reductions targets?

  • Companies set targets because they believe targets will enhance their competitive positioning.  Targets help companies that are interested in focusing on the triple bottom line, managing their regulatory risk, guiding policy development and learning by doing, and using resources efficiently to reduce costs. Top