Business

Bob Perciasepe's remarks at Harvard University

PREPARED REMARKS BY BOB PERCIASEPE

PRESIDENT, CENTER FOR CLIMATE AND ENERGY SOLUTIONS

CHALLENGES FOR THE NEW PRESIDENT

HARVARD UNIVERSITY CENTER FOR THE ENVIRONMENT

Cambridge, MA

November 15, 2016

I want to thank Doctor (Daniel) Schrag and the Harvard University Center for the Environment for inviting me to speak. And my thanks to all of you for coming to listen. Dan and I have been talking for some time about my coming up from Washington to do a lecture. I’m not sure either one of us had quite this backdrop of current events in mind.

What a week. I know folks are still processing what happened seven nights ago and what happens next. The truth is: Elections have consequences. That’s why it’s so important to exercise our right to vote.

It’s too soon to tell exactly what steps the next administration will take on climate and energy policy. The rhetoric of campaigning doesn’t always exactly match the realities of governing. We hope President-elect Trump and his advisers take some time to study the issues and hear a broad range of perspectives.

They’ll find that a majority of Americans support stronger climate action.

They’ll find that many cities and states are promoting energy efficiency, deploying renewable energy, and supporting alternative fuel vehicles.

And they’ll find that business leaders recognize the rising costs of climate impacts, and also see opportunities in clean technologies. You could say they want to “win” in the growing global clean-energy economy.

This evening, I want to explore three questions:

  • What are the climate and energy realities facing this president, and all of us?
  • What might we expect from a Trump Administration?
  • And what can we do to promote environmentally responsible policies in the years ahead?

To put my remarks in context, it helps to know a little bit about my organization C2ES – the Center for Climate and Energy Solutions. C2ES is a nonpartisan, nonprofit think tank. We work to forge practical solutions to climate change. Our mission is to advance strong policy and action to reduce greenhouse gas emissions, promote clean energy, and strengthen resilience to climate impacts.

We believe a sound climate strategy is essential to ensure a strong, sustainable economy. I want to underline that.  It’s a conviction our think tank was founded on.  And it’s a message I hope you’ll leave here with tonight: Environmental and economic progress go hand in hand.

I came to C2ES a little over two years ago because of its reputation:

  • As a Trusted Source of impartial information. We rank regularly among the top environmental think tanks in the world.
  • As a Bridge-Builder. We bring city, state, and national policymakers together with businesses to achieve common understanding.
  • As a Policy Innovator. We explore market-based solutions and other practical policy approaches.
  • And as Catalyst for Business Action. We work with Fortune 500 companies to strengthen business support for climate policy.

The idea of bringing disparate groups together is part of our DNA. Here are four quick examples:

At the international level, C2ES brought together negotiators from two dozen countries for a series of private discussions that helped lay the groundwork for the landmark Paris Agreement.

Our Solutions Forum is fostering collaboration to reduce emissions, mobilize climate finance, and strengthen resilience to climate impacts. That last one -- climate resilience -- is relatively new.  With communities experiencing climate impacts here and now, it’s something we can’t afford to ignore.

We recently partnered with The U.S. Conference of Mayors to create the Alliance for a Sustainable Future, whose goal is to strengthen public-private cooperation.

And our multi-sectoral Business Environmental Leadership Council is the largest U.S.-based group of companies devoted solely to addressing climate change.

That’s who we are and where I’m coming from. Now, let’s look at the some of the realities facing the next administration.

Realities on the Ground

Depending on your point of view, this was either a “Change Election” or a “Fear of Change Election.” What I can tell you is that it wasn’t a “Climate Change Election” because nobody was talking about it.

Climate change didn’t come up once in any of the presidential debates.  The only question about energy policy came from that guy in a red sweater, Ken Bone. Climate change was not top of mind in the voting booth. Asked before the election where climate change ranked among their concerns, voters put it No. 19 out of 23.

But when asked where they stand, the majority of Americans – of all political viewpoints -- support climate action.  A majority of Democrats, Independents, and Republicans support funding renewables research, providing tax rebates for energy-efficient vehicles or solar panels, and regulating carbon dioxide as a pollutant.

Americans support climate action because they understand that climate change is occurring, and that human actions are largely responsible.

Here are a few more facts:

  • 2014 was the hottest year globally ever recorded. Until 2015. 2016 has been even hotter.
  • Climate change is a matter of science, but also a matter of dollars and cents. This year, the United States experienced a dozen billion-dollar disasters.
  • Climate impacts like rising sea levels and more frequent and intense heatwaves, downpours, and droughts threaten the way we all live our lives.
     

Another reality is that our energy landscape has already changed. This isn’t your grandfather’s energy system. When I was born, the United States didn’t get any commercial power from natural gas or nuclear. Zero. Now those two sources together are responsible for more than half of our electricity.

Let’s talk a minute about those two. First, natural gas. Thirty years ago, before many of you were born, it was illegal to use natural gas in a power plant.  Now it makes up more than a third of U.S. electricity supply. Coal makes up another third of our energy mix, down from about half 10 years ago.  This change is due in large part to market forces. Natural gas is inexpensive, so utilities have switched to if from coal.

These same market forces are posing a challenge for nuclear energy. Nuclear is responsible for more than 60 percent of zero-carbon electricity in the United States – It’s the biggest source. A number of reactors have been closing prematurely, which could make it even harder to meet our climate goals.

Renewables have been surging as costs have plummeted. Wind and solar generation have grown nearly twelve-fold since 2005. That’s nearly eight times greater than expected.
Thanks to diversifying our energy mix, and improving energy efficiency, power sector emissions have fallen by more than 20 percent in the past 10 years.  We’re moving in the right direction.  The challenge will be to keep doing so.

What to expect

What can we expect from the new administration? I’ve been getting two questions for the past week: What will happen to the Clean Power Plan? And what will happen with the Paris Agreement? So let’s talk about those.

Every new president usually halts regulations that are in the process of being formulated, so we can expect that. For a final regulation, like the Clean Power Plan, a simple stroke of the pen can’t undo it. It’s a process. First, they’d have to do a rule-making, which requires public comment.  Then, they'd need to come back with an alternative plan. That’s because under previous Supreme Court rulings, EPA is still under a legal obligation to reduce greenhouse gas emissions. It’s mandatory. They’ll be sued if they don't.

The Clean Power Plan is currently in the courts. So we could find ourselves replacing the current legal uncertainty with new and different legal uncertainty.

On a positive note, the Clean Power Plan prompted a lot of state environmental officials, public utility regulators and other stakeholders to sit down together for the first time to talk about electricity reliability, efficiency and affordability. We hope those conversations bear fruit.

There’s no doubt that the Clean Power Plan could reduce power plant emissions faster and further than no plan at all. But progress has already been made and I think there are ways it can continue.

Mr. Trump has also said he wants to “cancel” the Paris Agreement. The bottom line is that he could legally pull the U.S. out of it. Let’s think through, practically, how that would work out for us. Consider that virtually every country in the world has committed to taking climate action. The Paris Agreement is a bottom-up, flexible framework. It relies on peer pressure. If we want to hold other countries accountable, we have to hold up our end. If we walk away from our commitments, we also give up being a player in the innovative energy and transportation technologies that can create U.S. jobs. China, Brazil and the US led the world last year in employment in renewable energy.

The Paris Agreement has widespread support among the business community. Eleven major companies we work with, including Berkshire Hathaway Energy, Microsoft, National Grid, and Shell, signed onto a C2ES statement applauding governments for bringing the agreement into force so quickly this month. Businesses say the agreement provides long-term direction, promotes transparency, and addresses competitiveness.

Because the Paris Agreement is flexible, there are a lot of ways for an individual country to tailor its efforts. It was also designed to be durable – It can survive shifts in political currents. The nearly 100 other countries that have already ratified it are reducing emissions for a variety of reasons, including economic opportunities and health benefits to their people. I expect they will remain committed to moving forward.

As for what else we can expect – we’ll have to wait and see. From opening up public lands and offshore areas to more drilling to re-assessing pipelines to appointing agency leaders with very different priorities from the past eight years, we’re going to see changes.

What we can do

So that brings me to my final question tonight: What can we do to promote environmentally responsible policies in the years ahead? Let’s look at four vantage points – federal, state, local, and business.

First: The executive branch has been the focus of climate action for a number of years.  That’s going to change. I want to posit that it may be time to return our focus on the legislative branch. Three areas where bipartisan support already exists are: building infrastructure, incentivizing carbon capture technologies, and preserving the nuclear fleet.

Both presidential candidates talked about the need to modernize our aging infrastructure. That’s not just roads and bridges. We need to modernize our electric grid to move renewable power from where it’s generated to where it’s needed. We need to improve the natural gas pipeline system to reduce leaks. And we need to expand electric vehicle charging. The electric grid should be able to accommodate clean energy technologies like energy storage, time-of-day pricing, and grid-to-vehicle interfaces.

Millions of miles of pipes carrying drinking water and wastewater are nearing end of life.  And it takes a lot of energy to move a gallon of water. The nation’s utilities lose about $2.6 billion dollars annually from trillions of gallons of leaked drinking water.

Infrastructure projects can also help communities be more resilient to extreme weather, make communities more livable, increase property values, and save energy and water. And, of course, infrastructure projects create jobs.

The second area where we could make progress is carbon capture, use and storage, or CCUS. Some of you might be skeptical about this as “clean coal.” The truth is, there’s no scenario for achieving the emission cuts we need globally without carbon capture. We need to keep emissions out of the air not only from coal and natural-gas power plants around the world, but also the industrial sector like steel, chemical, and cement plants. The industrial sector is responsible for more than 20 percent of U.S. greenhouse gases.

Right now, there are bipartisan bills in the House and Senate that would spur carbon capture technology. Imagine Senate Majority Leader Mitch McConnell and Hillary Clinton’s running mate, Senator Tim Kaine, on the same bill. It’s true.

A third area where we might get some bipartisan agreement is preserving our nuclear fleet. There’s a bill right now that both Senators Whitehouse and Inhofe support. From a climate perspective, it doesn’t make sense to prematurely close nuclear plants when, in the short- and medium-term, they cannot realistically be replaced by zero-emission power sources. Keeping these reactors operational also buys us time to address energy storage and transmission challenges to support more renewable generation.

Let me add one more area as a possibility where we might see some agreement at the federal level: helping the communities most affected by the transition to clean energy. Remember that market forces – not regulations -- have mainly been driving the decline of coal.  And natural gas will continue to displace coal in our power generation fleet at current prices.  There are no plans for new coal-fired power plants in the United States. What coal communities need is opportunities for new jobs. The United States could be world leaders in manufacturing clean energy and transportation technologies. More Americans work now in the solar industry than work in either oil & gas extraction or coal mining. It will take a concerted effort involving education and training, but we have to help.

Moving to the states, which have always been the incubators of policy, we’ve seen a lot of progress on clean energy. Twenty-nine states require electric utilities to deliver a certain amount of electricity from renewable or alternative energy sources. Ten states that are home to a quarter of the US population already have a price on carbon and are successfully reducing emissions. Those states are California and the nine Northeast states, including Massachusetts, in the Regional Greenhouse Gas Initiative (RGGI). RGGI has added $243 million in value to Massachusetts’ economy. Massachusetts has also been named the most energy efficient state in the country for the last six years.

Every state has either an operational wind energy project, a wind-related manufacturing facility, or both. Some of the biggest wind energy producers are Texas and Iowa. They won’t want to reverse the economic prosperity they’ve seen as a result. America’s first offshore wind farm has just come online off Rhode Island, launching new industry with the potential to create jobs in manufacturing and the marine trades.

Time and again, we’ve seen leadership at the state level and I expect that will continue.

On environmental policies, so much often comes down to the local level.  Many cities have already taken the ball and are running with it. They’re improving the energy efficiency of buildings, deploying cleaner energy, and encouraging cleaner transportation.

Cities see the real and rising risks of climate change. They’re dealing with the impacts now. They also see opportunities to for energy and transportation systems that are cleaner and more efficient than today. To keep their efforts moving forward, partnership and collaboration will be key, especially between cities and companies.

That’s why we at C2ES recently launched a partnership with The US Conference of Mayors called the Alliance for a Sustainable Future. The main goal is to spur public-private cooperation on climate action and sustainable development in cities. Santa Fe Mayor Javier Gonzales is leading the steering committee. Founding sponsors include JPMorgan & Chase Co., Duke Energy, and AECOM, and the mayors of Austin, Des Moines, New York City, and Salt Lake City.

Finally, business leadership has been and will continue to be crucial in transitioning to a clean energy and clean transportation future. A C2ES study found more than 90 percent of the companies in the S&P Global 100 Index see climate change as a business risk. They see rising sea level and more frequent and extreme heat waves, downpours and drought damaging and disrupting their facilities and operations, supply and distribution chains, and water and power supplies.

More than 150 companies -- from Alcoa to Xerox -- signed the White House American Business Act on Climate Pledge.  They committed to cutting emissions, reducing water usage, and using more renewable energy. Business leaders see opportunities in clean energy and transportation.

Here’s another thing to think about, the power of the consumer. In the past year, three in 10 Americans say they’ve rewarded companies for taking steps to address climate change.

The reality is that we have strong momentum in the right direction.  Our economy has begun decarbonizing. Power sector emissions are down, thanks largely to market forces and to incentives for renewable energy that have strong bipartisan support. Many cities, states and companies, along with a number of congressional Republicans, want to keep that momentum going. Smart investments and technological innovation have started America on a clean-energy transition. Building on that momentum will protect communities from rising climate damages and will contribute to strong and sustained economic growth.

The longer we wait to address climate change, the costlier it will be. I urge all of you to work at the local and state level to support common-sense policies that lead us toward a sustainable future.

The Alliance for a Sustainable Future

             

The Alliance for a Sustainable Future

A partnership of C2ES and The U.S. Conference of Mayors

U.S. cities and businesses are exploring how to prepare for climate impacts and how to address the emissions that are the cause – by improving energy efficiency and deploying more clean energy and transportation.

Both see sustainability as a smart strategy for the future.

That’s why The U.S. Conference of Mayors (USCM) and Center for Climate and Energy Solutions (C2ES) formed the Alliance for a Sustainable Future: to bring cities and businesses together to play a more significant role in shaping sustainable communities and achieving climate goals.

NEW: How cities are taking climate action
A nationwide survey by the U.S. Conference of Mayors and the Center for Climate and Energy Solutions demonstrates that cities are pushing ahead their efforts to implement climate programs and are eager to partner with  business and other communities to meet their goals. Download the full survey results.

 


“Cities are our nation’s economic powerhouses, making them a key proving ground for policies to increase energy efficiency, deploy clean energy, and foster clean transportation.”

- Santa Fe Mayor Javier Gonzales, Alliance Co-Chair


 

Cities and businesses are each doing their part to demonstrate climate leadership.

Cities are leading by:

Companies are leading by:

  • Investing in clean energy projects
  • Reducing emissions throughout the supply chain
  • Setting an internal carbon price
  • Helping customers reduce their carbon footprint.

 

Together, cities and businesses can accelerate the momentum toward a more sustainable, low-carbon future. The Alliance for a Sustainable Future creates a framework for mayors and business leaders to develop concrete approaches to reduce carbon emissions, speed deployment of new technology, and respond to the growing impacts of climate change.

Goals of the Alliance

  • Inform and engage mayors, city officials, and business leaders so that strategic opportunities can be identified and explored;
  • Empower local leaders to contribute to the design and implementation of state climate plans and other supporting federal, state, and local initiatives;
  • Build new public-private partnerships; and
  • Raise the profile of city and business contributions in accelerating sustainable development, resilience, and climate action to help implement international commitments.  

City and business leaders in the alliance will identify barriers to action and share research and analysis on climate and sustainable development solutions. By building crucial links between cities and companies, the alliance aims to spur innovative partnerships.

The alliance will also identify local, state, and federal policies, support action, and explore how those policies can produce new partnerships among cities and the business community.

In the first year of work, the Alliance will produce a suite of case studies and insights that highlight how cities and businesses are working together to reduce emissions and increase resilience. The Alliance Steering Committee has identified three action areas representing substantial opportunities for city and private sector action:

  • efficient buildings
  • low-emission vehicles/transportation
  • low-carbon electricity.

These areas present emerging opportunities for cities and businesses to leverage their purchasing power and increase their influence the local market. Success requires business engagement and finding complementary state and federal action.

The Alliance for a Sustainable Future was formed in June 2016. Santa Fe Mayor Javier Gonzales and Salt Lake City Mayor Jackie Biskupski are the chair and vice chair of the Steering Committee, which consists of founding sponsors JPMorgan Chase & Co., Duke Energy, and AECOM, and the mayors of Austin, Des Moines, New York City, and West Sacramento.

At the alliance’s first public event Sept. 21, 2016, at Climate Week NYC, a panel of city and business leaders discussed ways cities and the business community can work together to reduce carbon emissions.

Read more about the Alliance for a Sustainable Future

For more information, contact C2ES Director of Sustainability and Engagement Amy Morsch.

Blogs:

RESOURCES

Businesses continue to lead on climate

Business leaders at COP 22 in Marrakech, Morocco, explain how investments in clean energy and efficiency make good sense for everyone. L to R: Elliot Diringer, Executive Vice President, C2ES; Cathy Woollums, Senior Vice President, Environmental Services and Chief Environmental Counsel, Berkshire Hathaway Energy; Nanette Lockwood, Global Director, Policy and Advocacy, Ingersoll Rand; Kevin Rabinovitch, Global Sustainability Director, Mars Incorporated; Tamara “TJ” DiCaprio, Senior Director of Environmental Sustainability, Microsoft.

Businesses have invested billions in clean energy and efficiency because it makes business sense.

At a side event at the U.N. climate talks in Marrakech, Morocco, leaders of major companies reiterated the benefits of those investments – for their companies, customers, the environment and the economy -- and said they will keep moving toward sustainability.

“We see a clear business case for this,” said Kevin Rabinovitch, Global Sustainability Director at Mars Inc. The global food and candy company has committed to eliminate all greenhouse gas emissions from its operations by 2040. Working toward energy efficiency helps the company cut costs, he said, but also motivates employees who are working toward a higher purpose.

“These targets, these programs, these goals need to transcend individual leaders, be they in government or in corporations,” Rabinovitch said. “We’re solving long-term problems. We need to put structures and systems in place that are consistent and durable.”

“You’re now looking at decades of investment. Businesses are not going to walk away from this,” said Nanette Lockwood, Global Director, Policy and Advocacy at Ingersoll Rand. The maker of air conditioners and refrigeration systems has committed to invest $500 million by 2020 to develop alternative refrigerants to HFCs and to reduce emissions by 50 million metric tons by 2030. “Once we set a direction and we create value and markets, we continue down that path.”

The C2ES event, co-sponsored with the Edison Electric Institute, featured senior representatives from Berkshire Hathaway Energy, Ingersoll Rand, Mars and Microsoft. They are among the more than 150 U.S. firms that have committed to specific climate actions as part of the American Business Act on Climate Pledge.

“Microsoft is committed to its sustainability goals, to its clean energy goals. Our investments in innovation in this area are good not only for the environment, but also for our business and for the economy,” said Tamara “TJ” DiCaprio, Senior Director of Environmental Sustainability at Microsoft, whose operations have been carbon neutral since 2012. Microsoft uses an internal carbon fee to fund energy efficiency, renewable energy, and sustainable communities.

As the largest regulated owner of renewable energy generation in the U.S., Berkshire Hathaway Energy has invested more than $15 billion in renewable projects, and has pledged to invest up to another $15 billion going forward.

“We can bring renewable solutions to our customers at very low cost and sometimes no additional cost,” said Cathy Woollums, Senior Vice President for Environmental Services and Chief Environmental Counsel. “It’s a win for the environment; it’s a win for our customers; and it’s a win for us.”

In a C2ES statement released in October when the Paris Agreement reached the threshold for entry into force, 11 leading companies said they are “committed to working on our own and in partnership with governments to mobilize the technology, investment and innovation needed to transition to a sustainable low-carbon economy.” The statement notes that the Paris Agreement facilitates stronger private sector action by providing long-term direction, promoting transparency, addressing competitiveness, and facilitating carbon pricing.

Speakers at the event agreed on the importance of consistency, transparency and partnerships moving forward. The Paris Agreement, with nearly all of the world’s nations committing to move in the same direction, is sending signals that the business and investment community are internalizing in their long-term investing and decision-making. And working together with cities and states, and other companies, helps them share best practices and go further, faster to reach their goals.

A lot of the progress that has been made, especially in the United States, in reducing emissions has been driven by market and technology forces, and those forces will continue even in the absence of federal action on climate change.

Asked what will change under the new U.S. administration, Woollums said, “We need to give the new administration a chance to develop rational policies. The President-elect understands business. To the extent that the things that we’ve been doing make business sense, we will continue to do those things.”

 

Major companies back Paris Agreement

Media Advisory

November 15, 2016

Contact:

US: Laura Rehrmann, rehrmannl@c2es.org, 703-516-0621

Marrakech: Anthony Mansell, mansella@c2es.org, 202-384-0774 (cell) 

Major companies back Paris Agreement

Hear from companies at livestreamed event today

MARRAKECH – At an event today at COP 22 in Marrakech, the Center for Climate and Energy Solutions (C2ES) will highlight climate action by business, including a recent statement signed by 11 leading corporations in support of the Paris Agreement.

The event, to be held at the U.S. Center at the U.N. Climate Change Conference, will feature remarks by senior representatives of Berkshire Hathaway Energy, Ingersoll Rand, Mars and Microsoft. They are among the more than 150 U.S. firms that have committed to specific climate actions as part of the American Business Act on Climate Pledge.

The event occurs at 4 p.m. Marrakech time (11 a.m. EST) and will be livestreamed. 

C2ES Executive Vice President Elliot Diringer will highlight a statement organized by C2ES and signed by 11 major companies based or with major operations in the United States welcoming the Paris Agreement's entry into force, and pledging to work with governments to implement their contributions.

The statement, released when the threshold for entry into force was reached in October, says the Paris Agreement establishes “an inclusive, pragmatic and, hopefully, durable framework for progressively strengthening efforts globally to address the causes and consequences of climate change.”

The statement was endorsed by Berkshire Hathaway Energy, Calpine, HP Inc., Intel, LafargeHolcim, Microsoft, National Grid, PG&E, Rio Tinto, Schneider Electric, and Shell.

“As businesses concerned about the well-being of our investors, our customers, our communities and our planet, we are committed to working on our own and in partnership with governments to mobilize the technology, investment and innovation needed to transition to a sustainable low-carbon economy,” the statement says.

It says the Paris Agreement facilitates stronger private sector action by providing long-term direction, promoting transparency, addressing competitiveness, and facilitating carbon pricing.

“Many companies recognize the costly impacts of climate change, and see investment and growth opportunities in a clean-energy transition,” said C2ES President Bob Perciasepe. “These companies are taking action and are looking to governments to help lead the way.”

Read the full business statement: http://bit.ly/Biz4Climate

EVENT DETAILS:

CHARTING A LOW-CARBON COURSE FOR THE U.S. ECONOMY

Tuesday, November 15, 2016, 4 p.m. – 5 p.m. local time (11 a.m.-Noon EST)?U.S. Center, Blue Zone, Marrakech

Senior officials from major corporations discuss ways business leadership can help achieve climate goals in this live-streamed event co-sponsored with the Edison Electric Institute (EEI).

•    Cathy Woollums, Senior Vice President, Environmental Services and Chief Environmental Counsel, Berkshire Hathaway Energy

•    Nanette Lockwood, Global Director, Policy and Advocacy, Ingersoll Rand

•    Kevin Rabinovitch, Global Sustainability Director, Mars Incorporated

•    Tamara “TJ” DiCaprio, Senior Director of Environmental Sustainability, Microsoft

•    Elliot Diringer, Executive Vice President, C2ES

•    Eric Holdsworth, Senior Director, Climate Programs, EEI

For reporters in Marrakech, C2ES will also host a second side event:

Post-Election: The Outlook for U.S. Climate Policy

November 16, 2016

6 p.m. – 7:30 p.m.

IETA Pavilion, Blue Zone

•    Nathanial Keohane, Vice President, Global Climate, Environmental Defense Fund

•    Josh Klein, Senior Professional Staff, Senate Foreign Relations Committee 

•    Matt Rodriquez, Secretary for Environmental Protection, California

•    Cathy Woollums, Senior Vice President, Environmental Services and Chief Environmental Counsel, Berkshire Hathaway Energy

•    Elliot Diringer, Executive Vice President, C2ES

C2ES Resources

•    UNFCCC Climate Transparency: Lessons Learned

•    Key Issues in Completing the Paris Climate Architecture

•    Linking Non-State Action with the UN Framework Convention on Climate Change

About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonprofit, nonpartisan organization promoting strong policy and action to address our energy and climate challenges. Learn more at www.c2es.org

The business of pricing carbon

More companies worldwide are turning to internal carbon pricing as an effective tool to spur the transition to low-carbon technologies, and C2ES is helping organizations to explore this frontier through a new working group to share best practices.

By putting a price on the carbon pollution associated with business activity, companies can account for their operations’ climate impact and incentivize actions to achieve their emissions reduction goals. Pricing carbon also responds to stakeholder and investor calls for climate action and prepares businesses for future carbon pricing regulation.

According to CDP, more than 1,200 companies either currently price their carbon emissions, or plan to within the next two years. Meanwhile, more than 120 companies have joined the World Bank Carbon Pricing Leadership Coalition that brings together government, the private sector, and civil society to support effective carbon pricing systems and policies.

This movement isn’t restricted to developed economies. This month, Mahindra & Mahindra became the first Indian company to implement an internal carbon fee (US $10 per ton) to help achieve its goal of reducing greenhouse gas emissions 25 percent over the next three years.

There are a range of ways to implement an internal carbon pricing strategy. The most direct is an internal carbon fee, such as the one Microsoft uses in its pioneering program.

Microsoft, which pledged in 2012 to go carbon neutral, implemented an internal carbon price in 2013 to help reach its goal. Microsoft charges the fee on the company’s scope 1 (direct) and scope 2 (purchased electricity) emissions, including its global data centers, as well as a part of its scope 3 emissions (business air travel).

The fee has helped the company reduce its carbon dioxide equivalent (CO2e) emissions by 7.5 million tons, achieve $10 million in annual energy savings, and invest in 10 billion kilowatt hours of renewable energy as well as support carbon offset projects around the world.

TJ DiCaprio, Microsoft’s senior director of environmental sustainability, said the benefits of the internal carbon fee include:

  • It’s easier to target action. By quantifying the carbon emissions of different parts of the organization, it became clear where reductions were possible to meet the company’s carbon neutrality pledge.
  • It provides incentive to act. The fee for emissions is charged to each department’s budget. This motivates decision-makers to take meaningful action toward emissions reductions, find low-carbon alternatives, and invest in carbon-saving projects. Even simple steps, such as reducing airline travel, made a real difference in the final accounting.
  • It creates a dedicated funding source for action. The fees charged to departments are placed in a centralized fund that Microsoft uses for a variety of projects, from purchasing carbon offsets to investing in programs supporting e-waste recycling.

Among the key lessons for other companies from Microsoft’s experience:

  • Set clear objectives you would like your carbon pricing model to meet.
  • Align your carbon pricing model to support those objectives.
  • Anchor the carbon price across all business units to drive accountability, employee engagement, and a cultural and behavioral change.

While an internal carbon fee prices carbon pollution directly, companies are also using indirect strategies, such as shadow pricing and implicit pricing.

Shadow pricing—a more common approach—is used by companies including BHP Billiton, Duke Energy, EMC, Google, NRG and Shell, as a risk assessment tool. It is the hypothetical or assumed cost of carbon emissions used to evaluate large investment decisions and profitability of projects in light of government regulation and/or the impacts of climate change. Compared to the more direct approach that companies such as Microsoft are taking, however, shadow pricing is not actually reflected in a company or division’s profit and loss statement, thus it may not have the same incentivizing effect.

Implicit pricing, another form that is used by companies including Unilever and Novo Nordisk, is simply a price calculated based on how much a company spends to reduce its greenhouse gas emissions, including the cost of complying with regulations. Here, the price reflects actions taken, rather than being a charge that drives change. Recognizing how much a company spends to meet its internal greenhouse gas targets and/or regulatory requirements can encourage greater action. Some companies, for example, employ an implicit pricing strategy as the first step before establishing a direct carbon fee.  

Internal carbon pricing is a relatively new tool that can play a critical role in helping companies achieve aggressive greenhouse gas reductions. Through our Business Environmental Leadership Council, C2ES is engaging companies on internal carbon pricing strategies.  Please contact us if your company would like to learn more about internal carbon pricing as a business strategy.

For more information on the C2ES Working Group on Internal Carbon Pricing, contact C2ES Policy and Business Fellow Manjyot Bhan.

(Contributing: Ryan McCoy)

C2ES Events in Marrakech

Promoted in Energy Efficiency section: 
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Charting a Low-Carbon Course for the U.S. EconomyU.S. Center, Blue ZoneNovember 15, 2016, 4 p.m. -- 5 p.m. (11 a.m.-Noon EST) Side Event: Post-Election: The Outlook for U.S. Climate PolicyIETA Pavilion, Blue ZoneNov 16, 2016, 6 p.m. – 7:30 p.m. Reception: Business-Driven DiplomacyU.S. Center, Blue ZoneNovember 16, 2016, 7 p.m. – 9 p.m.

Charting a Low-Carbon Course for the U.S. Economy

November 15, 2016
4 p.m. -- 5 p.m. (11 a.m.-Noon EST)
U.S. Center, Blue Zone

See a recap of this event on our blog: Businesses continue to lead on climate

American business understands that there is both opportunity in getting ahead of the climate curve, and considerable risk and cost to inaction. The Center for Climate and Energy Solutions (C2ES) and the Edison Electric Institute co-host this side event to showcase the actions of mainstream US businesses, including those who have signed the American Business Act on Climate Pledge, and are members of the C2ES Business Environmental Leadership Council, a group of 30 companies with a combined $2.3 trillion in revenue and over 3 million employees that support mandatory climate policy and are acting to reduce emissions. See our business statement applauding the Paris Agreement.

Speakers

Cathy Woollums
Senior Vice President, Environmental Services and Chief Environmental Counsel
Berkshire Hathaway Energy

Nanette Lockwood
Global Director, Policy and Advocacy
Ingersoll Rand

Kevin Rabinovitch
Global Sustainability Director
Mars Incorporated

Tamara “TJ” DiCaprio
Senior Director of Environmental Sustainability
Microsoft

Eric Holdsworth
Senior Director, Climate Programs
EEI

Moderator: Elliot Diringer
Executive Vice President
C2ES

Post-Election: The Outlook for U.S. Climate Policy

November 16, 2016
6 p.m. – 7:30 p.m.
IETA Pavilion, Blue Zone

U.S. policymakers and business leaders will provide their perspectives on what this pivotal election means for climate progress in Washington and at the state level. 

Speakers

Nathaniel Keohane
Vice President, Global Climate
Environmental Defense Fund

Josh Klein
Senior Professional Staff
Senate Foreign Relations Committee 

Matt Rodriquez
Secretary for Environmental Protection
California

Cathy Woollums
Senior Vice President, Environmental Services and Chief Environmental Counsel
Berkshire Hathaway Energy

Elliot Diringer
Executive Vice President, C2ES
 
Reception: Business-Driven Diplomacy
 
November 16, 2016
7 p.m. – 9 p.m.
U.S. Center, Blue Zone
 
Reception at the U.S. Center recognizing the role of the private sector in addressing climate change and reducing GHG emissions. Attendees are expected to include delegates from the EU, Umbrella Group, and developing countries, as well as business and industry representatives from around the world, environmental NGOs and academia. It will feature remarks by U.S. delegation official TBD, Elliot Diringer (C2ES), and Dirk Forrester (IETA).

A new flight path for reducing emissions from global aviation

After years of intense negotiations, governments have agreed on a framework for limiting greenhouse gas emissions from international aviation.

It’s the first climate agreement encompassing an entire sector of the global economy. It’s also the first to employ a market-based climate strategy across a global sector, which will help reduce emissions cost-effectively and expand international carbon markets.

International airline travel is among the fastest growing sources of greenhouse gases. Aviation emissions are expected to triple by 2050 without additional action, making this agreement urgent.

Governments agreed earlier this year at the International Civil Aviation Organisation (ICAO) to phase in new standards for more efficient aircraft design. ICAO is also encouraging operational efficiencies, such as altering flight routes, and the development of lower-carbon fuels.

But these efforts alone won’t meet the goal set by airlines and governments: to freeze aviation emissions at 2020 levels.

That’s why the centerpiece of the ICAO agreement reached October 6 is a market-based measure that will allow airlines to offset any growth in their emissions beyond 2020 levels with reductions in other sectors.

A market-based approach gives businesses the flexibility to choose the most economically efficient way to reduce emissions, which ultimately saves money for consumers. Emissions reductions can be achieved at a lower cost outside the aviation sector, particularly given the projected growth in air traffic in coming decades.

Having an entire sector of the global economy using a market-based approach could spur governments to undertake market approaches in other sectors. The ICAO agreement also comes as nations work toward guidelines under Article 6 of the Paris Agreement to ensure the environmental integrity of offsets and avoid double counting.

Initially, participation in the ICAO program will be voluntary. The United States, Canada, Mexico, China, Singapore, and 44 European nations have committed to sign up from day one. Eventually the program will be extended to all countries, with the exception of least developed countries, landlocked developing countries, and those with only a minor share of global international aviation.

Each individual airline’s offsetting responsibility will be based at first on the overall sector’s emissions growth, to be fairer to fast-growing airlines, and then shift toward an individual airline’s emissions growth.

While the agreement provides an initial framework, details remain to be negotiated. For example, the agreement sets a deadline of 2018 to set Emissions Unit Criteria that will determine what types of offsets are eligible.

The ICAO agreement falls short of universal participation in its earliest stages, but still provides a sensible and practical framework that we can build on to reduce commercial aviation emissions and expand market-based approaches to climate change.

Statement on ICAO global aviation emissions agreement

Statement of Bob Perciasepe
President, Center for Climate and Energy Solutions

October 6, 2016

On the agreement on an international framework for controlling emissions from the global aviation sector at the International Civil Aviation Organisation (ICAO) 39th Assembly:

Today’s agreement is another major step in global efforts to combat climate change, and a clear sign that the momentum we saw in Paris continues to build. The agreement provides a practical framework for harnessing market forces to limit the rapid growth in airline emissions.

International aviation is among the fastest growing sources of greenhouse gases. Without new measures, emissions are expected to triple by 2050.

Governments in the United States and around the world are already using flexible market-based approaches to cut emissions cost-effectively. This agreement is the first to apply a market-based climate strategy across an entire sector of the global economy. By allowing airlines to offset emission increases with reductions in other sectors, the agreement provides an economical way to hold aviation emissions at 2020 levels.

With this framework in place, governments and airlines should move quickly to develop rules ensuring a smooth-working market that delivers real reductions.  

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For more information:

To speak to a C2ES expert, please contact Laura Rehrmann at rehrmannl@c2es.org

About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonprofit, nonpartisan organization promoting strong policy and action to address our energy and climate challenges. Learn more at www.c2es.org.

Business support for the Paris Agreement


 

Businesses urge president to remain in Paris Agreement

Major companies across the economy are urging President Trump to keep the United States in the Paris Agreement on climate change for the good of the U.S. economy

In full-page advertisments in The New York Times, The Wall Street Journal, and New York Post in May and June, companies told the president continued U.S. participation in the agreement will help them manage rising climate risks and compete in growing global clean energy markets. The ads were sponsored by C2ES in cooperation with the sustainability nonprofit Ceres.

The full text of the ad is below. Click on the image to enlarge and download (PDF), or view mobile-friendly versions of ads that appeared May 9, 2017 in the the New York Post, May 8, 9, 16, 18, and June 1 in The New York Times, and May 9, 17, and June 1 in The Wall Street Journal.

 

For more information on business support for the Paris Agreement, contact c2es@c2es.org.

 

Additional Resources

Building sustainability from the ground up

L to R: Tom Cochran, CEO and Executive Director, The U.S. Conference of Mayors; Daniel A Zarrilli, Senior Director, Climate Policy and Programs, Chief Resilience Officer, New York City Office of the Mayor; Josh Sawislak, Global Director of Resilience, AECOM; Mayor Chris Bollwage, Elizabeth, NJ, Mayor Javier Gonzales, Santa Fe, NM; Mayor Stephanie Rawlings-Blake, Baltimore, MD; Bob Perciasepe, President, C2ES.

 

Mayors know what’s going on in their communities. Businesses know how to get a good return on investment. So it seems like a natural fit to have them work together on innovative ways to finance clean energy, strengthen resilience to climate impacts, and reduce greenhouse gas emissions.

To promote that collaboration, C2ES and The U.S. Conference of Mayors formed the Alliance for a Sustainable Future, which held its first public forum during Climate Week NYC.

Baltimore Mayor Stephanie Rawlings-Blake, past president of the conference, told the gathering that cities are where the work is getting done when it comes to addressing climate change. “Nations talk about energy efficiency and climate action, but mayors are doing it every day,” she said.

At the same time, she noted, mayors need tools to get the job done. “We have to do more with less resources. We’re all in this together.”

That’s where business comes into the picture.

Josh Sawislak, global director of resilience for AECOM, a global engineering, consulting and project management company, said businesses want to get involved in building resilience, and they can do more on the local level.

He noted, however, that there needs to be a sound business case for clean energy investments, and for small businesses, the return on investment needs to be immediate.

“Climate change is costing us money. Not investing in these things is costing us money. We’re not doing the math right,” he said.

Some cities are already taking an innovative approach to bridging the gap between the two interests.

Santa Fe, NM, Mayor Javier Gonzales, the alliance’s chairman, explained how his city’s new Verde Fund taps into community needs and business expertise to help low-income residents access clean energy. “More well-to-do people can navigate complicated systems to get rooftop solar on your house,” he said. “The Verde Fund helps disadvantaged residents do the same.”

When low-income residents can save money on their electricity bills by going solar, he said, they have more money to spend on food, clothing and other essentials. The jobs created by these projects benefit the community as well.

Elizabeth, NJ, Mayor Chris Bollwage, whose city’s vulnerability to climate impacts was exposed during Hurricane Sandy in 2012, said some visionary leadership is also needed to imagine today what will be needed tomorrow.

“When we built Elizabeth’s midtown parking garage, we put in five spaces for electric vehicle charging,” he said. “No one used them the first two years, but now three cars are charging there every day.”

In New York City, officials are being proactive in other ways, like working through the city’s OneNYC plan to reduce energy use in buildings, the source of 70 percent of the city’s emissions. Daniel Zarelli, Mayor Bill de Blasio's senior director of climate and sustainability policies and chief resilience officer, said the city’s goal is to reduce greenhouse gas emissions from buildings by 30 percent by 2025 and to retrofit one million buildings so they’re energy efficient.

All the panelists agreed that federal, state, and local policy must become aligned to move in the right direction. One way to do that is by citizens letting both their government and business leaders know that they value sustainability.

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