Technology and Climate Change: Sparking a New Industrial Revolution

Technology and Climate Change: Sparking a New Industrial Revolution

Remarks by Eileen Claussen, President
Pew Center on Global Climate Change

American Institute of Chemical Engineers
New Orleans, Louisiana

March 10, 2002

Thank you very much. I want to thank the American Institute of Chemical Engineers for inviting me here today and for pulling together a very impressive roster of speakers. You are to be commended for taking on such a critical topic, and for having the good sense to do it at such a critical moment, as both the United States and the global community struggle to come to grips with the challenge of global climate change.

It's especially fitting, I think, that we are gathered for this meeting in New Orleans, which of all the major cities in America, is perhaps the one most vulnerable to the effects of global warming. As I am sure all of you are aware, scientists project that climate change could raise sea levels by as much as three feet by the end of this century. And since much of this city already sits well below sea level, this is no idle concern to the good people of New Orleans.

Nor is it a joking matter. But let's imagine for a moment what the future may hold for New Orleans if global warming continues unabated: Imagine, for example, all of the watering holes along Bourbon Street filled up with, you guessed it, water. Imagine the Lake Pontchartrain Causeway, the longest over-water bridge in the world, becoming, yes, the longest underwater bridge in the world. Imagine the city identified for generations as The Big Easy becoming The Big Sloppy. You like gumbo? Well, stick around long enough and you'll be up to your ankles in crawfish.

In all seriousness, global climate change is a profound challenge. Indeed, I believe it is one of the most profound challenges of our time. Meeting it will not be easy. In fact, I'd like to suggest to you today that meeting the challenge of global climate change will require nothing short of a new industrial revolution. But unlike past industrial revolutions, we can't afford to wait for this one to happen all on its own. We must make it happen. We must look to governments to help launch this revolution. We must look to the marketplace to mobilize the resources needed to carry out this revolution. And we must look to the creative minds of people like yourselves for the expertise and ingenuity needed to make this revolution a success. Because in the final analysis, our success will rest on our ability to devise new, cleaner, more efficient technologies - new technologies that can power our global economy without endangering our global environment.

Climate Change: Where We Stand Today

A little later, I'll have more to say about the kinds of technologies we will need and the kinds of policies that can help bring them about. But first let me spend a few minutes looking at where we stand today in our efforts to address climate change, both here in the United States and abroad.

The best place to start, I think, is with the science. And here, I believe, the consensus that has emerged is quite clear. Both the Intergovernmental Panel on Climate Change and the report prepared last year by a panel of the National Academy of Sciences are agreed on three main points: 1) the earth is warming; 2) human activity is largely to blame; and 3) the warming trend is likely to accelerate in the years ahead. And the implications for the United States alone are profound, affecting everything from farming and tourism to the reliability of the water supply and the livability of our coasts.

Of course, there are uncertainties, and there always will be. But these uncertainties cut both ways. Certainly it is possible that the effects of climate change could be less than we currently project. But it is just as likely that the effects will be greater. And so I believe that uncertainty is a reason for action, rather than a reason for inaction.

How are governments responding? Let's look first at the international picture. Over the last year, we saw both the greatest success and the greatest setback since the international effort to address climate change was launched a decade ago. The success was that after years of wrangling, nations finally agreed on a set of rules for implementing the Kyoto Protocol, which sets the first binding international limits on greenhouse gas emissions. European nations are well on track to ratifying the Protocol. Vigorous debates are underway in Japan, Canada and other industrialized countries that face some serious challenges in meeting their targets, but the prognosis is for the treaty to enter into force either this year or next.

The setback, of course, was President Bush's outright rejection of Kyoto. I do not intend to spend any time here debating the merits of the Protocol. It's true, Kyoto is at best a modest first step on a long journey. But from my perspective, the basic architecture of the treaty is sound. In fact, it is an architecture largely designed in the United States. It uses emissions trading, a concept born and bred here in America, to ensure that emissions are cut as cost-effectively as possible. I happen to believe that the emissions target for the U.S. negotiated by the previous Administration was unrealistic. It couldn't be met. But there were ways to deal with this problem short of a unilateral withdrawal.

And what has President Bush offered as his alternative? The President has offered a promise - a promise that the United States will do really no better than it's doing right now. When you do the math, the President's goal of an 18-percent reduction in greenhouse gas intensity by 2012 amounts to a 12-percent increase in actual emissions. It essentially continues the same trends we've seen over the last two decades. In other words, the target is nothing more than business as usual. On the positive side, the President has said that companies reducing their emissions should not be penalized in the event that there is a future regulatory regime requiring reductions. A first step, perhaps, but a very modest one.

Fortunately, that's not the end of the story. There are people in Washington who think climate change is a serious issue that warrants serious action. It may come as a surprise to you, but despite the Administration's lackluster efforts - or, perhaps more correctly, inspired by the Administration's lackluster efforts - there is growing bipartisan interest in Congress in doing something about climate change. Nearly twice as many climate change bills were introduced in the past year as in the previous four years combined.

These bills cover everything from regulating carbon dioxide emissions from power plants to raising fuel economy standards for cars and trucks, boosting research and development on alternative fuels, and encouraging farmers to adopt practices that suck carbon out of the atmosphere. Several bills would establish a national system for tracking and reporting greenhouse gas emissions - an important first step. And, of course, Senators Lieberman and McCain plan to introduce legislation later this year to establish a comprehensive nationwide emissions trading system. That's a bold idea - one that frankly I can't see being enacted for some time, probably years. Still, for the first time, serious debate about how the United States should meet its responsibilities on climate change is now underway.

But what we really need, of course, is action, not debate. And I'm pleased to be able to tell you that real action is indeed taking place. To find it, though, you have to look beyond the Beltway--first, to the boardrooms and factories of major corporations that are taking it upon themselves to tackle their greenhouse gas emissions; and second, you have to look to the states and local communities that, instead of waiting for leadership from Washington, are taking up this challenge on their own.

On the corporate front, let me talk very briefly about some of the activities that are being undertaken by the membership of the Pew Center's Business Environmental Leadership Council. This is a group that now includes 37 major companies that accept the need for action on this issue and that are taking concrete steps to protect the climate. These are primarily Fortune 500 firms such as Weyerhaeuser, Intel, Boeing, Dupont, Shell and Alcoa. Together they employ more than 2 million people and generate annual revenues of nearly $900 billion.

What are these companies doing? Many are adopting voluntary targets for reducing their greenhouse gas emissions. Consider Dupont, which is working to reduce its emissions by a stunning 65 percent below 1990 levels before 2010. Alcoa's target, to cite another example, is a 25-percent reduction over the same period. Some companies are looking beyond their industrial processes. They're setting targets for reducing emissions from their products as well. Major automakers, for example, will reduce greenhouse gas emissions from their European fleets by 25 percent by 2005; and IBM is working to make sure that 90 to 100 percent of its computers are Energy Star-compliant. Still other companies are setting targets for their purchases of clean energy. Dupont anticipates getting 10 percent of its electricity from renewable sources by 2010; and Interface is aiming for 10 percent by 2005.

We recently completed a report taking a close look at six companies - why they've taken on targets, and what their experiences have been. The companies cited several motivations: They believe that the science of climate change is compelling, and that over the long term, their climate-friendly investments will pay off. They also believe that by taking the initiative, they can help the government create climate change policies that work well for business. But each of the companies cited one other important motivation for taking on a target - to improve their competitive position in the marketplace. And that, in fact, has been the result. Each is on track to meeting or exceeding its greenhouse gas goal. Together, they've delivered reductions equal to the annual emissions of 3 million cars. And all of the companies are finding that their efforts are helping to reduce production costs and enhance product sales today.

Equally impressive efforts are taking shape at the state level as well. Over the past year, the Pew Center has worked with the National Association of State Energy Officials to gather information on state programs that reduce greenhouse gas emissions. Earlier this month, we officially unveiled the results: a searchable database on our website describing 21 state programs that have delivered real emissions reductions. Here are just a few examples: Oregon requires that all new power plants limit or offset their carbon dioxide emissions, making it the first state in the nation to enact mandatory carbon controls. Texas requires that all its electricity providers generate about 3 percent of their power using renewable sources. New Hampshire is cutting emissions and saving $4 million a year through energy-saving retrofits on state-owned buildings. The state of Washington is battling emissions and traffic congestion by giving commuters alternatives to the single-occupancy auto. And finally, one of my favorite examples: High school students in Pattonville, Missouri, teamed up with state officials to fuel their school's boilers with methane captured from a neighboring landfill.

So what do all these examples from companies and from the states show us? First, that despite the lack of leadership in Washington, there are significant efforts underway across America to address climate change, and the momentum is growing. These efforts are delivering real reductions in greenhouse gas emissions-and, better yet, they are doing it cost-effectively. A second important lesson is that these efforts pay multiple dividends. In the case of the companies, they deliver operational efficiencies, reduced energy costs, and increased market share - all things that contribute to a healthier bottom line. In the case of the states, they deliver cleaner air, smarter growth, new energy sources, and real savings for taxpayers. A third important lesson is the sheer diversity of approaches being taken. Climate change is an enormous challenge. It has to be tackled on many fronts. If ever there were an issue that defied one-size-fits-all solutions, this is it.

New Technologies Needed

So, yes, these efforts represent a good start. But let's step back and ask ourselves, What is really needed if we are going to effectively address climate change? In the long run, I believe, the answer is clear: The only solution to climate change is a fundamental transformation in the way we power our global economy.

To keep our planet from overheating, we must dramatically reduce emissions of carbon dioxide and other greenhouse gases. The primary source of these gases is the combustion of fossil fuels. So our goal over time must be to steadily reduce our reliance on coal and oil and to develop new sources of energy that, as I said earlier, can power our economy without endangering our climate. Yes, it is a tall order. It implies technological and economic transformation on an unprecedented scale. As I said at the outset, it demands nothing short of a new industrial revolution.

Because there are so many sources of greenhouse gas emissions, and because energy is what powers our entire global economy, there is no silver bullet technology that will solve this problem alone. The ultimate success of a climate change strategy-whether at the national or international level-will hinge on the development and deployment over time of a vast array of technologies that dramatically reduce the carbon intensity of the overall economy. That includes changes in how we produce electricity, how we get from one place to another, how we farm and manage our forests, how we manufacture products, and even how we build and manage our buildings.

Granted, none of these changes will happen overnight. Some of the necessary technologies will take years or even decades to develop and to deploy on a sufficient scale to make a difference. By the same token, however, some technologies are already showing they can make a difference and contribute to climate solutions.

What sorts of technologies am I speaking of? I think the best way to look at them is sector by sector. And, as I prepared my remarks, I tried to come up with catchy phrases to describe the fundamental challenges we face in each of the four critical sectors - electricity, transportation, buildings, and industry.

In the electricity sector, for example, I'd boil it down this way: "Here's the Fix: A Better Mix." As all of you know, we now have a moderately diversified fuel mix. I say moderately because coal still supplies 55 percent of U.S. electricity. That said, we do have a significant and growing amount of power supplied by natural gas, a significant and stable amount of nuclear energy, some hydroelectric power, a small but growing share of wind power, and a very small share of renewables. And so the challenge over time is fairly obvious: we need to shift the supply mix--not necessarily to wean ourselves entirely from fossil fuels (at least not in the near future) but to place ever-increasing emphasis on the lowest carbon fossil fuel (natural gas) while increasing our reliance on renewables.

Next up is transportation, and here my catchphrase would be: "And to Oil a Goodnight." Initially, of course, we must focus on using oil more efficiently. As the National Academy of Sciences has made clear, there are huge cost-effective efficiency gains that could be made in the near term. Ultimately, however, we face a far more fundamental challenge. We must make the transition to entirely new fuel sources, and we must build the infrastructure needed to produce and deliver them. We'll have to think big - the new hydrogen fuel cell initiative launched by the Bush Administration is a step in the right direction. But we must be careful not to pick winners too early in the race. We must explore every viable option.

In the building sector, where we use one-third of our energy, the name of the game is efficiency. And my slogan? "Smart is beautiful." Efficiency doesn't mean we all sit in the dark wearing wool cardigans. Smart technology and smart building design can deliver enormous energy savings without sacrificing comfort or quality of life. In the near term, there is much we can do to save energy - things as simple as replacing conventional light bulbs with compact fluorescents, or shutting off computers when we go home at night. Over the longer term, new designs, new materials, new equipment, and new information technologies promise remarkable gains. In design, for example, we can take much better advantage of natural shading and sunlight to enhance heating, cooling and lighting. And, in the information technology area, new sensors that monitor the use of equipment and lighting will allow us to overcome ordinary humans' failure to "just shut it off."

Finally, there is industry, which accounts for about a third of our energy consumption. And here my slogan, with apologies to Descartes, is "I rethink therefore I am." Rethinking in this case means looking at the entire life cycle of products. It means doing four things: changing inputs, redesigning production processes, reworking the product mix, and, wherever possible, reusing and recycling products so they don't have to be produced again.

Consider the life cycle of one product, aluminum, as a case in point. Alcoa has reduced the electricity required to produce a ton of aluminum by 20 percent over the past 20 years-that's from redesigning production. The company also sponsors life cycle analysis on a number of products including automotive components, beverage cans, and more, to determine how product designs and the product mix can be improved. Andit encourages recycling by supporting research alloy separation and purchasing large amounts of scrap. As for changing inputs, let's stick with aluminum but look at another industry: automobile manufacturing. A recent study showed that every ton of aluminum substituted for steel in automobile construction reduces greenhouse gas emissions by 20 tons over the life of the vehicle. For automakers-and, indeed, for all of society-that should be an important incentive to rethink what goes into our cars.

Getting to Tomorrow

So there you have a sampling of some of the technologies that can help us meet the challenge of global climate change. The question is: How do we get them? What must we do now to ensure that the right technologies are in place in the years ahead?

As I said earlier, we must look to the marketplace to be the primary engine driving technology development. First, most of the changes needed to reduce greenhouse gas emissions - whether they be new products, new processes, or new sources of energy - must come from the private sector. Second, only the marketplace can redirect resources and mobilize investment on the scale needed to create a climate-friendly future. What's more, only the magic of the marketplace can ensure that the necessary goods are delivered at the least possible cost. So we must count principally on the private sector to generate, and to deliver, the broad array of technologies that will make possible this new industrial revolution.

But the market will only deliver if it perceives a demand. And for that, I am convinced, we must look to government. We must look to government, first, to set the goal - to send a clear signal to the marketplace that this is the direction we must go. We must look to government, second, to prime the pump - to provide strategic assistance that will help spawn new technologies and then move them from the laboratory to the marketplace. And we must look to government, third, to keep us all on track - to make sure we not only keep our eye on the goal, but meet it, or face clear consequences.

Let me be clear: I am not advocating a draconian command-and-control system that says do it, and do it this way, or else. We've had enough experience with such approaches to know they won't work here. Rather, I am suggesting a comprehensive but careful mix of measures that provides the private sector with the necessary incentives - and the necessary flexibility - to ensure that we get to where we need to go, and that we do it cost-effectively.

Let me be a little more specific. On the incentive side, there are a host of policy tools available: targeted tax credits or low-interest loans to encourage the development and use of energy-efficient technologies and alternative fuels; government investment in basic research and public-private partnerships that can lead to breakthrough technologies; incentives to builders and landlords to encourage the use of energy-saving materials, appliances and building methods; and incentives to farmers and other landowners to adopt innovative methods to capture carbon in soils and forests.

But incentives alone will not be enough, just as voluntary efforts will not be enough. We must also establish clear, enforceable expectations. At some point, we must resolve as a society that the risks posed by climate change are too great, and that government must mandate action to avert them. This could take the form of emissions targets or efficiency standards. In either case, we should use market-based strategies to reward those who exceed the norm - for instance, by awarding tradeable credits to those who exceed their targets or standards. But government's expectations - society's expectations - must be clear and they must be binding.

This, I would suggest, is how you launch a revolution. I won't tell you the revolution is just around the corner. But I believe in time it will come. And I believe there will be enormous opportunity for those who help lead the way. Over the past century, the chemical engineering field has made tremendous contributions to the protection of our environment. Catalytic converters, smokestack scrubbers, reformulated gasoline, and new recycling technologies are just a few of the environmental advances that owe their existence in one way or another to you and your peers. Time and again, this distinguished profession has answered the call to make the world a better place.

And today, I ask you to do so once again. As individuals who apply scientific and technical knowledge to solve problems, you have the power and the ability to help the world respond to one of the greatest challenges of the 21st century. You also have the knowledge and the understanding to inform the development of forward-looking climate policies for the United States-the types of policies that will make the second industrial revolution real.

In closing, let me say once again that climate change is a problem that calls for new thinking and new approaches. And, as we gather here in a city that could be profoundly affected by this problem in the coming years, I hope we will vow together to solve it so we can leave behind a safer, more prosperous world for generations yet to come.

Thank you very much. 

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