Business Action + Constructive Policy: Achieving Positive Action on Climate
Winter in the U.S. has been breaking all kinds of cold records lately, and talk of climate change has been heating up. Last month a fresh report from the Intergovernmental Panel on Climate Change (IPCC) came off the press, and the message is clear that we need to end our carbon addiction. Our current trajectory will see global temperatures climb more than 2˚C, leading to even more amplified interference with global climate patterns. To have a chance at changing our fate, the IPCC is calling for a 40-70% drop in greenhouse gas (GHG) emissions by 2050. Can our competitive, fossil-fueled economy reorient toward a low-carbon future in the next three decades?
Remember “Global Warming”?
In the 80’s, 5 billion people were pumping about 22 billion tons of carbon into the environment each year while atmospheric CO2 concentrations quickly surged past the “safe” limit of 350ppm. At that time, scientists were also coming to agreement on the causes and effects of the warming. The IPCC was formed in 1988, the same year Toronto hosted the first global conference on climate change. Did scientists believe climate change was a serious issue then? Consider the not-so-subtle official statement from the conference: “Humanity is conducting an unintended, uncontrolled, globally pervasive experiment whose ultimate consequences could be second only to a global nuclear war.”
Climate escalated to become a headliner at the monumental 1992 Earth Summit in Rio de Janeiro, where participants from 172 governments were drilled with the importance of alternative energy. The world’s developed countries banded together in 1997 to sign the Kyoto protocol, but the U.S. Senate questioned the treaty’s efficacy, rejected the as a jobs-killer. After a decade of regaining momentum, the 2009 Copenhagen Summit was well attended but turned out to be anticlimactic. Then the 2010 UN Conference in Cancun gained strong commitments to cap warming at 2˚, but failed to follow up with sufficient pledges from nations to make that a likely outcome. Meanwhile, countries have set targets independently, launched abatement projects, participated in emissions trading schemes and built funding mechanisms. Despite these and other efforts, emissions have continued to climb at an even faster rate than before. Today, UN negotiations are led by a combination of European Union and climate-fragile nations, and are driving toward a legally-binding international protocol that will be adopted at next year’s conference in Paris.
In the U.S.
This week, the U.S. Global Change Research Program has released the Third National Climate Assessment (NCA), which reinforces many of the IPCC findings and details how changes are impacting aspects of the economy across the country. The Obama administration has been ramping up its climate initiative, and last year released the President’s Climate Action Plan, which marked a major milestone toward a U.S. national strategy and provided a clue that steps toward carbon accountability are beginning to materialize. The Supreme Court just backed the EPA’s “Good Neighbor Rule” in a decision that confirms the agency’s license to regulate power plant emissions through the Clean Air Act.
The public appetite for action appears to be growing. For instance, a recent Climate + Energy Project poll in Kansas showed that voters on both sides of the aisle overwhelmingly support using more renewables and are willing to embrace more aggressive measures that could lead to higher utility bills. Wind capacity has multiplied 25 times what it was fifteen years ago, largely due to infrastructure in the “Oil and Gas State” itself. Texas set a new wind record in March by generating over 10GW of power that met 30% of the state’s demand.
Overall, the pace of our energy portfolio shift has been modest, however, as temperamental policies and volatile price signals have dampened investment. The ability to cut emissions in half while the population rockets another 30% will require more aggressive approaches from the business community, and one group seeking faster action includes a growing list of major corporations that have voluntarily signed the Climate Declaration put forward by Business for Innovative Climate and Energy Policy (BICEP). On April 10, executives from several of these companies, including Sprint, JLL, VF Corporation, Mars, and IKEA, made a visit to the Capital to meet with the Bicameral Task Force on Climate Change. The business leaders shared what their companies have been doing to cut CO2, and specifically requested policy support including reinstatement of expired clean energy/efficiency tax credits, and support for the Master Limited Partnership (MLP) Parity Act, a bill would expand the MLP finance mechanism to include renewable energies to help rebalance a longstanding fossil fuel bias.
400 and Counting
Today we’re a party of 7 billion at 400ppm, anticipating 2 billion additional increasingly affluent people in demand of more energy and resources by 2050. It’s time for action, and the long-term strategy must align and integrate economic goals with climate goals. Despite the unprecedented business risks described in the IPCC and NCA reports, the challenge presents pragmatic opportunities for the business that is primed and willing to take advantage. Namely, identifying and addressing prominent impact areas across operations and products will better position the firm for tomorrow, build individual resilience and competitive advantage, and collectively steer the market toward a cleaner future.