Businesses Call for International Climate Action

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Some of the world’s largest businesses are calling for an international framework of standards to address climate change.

Despite the recession, many of these companies are also continuing their voluntary commitments to increase energy efficiency and reduce greenhouse gas emissions, feeling pressure to do so from both consumers and the inevitability of climate legislation.

Those are some of the findings of the The Carbon Disclosure Project (CDP), an organization that catalogs the climate change information of nearly 2000 companies, and AEA, an energy and climate change consultancy. Their new report, Climate Change in the Time of Global Recession, makes suggestions about how government and business can cooperate to address climate change while stimulating the green economy.

Paul Dickinson, CEO of CDP, explains why the business community is asking governments to coordinate efforts at the international climate talks in Copenhagen in December:

"The new framework must create markets that can link together and recognize the global nature of business.

"Business operations don’t stop at national boundaries, and internationally coordinated policy drivers are essential. Business is calling for these policies now, irrespective of the current economic challenges we are facing."

Among the almost 60 companies in the report are Alcoa, Chevron, Dell, Duke Energy, DuPont, Exelon, Ford, Kimberly-Clark, Molson-Coors, Newmont Mining, Panasonic, Sara Lee and more. Many are members of US Climate Action Partnership (USCAP), a centrist collaboration of energy companies, industry and environmental groups that wrote the framework for the major climate bill now in Congress.

A number of the companies have also been targets of more progressive environmental groups for activities seen as contributing to climate change. Greenpeace has had a long standing campaign against Kimberly-Clark’s clear-cutting of virgin forests in North America for facial tissues and toilet paper. Duke Energy has been accused of double-talk when it comes to climate policy.

According to the report, most of the companies that are already implementing carbon emissions reductions policies see the recession having little effect on those policies, particularly when they save money and reduce costs.

Another driving factor is their public commitments to reduce their carbon impact. However, when major capital investments are required to meet their promises, some companies say they may hold off until an economic recovery, particularly in industries like construction, food and beverages. 

Two-thirds of the American companies did not expect the economy to delay their climate change mitigation activities, while about half of UK and Japanese companies felt that way. That may reflect the current political environment in the U.S., with some kind of climate policy possible this year in the form of the American Clean Energy and Security Act (ACES).

In that vein, the report found that the inevitability of climate policy can drive action, even before that policy becomes law:

The biggest factor in reaping benefits from a low-carbon economy is seen as being well positioned before the change and therefore having a competitive advantage when a low-carbon economy begins to be fully realized.

Another strong incentive appears to be concern over consumer backlash and public opinion if companies don’t continue  their commitments to carbon emissions reductions:

Overall, the view is that most companies will not reduce their spending in this area on the grounds that they have no choice but to try to hit carbon emission reduction targets, whether mandatory or voluntary.

Nearly all the companies are looking for government incentives to further lower their carbon footprint in the form of grants and tax breaks for low-carbon technologies. As Dickinson explained,

Some companies argued for a sustained government campaign of support for longer-term programmes that would encourage a switch to low-carbon fuels. Multi-party agreements between industry and governments were suggested to determine how to share the initial risks, costs and benefits of deploying green technologies on a much wider scale, perhaps internationally. There is also some support for an agreed carbon floor price.

That doesn’t sit well with some climate activist groups and clean energy analysts, who are frustrated by industry’s notion of shared risk and costs for a variety of reasons, including the profits that some of these companies and industries have made as major contributors to the climate crisis.

And, while most of the companies in the report seemed to agree that subsidies for the fossil fuel industry should be eliminated or drastically reduced, the ACES bill  — which a number of these industries influenced through heavy lobbying efforts — gives almost 60% of cap-and trade revenue to the fossil fuel industry with only 12.2% of that revenue going toward renewable energy investments. As Amy Westervelt reported, the renewable energy
industry sees heavy polluters being rewarded while renewable energy development gets little.

The report also shows the degree to which corporations are influenced by consumers.

The participating companies called on government to educate consumers on the need for a low-carbon economy. At the same time, however, some of their industry groups have been accused of obfuscating consumer understanding of clean energy through organized ad campaigns. For example, the American Coalition for Clean Coal Electricity (ACCCE) spent $38 million in 2008 alone to sell consumers on the concept of coal being clean. Among its members there is overlap with both USCAP and the companies interviewed for the CDP report, including Duke Energy and Alcoa.

Companies also seem to run into a rhetorical disconnect regarding energy availability, essentially saying that they need continued access to cheap energy (presumably coal-based) in order to stimulate investment in clean energy.

And when it comes to carbon capture and storage technology, here again companies want to put the risk squarely on the shoulders of government:

In relation to carbon capture and storage (CCS), many businesses believe there remains a funding gap between the market price of carbon and the cost of implementing CCS. The view is that this gap must be filled by government if this technology is to be rolled out on a larger scale.

Greenpeace and the European Renewable Energy Council have questioned whether that kind of spending is necessary. In March they put out a report, Energy [R]evolution, showing that the U.S. can cut its greenhouse gas emissions using only existing technology while phasing out nuclear energy and avoiding unproven technologies like CCS, all based on the International Energy Agency’s data. In fact, they believe it is possible to achieve an 83 percent reduction from 1990 levels by 2050 in this manner with all fossil fuels but natural gas being completely phased out by 2050.

While there is wide agreement that the business community and government must come together to solve the climate crisis, and many reasons for businesses to do so willingly, there is disagreement as to whether the main driver should be short-term economics or long-term economics and science-based carbon reduction goals.

It is also reasonable to question whether all business entities in their current forms should be encouraged to continue or whether new companies that are fully within the green economy should be supported instead.