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CC Cutting a new climate deal

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  • patneuman2000
    ... wrote: Cutting a new climate deal For four years the US government has remained in deep denial about man-made climate change. Yet some of
    Message 1 of 1 , Dec 8, 2004
      --- In fuelcell-energy@yahoogroups.com, "janson2997"
      <janson1997@y...> wrote:

      Cutting a new climate deal
      For four years the US government has remained in deep denial about
      man-made climate change. Yet some of America's biggest companies are
      quietly but actively planning for a low carbon world – and Polly Ghazi
      spots their growing interest in emissions trading.
      The US produces a staggering 25% of all man-made greenhouse gases,
      much of it spewed out by industry. You probably know that. Less well
      known, but much more encouraging, is that household names such as
      Ford, Dupont, Dow Corning, American Electric Power (AEP), Cinergy, BP
      America, Bayer and Motorola are investing significant sums in
      emissions reduction programmes.

      Looking beyond the four-year electoral cycle, these companies are
      gambling that federal action to clamp down on US emissions is
      inevitable, as climate change accelerates. Shrewd executives are
      aiming to get ahead of the game by pursuing low-cost routes to reduce
      emissions, protect their companies' future and earn Brownie points for
      good citizenship.

      Carbon offset projects are part of this response. So too is a keen
      interest in emissions trading. In the absence of national targets,
      carbon trading is only a niche activity, but setting up or joining
      voluntary schemes is becoming one of the most popular routes to

      Some companies have started doing this privately with just one or two
      others – including some of the really big players, like Cinergy, the
      Ohio-based electric utility company whose operations account for 1% of
      the world's total greenhouse gas emissions [see right].

      It may also be done on a more public stage, as when the giant food
      sciences company Dupont helped Salt Lake City gain `carbon neutral'
      status for the 2002 Winter Olympics [see right]. Dupont's chief
      executive, Charles O. Holliday Junior, equates its aggressive climate
      impact reduction policy with good business sense. "We believe that the
      best approach is for business to lead, not wait for public outcry or
      government mandates. From our experience of the past 10 years, we know
      that integrating environmental considerations into our business
      strategies enhances our ability to achieve sustainable growth."

      Chicago shows the way
      Probably the most potent initiative so far, however, is the Chicago
      Climate Exchange (CCE), North America's first private sector
      greenhouse gas trading market. Launched in September 2003, this
      voluntary scheme is flourishing, despite the absence of mandatory
      federal regulations to reduce industrial carbon emissions. Its
      membership had grown by September 2004 from the original 14 founding
      companies to 65, with collective emissions roughly equivalent to those
      of the entire United Kingdom.

      The CCE trades in all greenhouse gases (unlike the EU-wide emissions
      trading system due to begin operating in January, which deals in
      carbon dioxide alone). Members, including Ford, Dupont, Rolls Royce,
      Dow Corning, IBM and Motorola, have agreed to modest emissions cuts of
      4% by 2006. They buy and sell carbon credits in a multi-sector trading
      system, for which detailed verification and accounting systems have
      been set up.

      "We believe that in the long run we will have some sort of mandatory
      emissions reductions in the US, and that companies that are proactive
      in their endeavours to reduce greenhouse gas emissions will have an
      advantage," explains Bruce Braine, vice-president for strategic policy
      analysis at AEP. His company is one of America's biggest electricity
      generators (mainly from high-polluting coal plants) with three million
      customers. It is also one of the exchange's founding members, and
      Braine is a CCE board member. "The exchange establishes an experience
      base for carbon trading and a policy precedent for the way in which
      mandatory systems will ultimately be established," he says, adding
      that its participants "look at it with some pride" and "feel we are
      all in this together".

      The potential US carbon trading market is huge: estimates range from
      $100 billion to $500 billion. "Trading is going to make the costs of
      reducing greenhouse gas emissions cheaper and easier. That's what
      markets do best and forward-looking companies are realising this,"
      says Jonathan Lash, president of the World Resources Institute in
      Washington DC and a former member of the CCE's advisory board.
      Companies are acting for a variety of reasons, he says, citing
      pressure from NGOs and customers, growing awareness of climate-related
      risks and evidence that capital markets reward environmentally
      responsible companies.

      This said, however, carbon trading in North America lags well behind
      European activity. Many of the biggest polluters, including ExxonMobil
      and Texaco, are holding back from embracing emissions reduction
      programmes, preferring instead to lobby against any climate mitigation
      policies and programmes by the US administration and Congress. Only
      one other major national power company, TECO Energy, has so far joined
      AEP on the Chicago Climate Exchange, for example.

      Advocates such as Lash concede that it is unlikely that carbon trading
      schemes will hit the corporate American mainstream, unless or until
      the politicians act to introduce mandatory caps on emissions from the
      most polluting sectors. President Bush's re-election would make this
      an unlikely prospect, although support for action is growing in the
      Republican-controlled Senate. (In October 2003 the Climate Stewardship
      Act, calling for mandatory caps on emissions from the electricity
      generation, transport, industrial and commercial sectors and unlimited
      trading of emissions allowances among these sectors, was defeated by
      only 55 votes to 43.)

      With John Kerry as president, a major shift in US climate policy might
      be a lot more likely. Kerry is a longstanding advocate of alternative
      energy sources and energy security – and the existence of the
      successful Chicago Climate Exchange could provide a new Kerry
      administration with the confidence to tackle the politically difficult
      terrain of mandatory cuts in industrial emissions. "By providing an
      open, visible and economically viable voluntary trading system, the
      exchange is a key step in proving to business leaders and politicians
      that a mandatory national carbon trading scheme would work," says

      A Massachusetts market
      The Bush administration's failure to develop climate mitigation
      strategies may have created a vacuum at the centre, but several
      individual US states are stepping up to the plate. No less than 28 out
      of 50 have published – or are developing – programmes to cut net
      greenhouse gas emissions within their borders. Though the states lack
      the power to legislate nationwide, they can give food for thought to
      regionally based highly polluting companies, such as power plants.

      Massachusetts led the way in 2001, setting binding reductions on
      carbon dioxide emissions by 2006-8 from its six highest emission power
      plants. Trading was built into the rules, which allow plants that fail
      the deadline to buy emission credits from cleaner operators. New
      Hampshire has followed suit, while Oregon requires tough CO2 standards
      for all new power plants. New York State's governor George Pataki is
      currently working with his counterparts in 10 other northeast states
      to establish a regional cap-and-trade programme for power plants.

      "These state initiatives are achieving real greenhouse gas reductions
      and are opportunities for learning, although they are not a substitute
      for a comprehensive national policy that includes mandatory measures,"
      said Eileen Claussen, president of the Pew Center on Global Climate
      Change. "Policy-makers would do well to be mindful of their successes
      as they work toward federal and international programmes, and actively
      involve states in their design and implementation."

      Some companies, too, are already speaking out for a nationwide carbon
      trading scheme, though without openly embracing mandatory greenhouse
      gas cuts. A 2003 seminar organised by the Pew Climate Center and
      attended by Shell, Rio Tinto, Toyota and AEP produced a blueprint for
      hypothetical mandatory emissions caps on polluting industries. This
      included staggered caps on emissions by utilities, manufacturers and
      transport companies, and a nationwide emissions trading programme so
      that companies that failed the grade could buy carbon credits.

      AEP's Braine has no doubt that this should be part of the solution.
      "We have been very clear," he says, "that we believe emissions trading
      – across sectors and including all greenhouse gases, so that costs are
      fairly distributed – would offer a win-win for everybody: the
      environment, the economy and business."

      Polly Ghazi is US correspondent for Green Futures.


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