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U.S. firms must respond to greenhouse gas limits

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  • patneuman2000
    ... wrote: U.S. firms must respond to greenhouse gas limits By Timothy Worth and Mindy Lubber While the Bush Administration was working to
    Message 1 of 1 , Jan 7, 2005
      --- In fuelcell-energy@yahoogroups.com, "janson2997"
      <janson1997@y...> wrote:

      U.S. firms must respond to greenhouse gas limits
      By Timothy Worth and Mindy Lubber

      While the Bush Administration was working to stall the global warming
      talks in Buenos Aires this month, U.S.-based companies have been
      taking the lead in developing and utilizing technologies to reduce
      greenhouse gases.

      American Electric Power and Cinergy, two of the nation's biggest
      carbon emitters, are making investments in clean-coal technologies
      and have acknowledged the need for Congressional action on national
      carbon controls. Meanwhile, other companies such as Cummins Engine
      and General Electric are already seeing a windfall from clean energy
      technologies. These companies form the vanguard of a new economic
      world order.

      By reducing greenhouse emissions and ratcheting up new climate-
      friendly technologies, U.S. companies can create jobs and launch an
      era of economic growth akin to the start-up phase of the Internet. If
      CEOs in the United States fail to realize these opportunities, their
      companies will soon fall far behind overseas competitors already
      honing their strategies to compete in a carbon-constrained world.

      On New Year's Day, thousands of power plants, factories and other
      facilities throughout Europe will begin operating under new
      greenhouse gas quotas. Other non-European countries are also
      developing carbon reduction plans as they move to comply with the
      Kyoto Protocol, which begins Feb. 16. The protocol, which the U.S.
      refused to ratify, requires most of the world's developed countries --
      including Canada, Japan, Russia and all of the European Union -- to
      reduce their greenhouse gas emissions by five percent from 1990
      levels by 2012.

      Global companies in the United States have no choice but to join the
      carbon-reducing movement. Whether it's GM cars in China or Alcoa
      aluminum in Europe, the carbon footprint from making and using their
      products is an increasingly important factor for U.S. businesses
      competing overseas. In the case of Alcoa, it has already announced
      plans to upgrade three of its smelters in Spain to comply with the
      new rules.

      The carbon-constrained global economy is also opening new
      opportunities -- markets that some U.S. companies are already seizing
      on for new revenues. Cummins Engine is selling thousands of
      compressed natural gas bus engines to Beijing, which is pushing to
      have its entire 118,000 bus fleet operating on clean energy by the
      2008 Summer Olympics. General Electric has locked its sights on the
      burgeoning wind power market, which it predicts will grow from 31,000
      megawatts of installed capacity today to more than 83,000 megawatts
      worldwide by 2007.

      But most U.S. companies still lag far behind their worldwide
      competitors in facing the challenges posed by global warming. Too
      many -- including leading electricity providers, oil and gas
      producers and automakers -- are acting as if global warming and
      carbon controls are fiction.

      Meanwhile, the financial risks from global warming are growing each
      day. So serious is the issue that the world's second largest
      reinsurer, Swiss Re, is telling its corporate clients to come up with
      strategies for handling global warming or risk losing their liability

      Tackling this challenge falls not just on companies, but on investors
      too. Here are three strategies they should be pursuing:

      • First, investors must understand the financial risks for companies
      in which they own shares and companies must do a better job of
      analyzing and describing those risks in the public reports they file
      with the Securities and Exchange Commission. If companies don't do
      this, investors should demand it. A growing number of the nation's
      largest pension funds are filing shareholder resolutions requesting
      that companies disclose their risks from climate change and how they
      plan to avert them. Several of these resolutions received record-high
      voting support this year -- in the case of oil and gas companies, as
      high as 37 percent.

      Investor pressure also prompted AEP and Cinergy to undertake climate
      risk assessments -- a process that recently led the two companies to
      disclose that regulatory uncertainty on carbon controls is
      compromising capital planning efforts and clearer direction is needed
      from the nation's capital.

      • Second, investment managers need to more accurately assess climate
      risk exposure in evaluating companies and industry sectors. More
      robust research practices are also needed to better analyze and model
      how businesses and sectors are threatened by various global warming
      scenarios, whether from weather impacts or regulatory changes.

      • Third, investors must channel their investment capital to take
      advantage of new clean technology opportunities. As more states and
      countries move to adopt carbon controls -- whether on vehicles in
      California or China, or on power plants in the Northeast -- markets
      for hybrid vehicles, clean-coal processes and other clean
      technologies will only magnify. Investors should take advantage by
      investing in companies and portfolios that are well positioned.

      Investors have a fiduciary duty to make sure companies are paying
      attention to global warming. Until a larger number of investment
      managers weigh in by demanding more accountability and disclosure
      from companies, climate risk will continue to fester as a giant
      hidden liability with potentially dire consequences for American
      companies, their shareholders and the U.S. economy.

      Is the U.S. going to lead the technological innovation and resulting
      job growth as it did with the Internet? Or is it going to lag behind
      as Toyota and other foreign competitors develop and dominate clean
      technology markets? The efforts of a small number of companies
      suggest the enormous potential available. The challenge is now before
      many other CEOs to lead their companies in realizing the
      opportunities posed by a carbon-constrained global economy.

      Timothy E. Wirth is president of the UN Foundation and a former U.S.
      senator from Colorado. Mindy S. Lubber is executive director of
      Ceres, a national coalition that runs the Investor Network on Climate


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