Obama surprises with climate commitment

After a general election campaign in which environmental issues received almost no attention, it was heartening, but very surprising, to hear President Barack Obama give such prominence to fighting climate change in his 2nd Inaugural Address. He commented:

“We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations.

Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires, and crippling drought, and more powerful storms.

The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition; we must lead it. We cannot cede to other nations the technology that will power new jobs and new industries – we must claim its promise.

That is how we will maintain our economic vitality and our national treasure – our forests and waterways; our croplands and snowcapped peaks.”

For those of us who believe in the imminent threat of human-made global warming — and I suspect we are a minority in the chemical industry — this is a heartening statement. But can this broad, but determined, goal become a reality?

Obama may have the wind at his back. As long as the price of natural gas stays low, the shift to this fuel to power reviving US industrial production will bring with it big cuts in CO2 emissions compared with burning coal or oil. The reductions could be up to 50% according to some estimates. And the share of coal and oil fuels in the US mix has started to fall already.

But great care will have to be taken to ensure that the gains are preserved — starting with careful regulation of fracking to capture any escaping methane, which is itself a more powerful greenhouse gas than carbon dioxide.

While the shift to burning gas will bend the curve of CO2 emissions, consolidating those gains would probably require a new coalition in the legislature which I think is unlikely to emerge. Truly to reform the US’ relation to GHG producing materials would almost certainly require disadvantaging them by levying taxes on them. But once you start down that road, you hit a lot of obstacles. First you have to get the legislation written and passed. But what do you do then to influence other countries so that your own progressive thinking does not disadvantage your own industrialists? A future of import tariffs on others’ carbon production is just not feasible.

Overall, I think that Obama will have some success in elevating the discussion of GHGs and will fire up the public to want to bend the GHG curve in the USA. But four years is not enough to take the type of global action that true change will require, even given the power and influence of the USA.

Let’s hope that the next president is also as determined as Obama seems to be, and that the public’s attention on this subject proves sustained.


Man-made global warming: Many in the chemical industry still do not accept the science

Whenever I meet with groups of chemical people, it quickly becomes clear that there are many in our industry who do not accept the science behind claims of man-made climate change. Here at Chemical Industry Roundtables, we think that the rise in temperatures that is being observed right now, and which seem to be outside of statistical historic norms, are driven by man-made activity.

Just today, we got the news that last year was the hottest in record in the USA (see http://www.nytimes.com/2013/01/09/science/earth/2012-was-hottest-year-ever-in-us.html?hp&_r=0). As the article states: “Scientists said that natural variability almost certainly played a role in last year’s extreme heat and drought. But many of them expressed doubt that such a striking new record would have been set without the backdrop of global warming caused by the human release of greenhouse gases. And they warned that 2012 was probably a foretaste of things to come, as continuing warming makes heat extremes more likely.”

And not only heat extremes, but the phenomena which accompany them, like more violent storms and more persistent droughts.

I have the greatest respect for colleagues in the chemical industry who are suspicious of the science and who take the view that the absolute proof of man-made climate change is not yet available. But I also ask them to look at the consequences of being wrong. Many seem to believe that if they are wrong, there are always remedial steps that can be taken to mitigate the effects of man-made climate change. What I see is a destruction of carefully built value as companies and governments try to hold back the rising tide, and also effects that we cannot control at all, like acidification of the seas, and diseases thriving in new locations because of climate change. These mega-effects are not fixed by clever science. They need even the skeptics to consider that they might be mistaken and follow up their new-found concern with international action.

We need this to happen now.

“We will never end poverty if we don’t tackle climate change”

These clear words come from a scientist who also happens to be head of the World Bank — Jim Yong Kim. Amid all the gloom of political inaction on climate change, it is refreshing to see the leader of this august institution, which has the potential to influence the funding of development around the world, taking climate change very seriously, and seeing it in its totality, as a threat to humanity on a scientific and social level.

Kim was answering questions about a new report from the World Bank, called Turn Down the Heat — http://www.huffingtonpost.com/2012/11/18/world-bank-climate-change-report_n_2156082.html. It foresees a rise in the planet’s temperature of 4C, if current policies continue, by the end of the century. Kim writes: “It is my hope that this report shocks us into action”. And the World Bank does have some influence. It will now mix climate change considerations in with its approach to development investment. The amount of money it can deploy will not change the curve of a warming planet on its own, but it is a good signal to others.

And it is not the only one. Four other news stories indicate that there could be some renewed activity in tackling climate change:

– People are accepting the idea of man-made climate change, even in the USA, where a recent Yale study found: “Americans’ belief in the reality of global warming has increased by 13 percentage points over the past two and a half years, from 57 percent in January 2010 to 70 percent in September 2012.” And more than half of Americans think that climate change is caused by man’s activity. With the USA’s leading role in emitting greenhouse gases, these are significant findings (http://environment.yale.edu/climate/files/Climate-Beliefs-September-2012.pdf);

– The State of California is going it alone in introducing a cap-and-trade system for limiting GHG emissions. Auctions of permits have already started. While California is out on its own in this regard, it has a reputation for blazing a trail that others follow (http://www.nytimes.com/2012/11/14/business/energy-environment/california-to-hold-auction-of-greenhouse-gas-emissions.html). The gamble on forming an emissions trading system could backfire and see jobs leave the state, or it could become the harbinger of wider action by other states and nations;

– President Obama, fresh from his re-election, has indicated that he will try to find at least incremental changes to legislation to bend the GHG curve. But at the same time, he is not promising any national legislation while unemployment remains high (http://www.washingtonpost.com/national/health-science/obama-to-continue-efforts-to-curb-greenhouse-gases-push-energy-efficiency/2012/11/07/06c70c66-28f9–11e2-96b6-8e6a7524553f_story.html);

– In the EU, with the economy going into a double dip recession (at least in the Euro Zone), and with output falling, the nascent Emissions Trading Scheme (or ETS) has hit a critical moment. Credits, which were issued in abundance, have become practically valueless, or at least worth so little that there is no incentive for companies to cut emissions. The EU is moving to correct that situation now (http://www.chemweek.com/envirotech/climate_change/EU-proposes-immediate-action-to-halt-buildup-of-CO2-emission-allowance-surplus_47689.html) by delaying the release to auction of a batch of new permits. It is also looking at how it can improve the program. The good news is that, recession or no recession, Europe still seems committed to playing its role in reducing man-made climate change.

Taken together these actions, plus that of the World Bank, are good signs that the world may yet rise to the climate change challenge before it is too late. That said, it will take something of a miracle at the upcoming talks in Doha to get truly concerted international action to reverse a warming trend that threatens to become irreversible.

EU stays on course to limit greenhouse gases, targets fluorinated gases

Sometimes the EU seems totally adrift in its policy making (think of the European debt crisis). But sometimes, it seems to have well-thought-out proposals, that are introduced in an orderly sequence, and which are admirable. The EU’s work on reducing greenhouse gas emissions falls into the latter category. It has been successful in bending the curve in its CO2 emissions in recent years, and has introduced (with only modest success) a carbon trading system to tackle the long-term problem of CO2.

Now the EU is turning to fluorinated gases, potent greenhouse gases. Proposed new regulations would reduce the amount of fluorinated gases used by two thirds by 2030, and ban their use in some appliances (they are generally used in cooling and refrigeration). The EU believes that safe, cost-effective alternatives are available. See http://www.chemweek.com/home/top_of_the_news/EU-proposes-major-cuts-in-fluorinated-gas-emissions_47499.html.

It is good to see this steady, unflappable, approach towards environmental problems that threaten global society. Amid all the bureaucratic chaos that surrounds so much of the EU’s policy making, it is encouraging to see the environment have such a steady course. Other countries and regions could do well to copy the EU’s example in this field.

Sandy brings global warming back to the headlines

It’s not before time that global warming got some major headlines. It is, after all, the biggest economic and social threat faced by the human race at this moment in our history. However, as noted before in this column, elections in the world’s leading economy had scarcely seen a reference to the world’s most serious challenge. Until now. After the devastating effect of SuperStorm Sandy, even climate change skeptics are beginning to see that plans that events that were meant to happen every 100 years are showing up with much more regularity. Some still say that this is not because of climate change, but more and more are beginning finally to take the threat seriously.

It is interesting to hear the proposals now emanating from New York and New Jersey about keeping those two great states safe in the future. This morning, I heard experts describing how to build permanent barriers around New York harbor to protect low-lying areas of New York City. The cost? a few billion dollars.

This illustrates why it is so important to act now to avert climate disaster. Delaying can look like a wise option. If you have assets in the ground that are carbon dioxide polluters, but which are playing a key role in industrial chains, then it is very attactive to maximize those assets and to make as much profit as possible. But, as we used to say in the 1980s, there is no free lunch. If you don’t change strategy now, you will find yourself committing a large share of those profits to remedial measures in the future — just think of the New York barriers I heard proposed this morning.

In short, hanging on to current constructs of value creation — which do not take into account the effect of human activities on the environment and society — will ultimately lead to great value destruction in the future.

For a big industry like chemicals, change comes slowly, but we have to be committed to accelerating the journey towards a sustainable future in the coming crucial few years. Otherwise, we shall go down in history as some of the biggest value destroyers of all time.


When government dithers on climate change, companies take the lead

Many commentators have remarked that a discussion of climate change, or indeed a discussion of the environment and sustainability, have been completely absent from the US 2012 presidential election. That’s a worrying sign, since it suggests that when a deep recession hits, as it has done so since 2008, the political clamor for growth at any cost will overwhelm the calls for sustainable growth. Nor has the public behaved better than the politicians: despite all the air time given to political debates and talk shows, regular citizens don’t seem to raise the issue very much. What about the Fourth Estate? Journalists are also mainly silent and unchallenging.

But the outlook is not all gloomy, since companies are taking up the climate cause of climate change even as governments are cowering from it. At least, that is what a new survey of the Fortune 50 list of top US companies reveals (http://www.triplepundit.com/2012/10/job-creators-tackle-climate-change/). An encouraging 68% of the companies recognize climate change as a challenge (presumably that means a business challenge). Forty nine of the fifty are working on reducing their carbon footprints and carbon emissions, and four fifths of them already publish sustainability reports.

If the elected officials don’t wake up to the challenges of sustainability soon, however, even the best intentions of the companies will prove less effective than they should be. Companies will hesitate in their sustainability investments if they don’t know what the regulatory framework will look like, or what tax regimes might apply, in the future. And with no international standards, sustainability investment will start to look more like sporadic acts of charity than a concerted global effort to avert disaster.

We can do better than this, but politicians must lead, journalists must ask probing questions, and the public must wake up to the challenge if we are to gain momentum.

Economist Sachs hits hard on Climate Change

Check out http://www.theclimategroup.org/what-we-do/news-and-blogs/sachs-two-logical-ways-to-achieve-a-sustainable-energy-future/, where economist Jeffrey Sachs, Director of the Earth Institute at Colombia University is quoted making comments on climate change at a recent conference.

The Climate Group piece says Sachs’ remarks asked US policymakers to adopt an energy plan that addresses climate change. He is quoted as saying: “We’ve just had the worst drought in modern history, that has done great damage to the corn crops, and now food prices are soaring. And how many mentions have there been in the presidential campaign? Maybe one.” Sachs went on to blame politicians’ “willful neglect” on “terror at hands of lobbyists.” He added, “Here we are in the middle of this disaster… and we can’t even talk about it.”

Sachs saw two logical approaches to getting to a lower carbon footprint: ““We either need to use energy sources that are not fossil fuels. So that could be renewables such as wind, solar, geothermal, nuclear. Or if we use fossil fuels, we need to clean up after ourselves with CCS (carbon capture and storage). These are the two logical chains.”

Put that way, it sounds simple. But Sachs is quite right, the big obstacle to making fundamental change is not public concern, it is political inertia. The scary part of all of this is that we do not seem to have world leaders who are willing to confront the world’s largest problem on behalf of the world’s population. Too many decisions are made to avoid tough choices or to maintain the status quo. More courage is needed, and needed soon.

Ready for a giant leap?

The passing of Neil Armstrong, the first man to walk on the Moon, left me thinking what challenges in today’s world can match the 1960s goal of walking on another celestial body. The key challenges are closer to home, but they are just as big: avoiding irreversible global warming is key among them, and, in my view, the biggest challenge we face as a planet and global society.

That is why is was encouraging to see a paper from the MIT Joint Program on the Science and Policy of Global Change, arguing for a carbon tax in the USA as a “win-win-win” solution to America’s massive budget deficit. The paper (http://globalchange.mit.edu/research/publications/2328?utm_source=Carbon+Tax++List&utm_campaign=3faedc1d1b-Carbon_Tax_Report_Release8_24_2012&utm_medium=email) see three wins from enacting a tax on carbon and letting current tax cuts put through under President George W. Bush expire:

– Congress could extend spending on programs while reducing tax rates;

– The resulting lower tax rates and elevated government spending would spur growth;

– Last, the environment would benefit from reduced CO2 levels.

Even better, the proposal is for a modest tax rate of $20/ton, rising at 4%/yr. The authors say the effects would be as follows: “We find that, whether revenue is used to cut taxes or to maintain spending for social programs, the economy is better off with the carbon tax than if taxes remain high to maintain Federal revenue. We also find that, in addition to economic benefits, a carbon tax reduces carbon dioxide emissions to 14% below 2006 levels by 2020, and 20% below by 2050. Oil imports remain at about today’s level, and compared to the case with no carbon tax, are 10 million barrels per day less in 2050. The carbon tax would shift the market toward renewables and other low carbon options, and make the purchase of more fuel-efficient vehicles more economically desirable.”

What’s not to like about this proposal? Unfortunately, politically it is unlikely to cause even a ripple of interest in the entrenched politics of today. But it is the sort of thinking that we need to show that growth and environmental and social responsibility are intricately linked in today’s world. Bravo MIT for having the courage to raise this idea at a crucial juncture in America’s political discourse.



On energy policy, the USA needs conservation and imagination

US Presidential candidate Mitt Romney’s energy plan, announced today, is bound to disappoint anyone who supports renewable technologies and who thinks that man-made global warming is a fact. It basically calls for a unimaginative agenda of drilling for oil and gas anywhere it might be found, with no investment in future technologies or energy conservation.

The aim of Romney’s plan is energy independence by 2020, which will no doubt be politically popular. So will be the focus on creating jobs in energy, though Romney’s claim of three million of them sounds far fetched.

From the sustainable development point of view, the plan does nothing to encourage the flip side of drilling — investment in renewables, conservation through consumption standards, more nuclear power. Indeed it is even somewhat cursory about natural gas as an alternative to oil.

The importance of energy policy as regards limiting global warming is almost entirely absent from the proposal, though it should be said that Romney has been equivocal about the fact of man-made global warming since he entered the presidential race.

It seems to me that a Romney presidency would make a dash for job growth and hope that any mess would be cleaned up later. This will be done in the name of national security (energy independence), so that arguing with it is arguing with the basis of patriotism.

Romney and people who think like him should reflect on the big success story of achieving energy independence of our times — Brazil. Way before Brazil discovered the Pre-salt offshore oil reserves, the nation took action to become energy self-sufficient by promoting sugar-cane ethanol. The program involved some mis-steps along the way, but over the years, aggressive government leadership proved the cost-effectiveness of ethanol as an auto fuel, and reshaped Brazil from an energy importer to an energy exporter. At first ethanol was subsidized by the government, then the subsidies were gradually withdrawn, so that the industry could stand on its own feet. Such aggressive government intervention was also a hallmark of the switch to nuclear in France in the 70s and 80s.

The Romney plan has no such vision. It is just a plan to drill.

I also worry that the Romney plan will mean that North American energy resources will be badly used for another generation. Without plans for energy economy and energy balance among different energy sources, just flooding the market with more oil will be an encouragement to more usage, without regard to efficiency in a nation that is already the world’s biggest waster or resources.

Romney’s plan may well resonate with voters. For the environmental point of view, it is among the worst things that could happen. An America that is ever-more complacent about energy conservation and global warming will have a negative impact on our ability to escape from impending irreversible global warming trends.


Listed in London? You must report your GHGs

Congratulations to the UK government on deciding that carbon emissions reporting will be mandatory for UK FTSE listed companies as of April 2013! There are many reasons to welcome this change. Here are four:

– It makes companies more responsible to their investors for their non-balance sheet activities, which are potentially more devastating to investor dollars that the most flagrant misconduct of corporate management;

– It starts to standardize a measurement and reporting standard that other countries can follow, http://www.defra.gov.uk/environment/economy/business-efficiency/reporting;

– It enables businesses and enlightened government to get a grip on where the emissions come from and how they should be reduced;

– It has already started a wave of new software announcements that will help not only UK companies, but all companies, measure and improve their emissions performance. Check out a new launch by the Carbon Trust (http://www.carbontrust.com/home) and CRedit360 (http://www.credit360.com/credit/site/en/home.acds).

If the US government would react in a similar way, we would see change start to happen much faster.