environment
INDUSTRY ACTS ON CLIMATE CHANGE Corporations are starting to fall in line with scientific consensus and are moving to reduce greenhouse gas emissions Bette Hileman C&EN Washington
pediment to people taking thefirmseriously. Shareholder resolutions and student activism have also succeeded in News Analysis raising some companies' awareness that denying the seriousness of climate lthough Congress hasn't passed change creates a legislation affecting greenhouse negative impresgas emissions and global climate sion, says Judith change, some large corporations are tak- Bayer, who is diing concrete steps to address the issue. rector of environOver the past two years, U.S. companiesfroma broad range of business sectors have begun to make strong commitments to reduce their own emissions of greenhouse gases and to invest in renewable energy technologies. At the same time, a number of firms have resigned from the Washington, D.C.-based Global Climate Coalition (GCC)—the industry trade group best known for public relations campaigns that oppose the Kyoto Protocol to the United Nations Framework Convention on Climate Clockwise from above: Change and are designed to Banks, Lovlns, and raise doubts about the reality of Claussen global warming. U.S. companies are making these mental governmoves for a variety of reasons. First, ment affairs at they arefindingit harder and harder to United Technolobrush aside the reality of climate gies, Hartford, change. Nearly all scientists who have Conn. published research on this issue agree A third factor is that the Earth warmed between 0.7 and that "many companies have a sense that 1.4 °F since 1860 and that it likely will the U.S. government will do something warm much faster—1.8 to 9 °F—during about climate change eventually, and the next century unless action is taken they want a seat at the policy table," says to slow the temperature rise. Scientists Eileen Claussen, executive director of the also agree that humans are playing Pew Center on Global Climate Change, some role in this warming. Many firms, an Arlington, Va.-based organization set though certainly not all, accept this up by the Pew Charitable Trusts to work consensus. on market-based solutions to the global Another reason for the shift is that climate-change problem. companies want to maintain a positive Another driving force, Claussen public image. Ford Motor Co., for in- says, is that many business leaders have stance, began to realize that downplay- come to believe that addressing climate ing the climate-change issue was an im- change can be compatible with a grow-
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ing U.S. economy, a view in contrast to that of GCC, which holds that meeting the Kyoto targets would throw the U.S. into a recession. Afinal,very important, factor is that some company executives realize a technological revolution is under way that will make it much cheaper and easier to address climate change than it was in the 1990s, and they want to lead that revolution. For example, "fuel cells—which entered the market at $800 to $1,000 per kW—are expected to cost just $40 to $50 per kW in a few years," says Amory B. Lovins, research director at the Rocky Mountain Institute, Snowmass, Colo. According to R. Darryl Banks, vice president of CH2M HILL, an engineering, design, and construction company with headquarters in Denver, firms are not dismissing climate change issues out of hand anymore. "More and more companies are seeing this as an issue they will have to deal with eventually," he says. Also, "firms are beginning to realize that by making their operations more efficient, they can help the environment and improve their bottom line," he adds. A dramatic illustration of shifting views on climate change is that many of GCCs largest individual supporters have pulled out of the coalition. Over the past five months, Ford, Daimler-Chrysler, General Motors, Texaco, and Southern Co., one of the nation's major energy companies, withdrewfromGCC. Because Amoco had resigned when it merged with British Petroleum, and Shell Oil had already withdrawn, these five resignations left only two oil firms, ExxonMobil and Chevron, and no autofirmsin the coalition. After Texaco resigned in March, GCC decided to expel its remaining individual memberfirms,including ExxonMobil and Chevron, and to restrict coalition membership to industry associations, such as the Chemical Manufacturers Association. Individual corporate members had become too much of a lightning rod, taking attention away from GCCs opposition to the Kyoto protocol and "more importantly, new technologies as a solution," says GCC spokesman Frank Maisano. (In fact, Ford, GM, and Texaco pulled out of GCC after they were targeted by shareholder resolutions and by student campaigns at 20 universities APRIL 24,2000 C&EN
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environment As to the idea that corporations build plants overseas to escape strict environ A primary argument of those who op unemployment at the local level," he mental regulations, more than 30 stud pose implementation of the Kyoto proto says. And a third belief is that "envi ies show that the primary motivations col is that it will cost jobs and throw the ronmental regulation has caused lots for moving plants out of the U.S. have U.S. into a recession. The protocol re of companies to build new plants over been to reduce labor costs and to be quires the U.S. to reduce greenhouse gas seas where they can escape onerous closer to markets, Goodstein notes. emissions 7% below the 1990 levels be environmental rules," he notes. There have been some exceptions, such tween 2008 and 2012. However, when em as a few wood-furniture plants that were However, if history is c ployment and economic movedfromSouthern California to Mex any guide, meeting that ε data from the past 30 ico to escape air emission rules. target would eliminate | years are analyzed, all "If the pollution-haven hypothesis very few jobs and might g three beliefs turn out to were true," Goodstein says, "you would even help the economy, * be false, Goodstein expect to see a disproportionate num says Eban S. Goodstein, |* says. Nearly all econo ber of dirty industriesfleeing,"and that associate professor of 1 mists would agree that hasn't happened. This is primarily be economics at Lewis & °" these three beliefs have cause the costs of running the pollution Clark College in Port no basis in reality, he control equipment are generally lowland, Ore. "Past fore says. First of all, as en seldom exceeding 2% of total plant op casts of widespread job vironmental regulations erating costs. Also, companies that in loss arising from envi have been imposed stall new plants abroad usually build ronmental regulation, over the past three de modern facilities with embedded pollu whether national macrocades—annually cost tion-control devices rather than the type economic disaster or re ing 1 to 2.5% of gross of plant that was put in decades ago. gional recession, have domestic product—the Goodstein concludes that job losses simply failed to material unemployment rate has from meeting the Kyoto target would be Goodstein ize," he says. fallen to the lowest level low if the U.S. would soon take serious it has been since the steps to reduce carbon dioxide emis In a 1999 book, "The Trade-Off Myth: Fact & Fiction about late 1960s, he explains. sions and the economy remained flexi Jobs and the Environment" (Island Second, the nationwide job loss from ble and innovative, as it has historically. Press), Goodstein analyzes the effects plants that shut down because they "I'm a big advocate of the Kyoto trea of environmental regulation on jobs couldn't meet environmental standards ty, not because I'm such a big advocate and economic growth. has averaged only 1,000 to 3,000 per of that particular target or timetable, Americans share three common be year since 1970, he explains, in con but because I think American industry liefs about environmental regulations trast to the 2 million people laid off each needs a very clear signal that they have and the economy, Goodstein explains. year for nonenvironmental reasons, got to get on the leadership edge for One is that environmental rules cause such as corporate mergers. Six different fuel-efficient vehicles and renewable economywide unemployment, either economic surveys, including one by the technologies," Goodstein says. "The by preventing full employment or by Bureau of Labor Statistics, attest to real job loss potential for the U.S. exacerbating recession. Another is that this. On average, environmental rules would be a replay of the 1970s when "environmental regulation has led to have forced the shutdown of only five the Germans and Japanese got way many plant shutdowns and aggravated to seven facilities each year. ahead of the curve on auto efficiency."
Environment versus jobs: Is there a trade-off?
that called on the schools to sell their stock in GCC member companies.) During the two-year period when companies were resigning from GCC, 21 large firms representing $550 billion in revenues affiliated themselves with the Pew Center on Global Climate Change. In taking this step, Claussen says, "each company publicly announced it would ac cept the science of global climate change; establish and meet its own emission re duction targets; accept the Kyoto proto col as a first, though incomplete and im perfect, step to address climate change; and support the view that reducing greenhouse gas emissions can be com patible with sustained economic growth." Some of those firms that signed on with the Pew Center have announced dramatic steps to cut emissions. For example, DuPont is planning to keep its total energy use flat and reduce its greenhouse gas emissions 65% by 2010 using 1990 as a base year. It has al 32
APRIL 24, 2000 C&EN
ready reduced its emissions 45%, primari ly by eliminating point sources of nitrous oxide and fluorochemicals. It has also held its energy use flat since 1991 while production volumes went up 35%. About half the energy efficiency gains came from improving equipment and yield and from increasing factory up-times from 70% to 95%, says Paul V. Tebo, vice presi dent for safety, health, and environment The rest of the efficiency improvements were accomplished by changing the mix of products and processes and by install ing cogeneration facilities, he says. Another goal is to have 10% of DuPont's global energy use come from re newable resources—likely wind power and biomass—by 2010, Tebo says. "We wanted to send a strong market signal that there would be a big renewable en ergy user ready to buy." This will be a large amount of renewable energy, 300 MW, or 17% of current U.S. renewable capacity. Unless the cost of renewable
energy goes down, this move will be an expensive one for DuPont, because a kilowatt-hour of renewable energy now costs 2 to 3 cents more than a kilowatthour generated by the most attractive fossil fuels, Tebo explains. To advance the renewable energy field and to develop its own future ener gy markets, DuPont is doing research on materials for fuel cells, photovoltaic cells, and batteries. In September 1998, BP Amoco also set an ambitious goal. It announced that it would reduce its greenhouse gas emissions 10% from a 1990 baseline by 2010. To accomplish this efficiently, it will use emissions trading within its own operations. "How the 10% target is met is left open in order to encourage individuals and businesses throughout the BP Amoco group to use their ingenuity and experience in the most effective way possible," said Group Chief Executive
Sir John Browne in a speech in Septem ber 1999 at Yale University. He believes that overall global emissions can be cut at the same time that the standard of liv ing rises on a global basis. For this rea son, BP Amoco strongly supports the Kyoto protocol. BP Amoco has become the world's largest supplier of photovoltaics, an alternative energy source. Corporate decisions to address cli mate change are now often driven by events in Europe, United Technologies' Bayer says. Global companies see what is happening in Europe and say, "If we want to do business or deal with suppli ers in this part of the world, we'd better recognize that this issue is real and we need to do something about it," she ex plains. For example, the French now have 96 climate-change measures, and the U.K. has a climate levy and a pilot emissions trading program. The Euro pean automobile industry has a volun tary agreement to reduce carbon diox ide emissions from cars, and the semi conductor industry has a worldwide pledge to reduce emissions of perfluorocarbons (greenhouse gases) by 10%.
"If you are afirmoperating in Europe or if you are a semiconductor plant, you have to deal with these measures re gardless of whether Kyoto ever goes forward and regardless of whether the U.S. Senate ever ratifies it," Bayer says. 'The danger is that the U.S., in not hav ing a concerted strategy or policy or game plan, is going to lag these other governments," she warns. United Technologies has already in stalled 180 fuel cells, each supplying about 200 kW of reliable electricity, in banks, hospitals, police stations, and military installations. Fuel cells are so clean they can be installed with no per mit in areas that fail to meet federal clean air standards, Bayer says. United Technologies is also working on fuel cells for cars and buses. American Electric Power (AEP), the second largest U.S. investor-owned power company, has also taken steps to address climate change. It is doing re search on sequestering carbon dioxide in deep saline aquifers, depleted natural gas wells, and coal mines, says Dale Heydlauff, AEFs senior vice president
for environmental affairs. In the future, when hydrogen-powered fuel cells are used extensively, he says, it might make sense to reform natural gas into carbon dioxide and hydrogen at the wellhead and sequester the C0 2 underground. That way fuel cells could supply power with virtually no net carbon emissions to the atmosphere. Lovins of the Rocky Mountain Insti tute believes the U.S. has already made great progress in finding ways to im prove energy efficiency and in develop ing renewable technologies. He sees two advances as revolutionary changes that will make it much easier to meet the Kyoto targets than companies thought. First, he says, "for the short term, very efficient use of energy is turning out to be a bigger and cheaper resource than we thought, and it is get ting bigger and cheaper all the time." For example, beginning in about 1990, Dow Chemical, at its site in Plaquemine, La., invested in energy effi ciency improvements, and the average return on these investments was more than 200% a year. As time went on, the
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environment savings kept going up because the engineers kept learning new tricks, Lovins says. Recently, several European chemical companies have saved about 70% of their total energy use with new catalysts and simple process changes, he says. Probably, "a third to a half of the chemical industry is starting to get serious about reducing energy use," Lovins notes. "However much a chemical firm has done already to save energy, it's time to start all over again because there are many more opportunities," he says. "I think we have only begun the efficiency revolution," he claims. The second revolution that will help climate change, Lovins explains, is in alternative and renewable forms of energy. Prices of these technologies are falling so rapidly they will soon be very cost competitive. In addition to lower prices for fuel cells, Lovins notes that microturbines, essentially small jet engines that burn natural gas very efficiently, came onto the market at $600 to $800 per kW, and fairly soon their price will fall to $200 to $250 per kW, he says. Wind generation of electricity has also become far more
competitive recently. (It takes about 2 kW to power an average home.) In the past two years, companies have made plans to use fuel cells in a wide variety of applications. A joint company formed by Plug Power and General Electric intends to make a million fuel cell systems by 2001. CanadianfirmBallard Power Systems is manufacturing fuel cells for buses, and it plans to supply fuel cells for DaimlerChrysler and Ford vehicles to be mass-produced by 2004. In contrast to advances the U.S. has made in fuel cells, it has lost its manufacturing capacity for windmills to Denmark, and its dominance in the photovoltaics market to Japan. The movement toward taking action on climate change has not gone unopposed. Groups have sprung up to counter efforts to cut greenhouse gas emissions. For example, the Greening Earth Society—created by coal industry organization Western Fuels Association—claims that rising C0 2 levels will improve conditions for humanity, and has mounted an expensive advertising campaign to advance this notion.
A number of activists from groups that oppose taking strong action to combat climate change, such as GCC, recently showed up at a conference session aimed at discussing shareholder resolutions on global warming. "While I was speaking, these activists tried to disrupt the meeting," says Patricia Daly, director of the Tri-State Coalition on Responsible Investment, Caldwell, NJ. "I felt like I was teaching school again," she says. In the corporate arena, the debate over climate change seems to have shifted from arguments about the science to discussions over how soon and what means should be used to take action. Some companies would prefer to support long-term research and to take no immediate action to reduce emissionsfromtheir own operations. Others are taking a multipronged approach— immediate greenhouse gas reductions and research to advance future markets in renewable technologies. No matter what company officials think about climate change, they likely will have to deal with it eventually.^ ^fp;f?tli
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