Businesses are making the economic case for climate action

Businesses leaders “get” climate change.

When they look at the balance sheet, it’s clear that the costs of acting are going down, while the costs of inaction—of coping with rising sea level and more frequent and extreme heat waves, downpours and drought—are going up. They also see opportunities in pursuing clean energy and transportation solutions.

Looking for evidence that companies understand the risks?

Our report, Weathering the Next Storm: A Closer Look at Business Resilience, found that the vast majority of our largest companies—over 90 percent of those in the Standard and Poors Global 100 Index—recognize climate change as a risk. Climate impacts threaten facilities and operations, water and power sources, and supply and distribution chains.

Business leadership has moved far beyond saving energy in a company’s own facilities. It now means investing in clean energy, reducing emissions throughout the supply chain, helping customers reduce their carbon footprint, and making an economic case for policies that address climate change.

Leading up to reaching the Paris Agreement last December, we saw unprecedented business support for climate action. More than 150 companies, from Alcoa to Xerox, signed the American Business Act on Climate Pledge and committed to reducing their environmental impact by cutting emissions, reducing water usage, and using more renewable energy.

That support has continued.

In October, 11 leading companies signed onto a C2ES statement welcoming the Paris Agreement's entry into force. The statement was endorsed by large energy producers and energy consumers: Berkshire Hathaway Energy, Calpine, HP Inc., Intel, LafargeHolcim, Microsoft, National Grid, PG&E, Rio Tinto, Schneider Electric, and Shell.

“As businesses concerned about the well-being of our investors, our customers, our communities and our planet, we are committed to working on our own and in partnership with governments to mobilize the technology, investment and innovation needed to transition to a sustainable low-carbon economy,” the statement said.

At a C2ES event (15-Nov-2016) at climate talks in Marrakech, leaders of major companies reiterated their commitment to investing in clean energy and efficiency— because it makes sound business sense.

“You’re now looking at decades of investment,” said Nanette Lockwood, global director of policy and advocacy at Ingersoll Rand. “Businesses are not going to walk away from this.”

The next day, more than 360 businesses and investors, from Fortune 500 firms to family-owned businesses, reaffirmed their support for the Paris Agreement and the need to accelerate the transition to a low-carbon economy at home and around the world.

American industries know how to take cost-effective action to address environmental challenges. They’ve done it before. Thirty years ago, acid rain and smog were fouling our waterways and choking our cities. Some business and political leaders said at the time that reducing the sulfur dioxide and nitrogen oxide causing acid rain was impossible, or would be far too costly.

Not long ago, I attended a power industry conference where companies won awards for getting those emissions down to near zero. We don’t hear about acid rain anymore because we took action and solved the problem through a cap-and-trade program passed by a bipartisan Congress and signed by a Republican president.

That was yesterday’s challenge. How do we overcome today’s environmental challenges and accelerate the transition to a clean energy future? Innovative technology plus policies and partnerships at all levels of government will have to play key roles.

Innovative technology

Thirty years ago, it was illegal to use natural gas in a power plant, and hydraulic fracturing was an experimental technology in a Department of Energy research program. Now natural gas makes up more than one third of U.S. electricity supply, where it’s displacing coal-fired generation and backing up intermittent renewables, reducing U.S. carbon emissions.

In the past 30 years, solar panel costs have dropped almost 90 percent and the industry has grown globally from less than 1 to more than 227 GW of installed PV since 2000.

This fall, America’s first offshore wind farm started generating electricity off the state of Rhode Island, and the nation’s first new nuclear generation in 20 years began commercial operation in Tennessee.

Going forward, we need to modernize our electricity infrastructure to move renewable power from where it’s generated to where it’s needed. The electric grid should be able to accommodate clean energy technologies like energy storage and grid-to-vehicle interfaces.

We also need to incentivize carbon capture and storage. It is already in use, mostly in industrial facilities, where it’s the only option for reducing carbon emissions from the production of cement, chemicals and steel. It’s expensive, but just as with all technology, the more experience we gain, the faster costs will come down. Saskpower, which built the world’s first commercial-scale, post-combustion CCS project at a coal-fired power plant in Canada, has said it could cut costs by 30 percent if it had to do the project again, based on lessons learned.

Innovative Policies and Partnerships

Innovative technology is fostered by innovative policies and policy certainty. We should foster the bipartisan support we already see at the federal level for modernizing infrastructure, incentivizing carbon capture technologies, developing advanced nuclear, and preserving existing nuclear power. We also need to focus on states and cities, which are often the incubators of new policies and programs.

Ten states that are home to a quarter of the U.S. population already have a price on carbon. Twenty-nine states require electric utilities to deliver a certain amount of electricity from renewable or alternative energy sources. Many cities are promoting energy efficiency, deploying renewable energy, and supporting alternative fuel vehicles.

We’re already seeing innovative partnerships.

The city of Phoenix set a goal to get 15 percent of its electricity from renewable resources by 2025. To do it, the city partnered with the private sector and the state to put solar power installations at the airport, a landfill, and a water treatment plant. In Chicago, Philadelphia and other cities, government is working with local schools, universities, and commercial real estate companies to determine and reduce energy use in large buildings.

To keep their efforts moving forward, partnership and collaboration will be key, especially between cities and companies. That’s why C2ES recently launched a partnership with The US Conference of Mayors called the Alliance for a Sustainable Future. The main goal is to spur public-private cooperation on climate action and sustainable development in cities.

By bringing policymakers and business leaders together, especially at the local and state level, we can address climate change in a way that allows our environment and our economy to thrive. 

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Bob Perciasepe is president of C2ES, the Center for Climate and Energy Solutions, an independent, nonpartisan, nonprofit organization working to forge practical solutions to climate change. Learn more at c2es.org and follow on Twitter at @C2ES_org.

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