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  • 1. Global warming today’s debate tomorrow’s dilemma? Member´s Report #4/2007 Global warming – today’s debate, tomorrow’s dilemma? Copenhagen Institute for Futures Studies Instituttet for Fremtidsforskning
  • 2. foreword It may seem odd for futurists to write about the climate. Odd, because the idea is hardly novel. To be honest: isn’t ‘climate’ yesterday’s news? Instead of repeating what others have said for years, shouldn’t a futurist look ahead and focus on trends that could lead us in new and unexpected directions? Our answer, simply, is “yes.” All of that is true. And when you read the report, you’ll understand why we chose this topic. Our focus is not climate change as such. Nor do we argue for or against any assumptions or facts about environmental issues. That is not our area of expertise. But we do want look more closely at the environment debate, a debate that has arisen over the past few years. Because no matter what technological solutions we come to devise in the next ten years, no matter what consensus we reach, no matter what happens when the Kyoto protocol expires in 2012, today’s debate and our view of the state of the world will significantly affect our future. The debate, the way it makes us feel today and the way it imposes new fears and realities will change our society and the way we define ourselves as humans. Just as mobile communication has changed every- thing. Just like 9/11. Just like the fall of the Berlin Wall in 1989. So mark our words: today’s debate will have some consequences over the next 10-15 years, and companies, organizations and politicians must be aware of that and act accordingly. Whatever the facts are in 15 years (whether or not we agree on them), today’s debate forever changes the way we understand the term “environment” and the way we understand our roles as individuals. Our behavior will change, as will the demands and expectations of other players. This will be the new reality. Our purpose is to explain further why we find the debate interest- ing and why it is important. This report will be presented in Copenhagen, Aarhus and Brussels in December 2007. Enjoy! Jessica Panke Wagner, Project Manager The Copenhagen Institute for Futures Studies November 2007 3
  • 3. MeMbeR’S RepoRt # 4, 2007: Global warminG – today’s debate, tomorrow’s dilemma? DeveopeD by CopenhaGen institute For Futures studies (CIFS) ConCept and projeCt leader: JeSSICA pANKe WAGNeR projeCt Group: CARSteN beCK, MARtIN KRUSe, JeSSICA pANKe WAGNeR, HeNRIK peRSSoN AND JeFFRey SAUNDeRS writers: #1: JeSSICA pANKe WAGNeR, # 2: KeNNetH StoRMoeN, # 3: MARtIN KRUSe, # 4: JeFFRey SAUNDeRS, # 5: CARSteN beCK, # 6: MARtIN KRUSe, # 7: HeNRIK peRSSoN enGlish adaptation: DeSIRAble RoASteD CoFFee Cover illustration: MAJA AUGUStA GJelStRUp DyReboRG GraphiC desiGn: StINe SKØtt oleSeN, NXt dtp: NXt printer: StRANDbyGAARD CopeNHAGeN INStItUte FoR FUtUReS StUDIeS, CopeNHAGeN, DeCeMbeR 2007 CIFS’S MeMbeR RepoRtS ARe pUblISHeD FoUR tIMeS ANNUAlly. tHe NeXt MeMbeR’S RepoRt WIll be pUblISHeD IN MARCH 2008 WWW.CIFS.DK
  • 4. contents foreword ............................................................................. 3 your guide to the climate debate......................................... 6 # 1 global warming is on our minds ................................... 8 # 2 the climate debate blowing in the wind? ................... 11 # 3 risk is a part of life ...................................................... 22 # 4 the US role in the global drama .................................. 25 # 5 what’s up for the future? ............................................ 37 # 6 future losers ............................................................... 47 # 7 future winners ............................................................ 57 sources ............................................................................ 62 some consequences for year 2025 .................................. 65 5
  • 5. your guide to the climate debate You may not have time to read this report from cover to cover. But, cherry picking is better than not reading it at all. Why not mark your areas of interest, check the boxes and read the corresponding chapters. At the end of this report, you’ll find our special list of consequences for the future. Use it for inspiration, save it and hang it on the wall as a constant reminder that the fu- ture will be different from the present. 6
  • 6. #1: global warming is on our minds About this report and its contents, and why we felt compelled to write it. #2: the climate debate blowing in the wind The debate from a rhetorical point of view: who is talking and what are they talking about? Who appears in the news. Why do some people get more media attention than others? #3: risk is a part of life When facing risk, most people are afraid. But is the sense of risk always rational? Are we too afraid of the threat of global warming? Or are we not afraid enough? #4: the us role in the global drama It would be almost impossible to analyze the debate without taking a closer look at USA and its actions. This country is a big player and we should be aware of what is going on in US politics regarding climate change. Furthermore, we have developed two scenarios about US engagement in combating global warming. #5: what’s up for the future? What about the future consequences of global warming? Who is acting and who is not? Who is supposed to act and who shouldn’t? Will sustainability be strong or weak? Will there be bottom-up or top-down solutions? We don’t know. That’s why we have devel- oped four scenarios for you. #6: future losers As simple as that – who will be the biggest loser in the future? We have some ideas and we’ll tell you why we think as we do. #7: future winners Where there are losers, there are usually winners – who will be the biggest winner in the future? We have some ideas here, too. some consequences for the future Just for inspiration: our ideas of the consequences that might occur in 2025. Maybe you’ll find your company in one of the categories? 7
  • 7. #1: global warming is on our minds summer of 2007, scandinavia It all begins very well, with extremely hot days in June. Unusually warm, actually. We sweat at the office and complain some that many Scandinavian offices and public build- ings are not air-conditioned. For the simple reason that it is not needed, we might assume. But we are pretty sure air-conditioning will soon become reality here, as it already is in southern Europe and the US, with summers that are bound to be even hotter. It was the same in 2006, wasn’t it? One thing is certain: these unusually hot summers must have something to do with climate change. Global warming and CO2 and all that. The phrases that have become mantras for ordinary people, though no one is really able to explain the details. But who needs details? It seems enough to know it is bad and potentially dangerous. We worry about the next water bill, but we continue to water our lush lawns and, of course, our potatoes. In Scandinavia, the potato is almost sacred; small, fresh potatoes are a delicacy, and summer is incom- plete without them. We worry about the heat because there will probably be a water ban if it continues. A water ban will prohibit the use of sprinklers and such during the heat wave. The only alternative will be a watering can. Or using the sprinkler at night, when the neighbors cannot see. But filling your outdoor swimming pool is not prohibited in most cities. So just fill it to the very edge and then empty it into your garden. Good strategy if you are the lucky owner of a pool. But if not, an inflatable children’s pool will do. It is legal, but many neighbors probably sense a moral dilemma here. The neighbors with swimming pools are happy, the neighbors without are angry. Damn that global warming! The suburban riots never materialized, though. In the middle of June, the skies open – a huge, natural water sprinkler. It rains and rains. There is no end to the rain. It rains in the morning, at night. It rains all day, sometimes for days on end, with only short breaks. It pours all over northwest Europe. This is truly an odd summer: it has 8
  • 8. almost never rained this much and definitely not this much at one time. Houses and basements are flooded, trenches collapse and the sewers overflow. Every day, we watch the disturbing images on TV, people paddling down their suburban streets in rubber rafts. Not people in distant parts of the world – they are used to flooding by now, aren’t they? No, these people are practically neighbors, living in homes and towns that look like ours. And they are in tears because everything they owned on the ground floor is gone. Scandinavian domestic travel operators are in tears, too, along with ice-cream vendors and ordinary people who only wanted a pleasant summer in the garden. No, there are no smiles this summer, unless you are a travel agent selling charter trips to the Med. Damn that global warming! Christmas 2006, denmark Every Christmas is different. And, each year, Yuletide commerce takes on a life of its own, with a “Gift of the Year.” The “gift of the year” is that one “must have” that many people buy -- the most popular Christmas gift. Such as a bread-maker, certain toys or a gadget we cannot live without. The gift of the year is probably found under thousands of Christmas trees throughout the country. The gift of the year anno 2006 was even more special than usual, because it could not be wrapped and put under the tree. Our focus has shifted; we have become more aware of the state of the world. We have a conscience, now, and the waves of immaterialization have lifted our consumption to new levels. We want to do good, something really good. Not because it is expected of us, but because we want to. We want to contribute to the greater good. That is why this year’s top gift cannot be wrapped. It is a goat. A real goat, bought through a Danish church charity and donated to a poor family in Ethiopia.1 More than 16,000 Danes paid €35 to buy a goat for Christmas in 2006, and these 16,000 gift givers – not to mention recipients – were probably very happy with their choice. We feel good when we do good, without even thinking about it. And the good thing about goats is that they will eat anything and require no special attention. Unfortunately, good intentions sometimes go badly. Goats not only eat anything, they eat everything, leading to erosion, the ruining of crops and further desertification in a poor part of the world that is already suffering from all of the above.2 However, this year the goat will be environment-friendly. a complex world The above anecdote is just an illustration of what it is all about. Of how it is almost impos- sible to do the right thing, since we do not have all the facts, and since the environment is really a huge web of connections and factors. Factors that sometimes conflict with each other and with other areas of interest that are high on the public agenda. Areas such as the quest for ‘the greater good’, as with the goat example. 1 www.danchurchaid.org/ 2 www.dr.dk/P1/Miljoemagasinet/Udsendelser/2007/01/04142949.htm 9
  • 9. So we all do the best we can -- most of us anyway – but can we really expect people and companies to change their behavior, if we can’t even be sure what the right thing is? It’s been said before, but we will say it again: the public debate about the environ- ment is hugely complex. The debate seems to be a jumble of (often contradictory) facts, statements, agendas, political spin and bombast. Taken together, we call it “the climate de- bate,” and this is what we are expected to take part in, through our actions and behavior. Consumers, individuals, and companies: we are all trying to navigate this reality, without map or compass. And so are politicians, CEOs and all other players. The very same people we trust to make decisions that will eventually save us all. So what should we believe? What direction should we take? What is right and what is wrong? It is often said that we all need to change our behavior to solve the climate problem. And maybe we have started to. But our actions are based on what we believe to be facts, things we think we know. What we know is based on what we pick up from the debate – hence the debate will influence our actions, and our actions will affect the future. Most companies know this and most companies talk a lot about the environment and CSR (Corporate Social Responsibility). CSR is the new buzzword that isn’t even new any- more. But how many companies actually act, rather than talk? Are they prepared for what is probably coming, or will the new demands from consumers and new regulations hit them like a fright train? The fact is, now is the time to make choices about your future strategy. Simplicity is a virtue when trying to explain the world. Shades of gray and nuance complicate matters. A black-and-white world is easier to explain: coincidences do not ex- ist and someone can always be blamed for whatever goes wrong. A black-and-white world is simple. If you would make people listen to you and choose your message from all the messages on offer, you must simplify and make the world seem full of risk. The far-right and the far-left have always known this: when in doubt, blame the politicians, blame the immigrants, blame everyone else. But this time we don’t know whom to blame. The politicians? Multinational com- panies in general? Previous generations that did not understand how damaging their behavior was? The scientists? The poor countries? The rich countries? UN? USA? Your next-door neighbor? Or perhaps we’d better blame ourselves – although some people will always feel guiltier than others. If you are the kind of person who is more into the ab- stract levels of guilt, there are even more categories such as globalization or demography. If we do not know who is responsible for the problem, then we really do have a prob- lem: because we don’t know who is really right. One problem with today’s debate is the lack of heroes. Al Gore was awarded the Nobel Peace Prize, but that does not make him a hero. Various newspapers have already pointed to factual errors in An Inconvenient Truth. All societies have their heroes. Henry Ford was the hero of the industrial society, a man whose actions changed us, society and its ‘zeitgeist’. The same goes for Bill Gates, the hero of the information society. But who will be the hero of the climate debate? The truly good guy who is right, who tells it like he means it, and whom we can trust. In short: the one who is supposed to do something. This question is valid today. It is time to act, but there is no consensus about who that someone is. So we should probably agree on that, soon. Of course, different scenarios ex- ist, and both top-down and bottom-up solutions are possible. 10
  • 10. #2: the climate debate blowing in the wind on rhetorical arguments about the climate in a scientific world. ? Would you be surprised if I told you the Earth’s average temperature hasn’t risen at all in the last century? Probably not, since you are probably used to hearing all sorts of things about our climate’s direction. Around the world, thousands of researchers work with the climate. Hundreds of peri- odicals and a flood of pundits have their view of the climate’s real state. So why is there such apparent disagreement about basic questions such as “Is the climate really chang- ing?” and “If so, has mankind any influence on this change?” One reason for the confusing climate debate is that the agendas of researchers, politi- cians and other players are different. The agendas may be driven by personal goals. In the worst case, they collide in conflicting assertions about the climate. And some players, thanks to rhetorical skill, present their messages more effectively. the birth of modern climate theory Today’s debate about the climate could figuratively be described, on the whole, as a cy- clone, and the 20th century’s debate about the climate was hardly an even and unanimous prediction of the present climate. The present theory is based on the idea that manmade emissions of greenhouse gases are a threat to our future; it was mooted long before it was widely accepted. And even though researchers largely agree on the theory today, questions about its validity still crop up; researchers and lobbyists occasionally try to disprove it with other theories about the 11
  • 11. climate’s future. We will return to that. But when was the first tentative link between CO2 and global warming? We must go back 111 years, to the Swedish scientist Svante Arrhenius. In 1896, he published “On the Influence of Carbonic Acid in the Air upon the Temperature of the Ground,” describing the link between the Earth’s changing climate and the amount of CO2 released. Later, Arrhenius was the first to predict that global warming could be due to man’s burning of fossil fuels. In 1908, Arrhenius forecast that manmade global warming would take 3000 years. Obviously, he missed the mark by many years, but when we consider the great increase in fossil fuel consumption since then, Arrhenius’ prediction is impressive. Among other impressive forecasts, Arrhenius predicted that a doubling of contem- porary CO2 emissions would cause average temperatures to increase 5°C. In compari- son, in 2001, IPCC, the UN’s climate panel, estimated that a doubling of CO2 emis- sions would increase global temperatures by 1.5 to 4.5 degrees. Despite his remarkable foresight, it would be sixty years before Arrhenius’ theory was developed further. International climate research Like Danish researchers, whose work attracted little public interest, American researchers were not exactly in the public spotlight. In the 1960s, American researchers were divided: Will the Earth grow warmer? Are we headed into a new ice age? Investigations had shown that the Earth’s warm periods typically last 10,000 years, after which a new ice age occurs.1 In the temperature decrease from the middle of the 1940s to the middle of the 1970s, many researchers saw indications of an imminent, new ice age. The cooling tendency seemed plausibly supported, moreover, by the relatively large amount of dust and smoke issuing forth from the smokestacks of the time: Dust and smoke might block solar rays. The theory that a new ice age was approaching was mooted at the same time other researchers presented the thesis about global warming. It was also in the 1950s-1960s that researchers could confirm Arrhenius’ predictions about global warming, as it gradually became clear that human activity was responsible for the emission of CO2 that had con- siderable influence on the atmosphere. The gravity of this was unclear, however, until the 1980s, when temperature increases were so notable that researchers were forced to take greenhouse gas-based global warming seriously. Researchers in the US were aware of the connection, but the topic was still absent from the political agenda. The North American summer of 1988 was extremely hot. Americans experienced the worst heat wave since the violent industrialization of the 1930s. When prominent climate researchers stated that global warming was behind the hot summer, climate change quickly climbed the political agenda. In 1988, in the wake of increased awareness of climate change, the UN established the IPCC climate panel as an authoritative body to examine climate change. With the creation of IPCC, the stage was set for the present debate about climate change and the questions we now meet in the media’s articles about climate change. 1 Dessler & Parson: The Science and Politics of Global Climate Change (2007). Cambridge, New York, p. 9f 12
  • 12. The climate’s players As mentioned, one difficulty in gaining a nuanced view of the environment debate is that the agendas of the players do not necessarily create a standardized and balanced picture of the real state of the climate. The food chain goes from researcher to media, and from there to citizens, political organizations, interest groups and politicians themselves. Each has an agenda; each has a purpose with the climate. We must now look at the people who shape the climate debate, and why they each can blur the overall picture. What does a credible climate researcher look like? What does a credible scientist look like? Today’s researcher doesn’t sit in his lab com- paring measurements and observations, writing them down as matter-of-fact, objective findings in research papers for us to peruse at the library. Today’s climate researcher must know how to adapt his results to the demands of the media. The researcher who wants to be publicly heard must know how to work the screen, be rhetorically skillful, be familiar with ethos, logos and pathos, and appear competent and self-assured in both body lan- guage and sartorial choice. Not every researcher can do this. Researchers who cannot meet the demands of the communication age can have their pa- pers “peer reviewed,” as the process of recognizing research is called. Peer review is a scientif- ically-independent quality assessment of a researcher’s work, and it is the safe road to respect, collegial backslapping and acknowledgement at the researcher’s institute. Not all research goes through the peer review-process. Nature, a respected science periodical, receives 10,000 submissions a year from researchers, of which 60% are not published. The rejected researchers try to break through elsewhere, of course, possibly by publishing in a less respected journal. If enough consensus exists about the researcher’s work, it’ll be published elsewhere and come one step closer to the public. New or controversial assertions are examined more closely and undergo a more rigor- ous review by the researcher’s peers than less controversial assertions. In this way, we have some assurance of the work’s quality and durability. However, the so-called research consensus can lead a whole research field off into a blind alley, because even the strongest consensus is not immune to erroneous observa- tions or false causality. So the best definition of scientific “truth” is this: “when there is strong scientific consensus about a scientific statement, people outside the scientific forum should trust it.” No matter how sound this assurance of truth sounds, theory remains open to personal interpretation and creativity. Remember that Pythagoras had determined the world is round by 500 BCE, an assertion that was the consensus among the learned through most of history. But only in the Middle Ages did laymen accept this truth. Research consensus, in other words, isn’t enough to spread the truth. Laymen may have another perception than researchers -- not least when it comes to global warming and climate change. For example, the explanation for the hole in the ozone layer over Antarctica suc- cumbed to a mistaken research consensus. From the first observation in 1982 to 1987, three plausible theories were put forth until, in 1987, scientific consensus coalesced around CFCs as the cause of the hole in the ozone layer. In other words, despite peer review and ordinary research consensus, we can never be completely assured of the validity of the researchers’ assertions. 13
  • 13. So it can be hard to describe the credible climate researcher exactly, since even the most rigorous scientific quality control, and the strongest research consensus, can go awry. To that, add the challenge the layman has in her search for valid arguments in the climate debate: How does she decide how strong a research consensus is, or who has the credibility to pronounce consensus, and how does she learn if a theory is peer reviewed? As a result, we find it hard to know what to believe, and it can take years for scientific consensus to be broadly acknowledged by the public. International research consensus If we must point to one institution that can be called the premier climate authority, it is the IPCC. The international climate council was established to create greater overall knowledge about climate research and create greater research consensus on which to base political decisions. The IPCC was created at the end of the 1980s by the United Nations Environment Program and the World Meteorological Organization. It includes hundreds of researchers, who are divided into three working parties to examine differ- ent aspects of climate change. The IPCC is, therefore, the highest authority on climate change. But that must not keep absolute skeptics of climate change from speaking criti- cally of the IPCC. Lomborg and the media The political scientist Bjørn Lomborg’s career on the climate warpath must be character- ized as “successful-despite-the-odds”. He is one of those researchers who finds it difficult to pass through the eye of the peer-review needle, but who anyway gains wide recognition for his controversial approach to global warming. When Lomborg’s first – and loudly dis- cussed – book, The Skeptical Environmentalist: Measuring the Real State of the World, was to be published, the Cambridge University Press came under great pressure to publish the book at a non-scientific house, rather than a well-reputed scientific publisher. In addition, critics in scientific world suggested the publisher should change its publication guidelines to avoid publishing fundamentally political works. After a carefully selected group peer-re- viewed the book, it was, as is well known, published in 1998. So why did the book become a bestseller after the world of research fell all over itself to criticize it? The explanation lies in the conflicting agendas of two worlds: science and the media. While the usual purpose of research is to gain consensus in a field, the media’s purpose is to sell news. In addition to “sensation” and “identification,” “conflict” lies on the hit-list of news characteristics that sell newspapers. Lomborg must be said to be the epitome of two, at any rate, of these news criteria. The reader is taken in hand and led through an acknowl- edgment process of the real state of the world. From the book’s first chapter come the calm words: “We all know the Litany: the environment is in poor shape on Earth. Our resources are running out…” 2(“We” being, in other words, all of us who aren’t experts, but who sit on the couch, sorrowfully listening to the doomsday prophecies of climate experts.) Lomborg, in other words, has a sense for pedagogical language, rhetorical devices such as allusion and intertextuality – witness his allusion to the annual State of the World report in his subtitle -- and is painfully aware of the persuasion element that means telling 2 Lomborg, Bjørn: Verdens sande tilstand (1998). Centrum, Haslev, p. 17 14
  • 14. us that it will all work out OK nonetheless. The book’s first chapter is, in fact, optimisti- cally called “Things are getting better”. Lomborg is also known for his rational logos arguments. There are no alarmist prophe- cies, only apparently rational ends about how we can best invest funds and best fight the world’s problems. Should we save people from dying of heat caused by global warming, or should we go with the flow and exploit the increasing temperatures to save people from freezing to death? is Lomborg’s question in his new book, Cool It.3 No frills, no elaboration of the consequences of the temperature increase, which some researchers believe is much higher at the poles, with altered ocean currents and other consequences to follow. Another of Lomborg’s well-known arguments is that we should rather fight diseases in the Third World such as malaria and HIV/AIDS. His argument is based on the hid- den premise that rich countries will unhesitatingly give more money to fight disease if not asked to invest in reduced CO2 emissions. However, this seems improbable, inasmuch Denmark is a leading contributor to poor countries and invests heavily in reducing global warming, while the US neither supports Kyoto or contributes much to impoverished countries.4 Superficially, Lomborg’s arguments seem reliable and acceptable, but they have been strongly criticized internationally and, in addition, in Denmark by Environment Minister Connie Hedegaard, among others. Lomborg and Gore: cold and warm fronts The 2007 Nobel Peace Prize went to former US vice-president Al Gore, author of the book and documentary film, An Inconvenient Truth, and the IPCC. The day the award was announced, Lomborg was quoted in Jyllands-Posten, a Danish newspaper, that it was a shame the prize went to Gore. IPCC estimates the oceans will rise 30cm in the next 100 years, while Gore, in his film, estimates an incredible rise of six meters. In contrast to sensible Lomborg’s apparently rational arguments, Gore uses images to communicate his take on the climate debate, and to win the peace prize, helped greatly by his slideshow about the world crisis on which his book, An Inconvenient Truth, is based. If you open the book, which could be a manuscript for the film, the difference between Al Gore and Lomborg’s argumentation is clear. Lomborg rarely uses emotional appeal and does so obscurely. Gore’s picture-saturated book, with its 20cm by 20cm pages, is a clarion call for the cause – a shout from the rooftops, to put it mildly. When I paged through Al Gore’s book, I realized some pages were thicker than others. When it dawned on me I could unfold them, out came the scenario of a failed Gulf Stream and a Europe encased in a new ice age. The language is ultra-pedagogical with large type: “This is the image that first caused me to think about – and then to become intently focused on – global warming. It was show in the mid-1960s to a small undergraduate class I took taught by the second teacher I want to tell you about: Roger Revelle.” 5 The book’s easy-style and full page illustrations are relieved from time to time by bio- graphical excerpts about Al Gore, such as the section “Concrete and Countryside:” 3 Lomborg, Bjørn: Cool it (2007). Knopf, New York 4 Bach, Christian Friis: ”Ny bog: Bjørn Lomborg: Lad os starte med isbjørnene”, Dagbladet Information 22.9.2007, p. 38 5 Al Gore: En ubekvem sandhed (2006). Aschehoug, p. 30 15
  • 15. “I breathed freely – full-chested, invigorating breaths – unlike any I took on the streets of DC.” 6 In the film, the biographical sections act as breaks from Gore’s climate lecturing, much as advertising breaks up television programs. In the book, the biography side-bars bring us closer to Gore’s life, philosophy and reasons for working with the climate. Al Gore’s son, Albert, was in a car accident as a child and suffered serious injuries that required a year of recuperation. During that year, Al Gore thoroughly reconsidered the purpose of his life: “It was during that traumatic period that I made at least two enduring changes: I vowed always to put my family first, and I also vowed to make the climate crisis the top priority of my professional life.”7 Through identification with the terrible event of his son’s accident, we are forced into compassion with Gore. When Gore found his way out of the crisis, he found it most pressing to tell his fellow Americans about the climate crisis. Who cannot share Gore’s compassion, and who can criticize his project of devoting his life to informing ordinary Americans about what he or she can do to ensure “the most costly of God’s beautiful earth ... aren’t lost.”? At any rate, Gore has his intentions in the right place, creates solidarity with his audience, and builds a high ethos on which to base his further argumentation and climate assessments. Back to Lomborg’s criticism of Gore. Gore predicts the seas will rise six meters. The IPCC says 30 centimeters. Lomborg asks who is correct. In the end, we don’t know. What we do know is that Greenland’s icecap and the arctic icepacks are melting faster than statistics predict. Whether the statistics are multiplied by 1.5 or 10 depends on how pes- simistically one chooses to view climate change, and how dramatic a picture one wishes to paint. Drama and exaggeration are exactly what Gore has been accused of, and an English High Court has ruled that Gore’s film may be used for teaching only if the teacher also notes it contains “nine scientific mistakes”.8 The question now is whether the end justifies the means. Is it justified, in the name of the noble environmental cause, to exaggerate the alarm and move the melting of the Greenland icepack forward? Given Gore’s rhetorical success in putting the environment on the American agenda as never before, some observers – though not Lomborg – will be tempted to say yes. the media’s influence on the debate The media’s role in the climate debate suddenly became clear during the summer of 2007, when DR2, a Danish television channel, broadcast a controversial British documentary, The Great Global Warming Swindle. The film argues that global warming has nothing to do with humans. The program was later strongly criticized by NOAH, a Danish environ- mental lobby, who claimed the documentary tends to “libel Danish climate researchers.” Tony Juniper, another critic, and leader of the environment lobby Friends of the Earth said: “In my wildest dreams, I never imagined a responsible European broadcaster would show it.” 9 6 Al Gore: En ubekvem sandhed (2006). Aschehoug, p. 122 7 Al Gore: En ubekvem sandhed (2006). Aschehoug, p. 70f 8 From BBC 11 October 2007: http://news.bbc.co.uk/1/hi/education/7037671.stm 9 von Sperling, Anna: ”Klimadebat: Kritik af DR’s klimasatsning” in Dagbladet Information d. 12.7.2007, 1. section, p. 5 16
  • 16. In response, DR’s development director, Carl Otto Dethlefsen, said the documentary was sent as part of DR’s series about climate change and “in that connection, we deliber- ately looked for at least one program that disagreed with the conventional climate problem wisdom” and “We also have a duty to tell the other side of the story.” 10 The debate about the controversial documentary illustrates the role the media will sometimes play in the climate debate. Controversy always sells better than a story we have often heard before, so researchers or players who offer novel explanations often attract the microphone and ink. But what does this mean for the rest of us, who try to act in the best interests of the Earth’s future, and who try to find a well-considered basis for decision? It’s very difficult to know what is fact and fiction in the climate debate, when only experts or people who work with climate daily have the expertise to look into a source’s credibility. Stories in the daily press are built up as view vs. counterview. Rarely do we learn how many researchers stand behind one view or the other. Rarely do we learn how widespread support may be for a point of view compared with other points of view. Science has fairly detailed data about climate change. Even so, when the controversial and sensational has great news “value,” this unfiltered nuanced data rarely comes forth. The German climate debate In the fall of 2007, Germany saw a sharp debate about Stefan Rahmstorf, a climate researcher at Potsdam-institute für Klimafolgenforschung. Rahmstorf would probably describe himself as the watchdog of the climate debate.11 His opponents call him its cru- sader. What prompted the controversy was Rahmstorf’s article in Frankfurter Allgemeine Zeitung describing how the German media misleads citzens about the climate crisis by relying too much on unreliable sources.12 In the article, Rahmstorf refutes point by point the researchers he disagrees with, and who have appeared publicly with their alternative explanations of climate change. Rahmstorf’s opponents retort that he blacklists journalists who disagree with him. In the article’s conclusion, the argument against Rahmstorf’s media critique: “When scientists declare their assumptions to be dogmas, they become soldiers of faith. Then it’s time to contradict ... Somebody must still keep the door open for a skeptical world- view against largely unified conventional wisdom…”13 The German debate is also about the media’s role in the climate debate, on the one hand, and science’s role, on the other. Rahmstorf’s opponents have looked dimly upon him when he seems so certain in his assumptions. Refutations and modifications have always been rhetorical tools to create credibility, but when research results have been repeatedly, like those theories supported by Rahm- 10 von Sperling, Anna: ”Klimadebat: Kritik af DR’s klimasatsning” i Dagbladet Information 12.7.2007, 1. section, p. 5 11 Bartsch, Chritian et al.: ”Wir müssen Urängste relativieren” i Frankfurter Allgemeine Zeitung d. 5.9.2007, nr. 206, p. 35: ”Wenn Wissenschaftler ihre Annahmen zu Dogmen erklären, werden sie zu Glaubenskrie- gern” 12 Rahmstorf, Stefan: ”Deutsche Medien betreiben Desinformation” i Frankfurter Allgemeine Zeitung 31. August 2007 13 Bartsch, Chritian et al.: ”Wir müssen Urängste relativieren” i Frankfurter Allgemeine Zeitung 5.9.2007, nr. 206, p. 35: ”Wenn Wissenschaftler ihre Annahmen zu Dogmen erklären, werden sie zu Glaubenskriegern” 17
  • 17. storf, there’s no reason to pull alternative theories out of the bag that only confuse the public. In any case, they must be presented in a context that leaves no doubt about their relative validity – like the “news” reported in The Onion. It’s the climate debate’s disagreement between breadth and depth - between pluralistic opinion and scientific unanimity. The schism will certainly also be a part of the future debate, and will help shape our view of the debate. Because we must decide whether we believe those who agree or those who question the majority. At any rate, it’s about asserting one’s view against a background of honest arguments that do not tend to the dogmatic, and that are also largely supported by accepted available facts. The Nobel Peace Prize of 2007 seems almost characteristic of this problem. Award- ing the prize to the IPCC, with its hundreds of researchers from 130 countries, acknowl- edges scientific consensus, while Al Gore receives it for the most powerful, isolated and agenda-setting expression about man-made climate change. The politician’s contribution to the climate debate To publicity-seeking “climate researchers”, honest scientists and sensation-hungry media, we must add politicians to the list of players in the climate debate. Politicians have the job of making, on the basis of available research, decisions that best meet party policy and the expectations of voters. In addition, we must expect them to act with an eye to their own career, and so be driven to some degree by what looks good on the c.v. In other words, politicians have a big task and many different agendas to consider. Let’s look more closely at the factors that help shape a politician’s actions and communica- tion to the public. The question of global warming is, by definition, complex, and politicians seldom have resources to thoroughly evaluate a scientific assertion. Therefore, many politicians stake out a position that agrees with their political ideology, and then seek out theories that support the position.14 It is rhetorically powerful to present one’s arguments first, and then support them with scientific gravitas. An example politics-followed-by-scientific-gravitas is the Copenhagen Consensus pro- gram, established by the Danish government in 2002, with Bjørn Lomborg as director. The group’s goal, leading up to a 2004 conference, was to analyze the Earth’s biggest challenges from a cost-benefit angle and then prioritize the challenges. Lomborg’s book The Skeptical Environmentalist had already appeared in 1998, and was apparently a point of departure for Lomborg. Critics claim the government must have been aware of Lomborg’s views when he was appointed director of the think-tank, and that he was appointed to promote them. Seventeen problems were ranked by the think-tank, with the climate problem ranking 17th – in other words, the least important major world problem to spend money on. The climate problem’s last place ranking at the Copenhagen Consensus conference may have something to do with the law of inertia. It is always easier to stay the course than to argue for a change of political agenda.15 As mentioned before, the IPCC was estab- lished in 1988 and, by 1990, had produced clear evidence of human influence on climate change. But in Denmark, the climate crisis only recently – 19 years later – assumed an 14 Dessler & Parson: The Science and Politics of Global Climate Change (2007). Cambridge, New Your, p. 40 15 On the law of inertia, see: Se Perelman, Chaïm: The New Rhetoric: A Treatise on Argumentation (1969). University of Notre Dame Press, p. 106f 18
  • 18. important place on the agenda. The Danish environment ministry’s campaign “One Fewer Ton” shows that the climate and manmade CO2 emissions have, after many years, finally found a place on the political agenda.16 I also consider Al Gore’s film An Inconvenient Truth as a symbol of how much it takes to change the political agenda. The film’s assertions are called “exaggerated,” the book could be read by a six-year-old, and is so densely illustrated that the reader doesn’t actually have to read it to get the message. I say this not to dismiss the work, but to point out how o-b-v-i-o-u-s the message must be to change the political agenda. These examples of the law of inertia show how difficult it may be for a politician to put a new subject on the agenda. But the Danish climate agenda has slowly changed: witness Danish environment minister Connie Hedegaard’s praise of Gore’s documentary, which stands in sharp contrast to Lomborg’s view of the climate problem.17 Take hold of value-based arguments The biggest difference between science and politics is that science is fact-based, while politics is about future action. Political decision-making, and the question of what we should do, deal with subjective questions that require a politician to put the question on his agenda. Since this can never logically follow the objectively-best political action in a given case, we will always need an unsurpassed openness to new agendas and different worldviews to decide best how to react to climate change. The distinction between the climate researcher and the environmental politician lies between arguments about truth and action . Truth is largely indisputable, since it has be- come our collective property, but the actions suggested by the facts at hand are very much open to debate. “Is the climate changing?” is one question, whose answer falls into the truth category, and we can answer in the affirmative. “Is human activity the culprit?” is the next question that has been widely discussed. By now, there should be agreement in answering “yes.” The third question is “How do we best and most suitably react to the man-made changes?” This is the truly difficult factor in the debate, one we should concentrate on much more. An argument may be perfectly shaped, logical and rational, but, still, it can never dictate a fixed political action. So the parties to the debate must be open to all sides, both those that are against them and for them, to reach the most well-considered basis for decision as possible. Which way will the climate debate go? It is clear the climate debate is complex and makes it difficult for the individual to act cor- rectly on the basis of what he or she has heard of climate change in the media. Yesterday, in a news broadcast, I heard that the Danish environment ministry has stated that a single gas heater at a café produces two tons of CO2 a year, which seemed alarming. As a consumer, am I to avoid these cafés, or wear woolen underwear so I can 16 See the campaign here: www.1tonmindre.dk 17 Hedegaard, Connie: ”Al Gores film er god at få forstand af” at the Danish environment ministry’s website: http://www.mim.dk/Ministeren/Artikler+og+synspunkter/2006-09-19_Anmeldelse_af_En_ubekvem_sand- hed.htm 19
  • 19. ask the manager to turn off the heat? The next story in the broadcast was about a dispute between two towns over which had the right to build a large luxury vacation center with indoor water park. With the café heater’s CO2 emissions still in my head, I couldn’t help wonder how much CO2 is released by an indoor water park. The many arguments and investigations make it very difficult for the individual to judge what actions are morally correct when it comes to climate change. Is climate change so seriously advanced that it cannot pay to do anything about it now? Or will it be so expensive to do anything about global warming, that our best bet is to get as much out of the development as possible, which we cannot influence anyway? Some will undoubtedly see it this way after the recent heated environmental debate. But I hope most will look more optimistically on the future, even though the debate, for the next many years, will be marked by the same clashing tendencies we see today. And so we return to this article’s opening: the arguments of the climate debate consist of, and will continue to consist of, unsentimental facts, sophisticated sensation-searching broadcasts, debatable causalities, cosmopolitan consensi and pathos-arguments that go to the bitter end to convince us which way the climate debate should go. 20
  • 20. hoW do you raTe abILITy To affecT The WorLd very bad around you? bad good very good laggard Adapter Navigator Innovator 0% 50 % 100 % Source: CIFS survey on change 2004 In The nexT 10 years, are you LIkeLy To be personaLLy affecTed by terror The foLLoWInG ThreaTs? rIse In % beTWeen 2005 and 2007 Climate Islam 16 Immigration 14 economics 12 10 8 6 4 2 0 rise eU rise US Source: German Marshall Fund Transatlantic trends 2007 21
  • 21. #3: risk is a part of life Risk is a part of life. Risk is part of planning and evaluating the future, for individu- als, business and government. Katherine Rowan has shown that when measuring risk technically, analysts understand it in terms of multiplying severity by likelihood (Risk = Severity * Likelihood) In risk management, we often prepare for probable events that will have little effect, but which must be addressed because they are likely. Public transport agencies must plan for train delays, for example. But we must also prepare for the improbable, yet severe: terrorist attacks or environmental catastrophe, for example. Whether to spend money on the likely-but-not-severe or the improbable-but-severe is a constant debate in risk manage- ment because of limited resources. When considering climate change, we already know the big question is: is the climate really changing? This question pertains to identification. We must have a clear understand- ing of the phenomena in question. We don’t. The system’s complexity makes for uncer- tain judgments. As a result, the very basis for discussion is open to interpretation, which is why so many people are confused even at this level. Another question we ask is: to what extent is the phenomenon a threat? The phenomena in question typically influence human life. This is why meteors rarely pose a problem, be- cause the oceans are so vast and there is so much uninhabited land. With climate change, we look at human exposure to risk. Since many possible consequences must be measured, we try to look at them separately and together. One study may look at rising sea levels and the threat posed to coastal areas. Another study may look at temperature increases in Africa and the attendant effects on conflict and migration. It is not enough to identify causes, problems and people at risk. We must also measure how big the risk is. This is a vital point in risk management and risk communication. People often react irrationally to information and are unnecessarily frightened due to a lack of knowledge about or preconceived ideas about a phenomenon. The complexity of climate change is a result of the multifaceted aspect of the phenom- ena. Climate change is not an incident, such as Chernobyl. It cannot be grasped in quite the same way. And this means that risk assessment by individuals is uncertain. While statisticians base risk on quantitative historical data, such as average annual lung cancer deaths or the chances of dying in a car accident, individuals assess risk differ- ently and sometimes illogically. This difference is evident when we consider flying. When assessing subjective risk, laymen tend to exaggerate the risk. 22
  • 22. The personal perception of risk differs from the technical perception of risk. Studies (Sandman 1987) show how the personal perception of risk is depends on voluntariness, control and perception of fairness. With climate change, we can test these questions generally, or against particular communities. On the whole, mankind may seem to have entered into the problem voluntarily; however, most people disagree with this perception, because most people feel they have no influence. In western democracies, this is false, because we elect politicians who represent our beliefs, and we can punish the companies that do not meet our standards. But for much of the world, this is the case. Particular communities or groups of people are be- ing subjected to changes in their environment that they did not cause. Dioxins, widely used in India and other parts of Asia, are vaporizing into the atmosphere, where they drift to polar regions, descend, and cause genetic damage to Arctic animals. Risk is evaluated in relation to mastery. We perceive risk that we can influence as less risky. This was corroborated by a CIFS survey in which four types of people were catego- rized according to their view of the future. The future-oriented innovators were fairly confident of their ability to influence their lives and future, and so were optimistic about the future. Those who felt threatened by the future, however, tended to feel little or no ability to affect their future. People from the countryside are familiar with snakes and other dangers, and so are unafraid of them. Whereas walking in the city, with all its traffic, can be perceived as highly risky. People tend to view the risks of atomic waste, climate change and other phenomena beyond their control as more risky than driving a car. The lack of feeling of mastery and familiarization makes for a somewhat distorted risk assessment. This could mean that, as people become familiar with climate change, they will get used to it. It is often claimed that a frog put into boiling water will jump out of the pot to save its life, while a frog put into cold water gradually warmed to boiling will not. The slow process of climate change and human adaptation may mean we familiarize ourselves with the risk embodied in climate change. As a result, we may wait until it is too late. Whether the talk of climate change will subside due to overexposure or strengthen seems to depend on people actually experiencing the change. According to the World Bank, the Chinese, with their direct exposure to pollution, are much more worried than Europeans by the direct effect of the environment on health. Studies show that the greenhouse effect will affect Africa first and, according to the CIA, this can cause conflicts over land, as we have seen in Darfur. This touches upon another aspect of risk perception- fairness. Is it fair that rich countries, in pursuit of their own happiness and material wealth, destroy the land of others and dump the problems in their backyard? Most people would agree that the troubles facing Africa in the future are morally unjust. The UN expects that two billion people will lack water in 2050, and that 50 million people, most of them African, will be environmental refugees by 2010. risk assessment is different in different cultures. According to the German Marshall Fund, Europeans differ from Americans in their threat perception. Americans are troubled by the prospect of economic crisis; they find only for- 23
  • 23. eign dependence on energy as more troubling. Europeans are more worried about climate change (85%) while only 70% of Americans perceive climate change as a threat. Both consider global warming to be more of a concern than they did in 2005. In 2005, 73% of Europeans, but only 64% of Americans, perceived it so. The American levels today, in other words, roughly match European levels in 2005. 24
  • 24. #4: the US role in the global drama September 25, 2007 – Denmark’s environment minister, Connie Hedegaard met with mem- bers of the US House of Representatives to discuss climate change and global warming. Following her discussions, she concluded that US resistance to developing effective policies to combat global warming stems not only from US President George W. Bush, but from a broad swath of US lawmakers, both Democratic and Republican. The meeting, in effect, doused any expectations she had for a rapid change in the US position on climate change. She concluded that it would be a long time before the US government would actively engage itself in taking meaningful actions to cut US greenhouse gas (GHG) emissions and combat global warming.1 Is this actually the case? Are the policy discussions regarding climate change and global warming at a standstill? What is the status of the US political debate on global warming and climate change? We have chosen to focus on the United States for two reasons. First, it was the world’s single largest emitter of GHGs until China caught up to and surpassed it this year. The US, however, remains one of the world’s largest per-capita emitters of GHGs: individual Americans release over 20 tons of CO2 annually compared to about ten tons by citizens of EU-15 countries. Second, as one of the world’s largest polluters, and because it rejected the Kyoto Protocol in 2001, the US is seen by the rest of the world as essential to creating effective anti-climate change policies. Without US buy-in, China and India are unlikely to partici- pate. Japan, among others, has stated that it will assume no further commitments beyond Kyoto if the United States and major developing countries are not onboard. Therefore, negotiations over a new global anti-climate change protocol are unlikely to succeed without bringing these players onboard. Following an analysis of the current state of US politics and policies regarding global warming, we will present two possible scenarios for US engagement in climate change over the next five years. 1 ”Miljøminister Connie Hedegaard: Stejlt op ad bakke med USA” Berlingske Tidende. 26 September 2007: 14 – 15. 25
  • 25. But, first, a little history. a little history Since the late 1970s, an international scientific consensus has emerged about manmade climate change, as shown by reports by US National Academy of Sciences (1979, 1983, and 2001), World Climate Program (1985), and the Intergovernmental Panel on Climate Change (1990, 1995, 2001, and 2007). Even so, the issue of climate change due to man- made global warming remains controversial in US political and public arenas. Since the late 1980s, the debates about global warming and climate change have ranged over whether it is actually happening, to whether it is manmade or natural, to whether GHG emissions can be sufficiently reduced without causing large economic and social disloca- tions. The global warming debate split into two camps: environmental reformers on one side and, on the other, the political backlash – ideological conservatives, the business com- munity, and members of federal, state and local governments. The issue of climate change came to the forefront of public and political consciousness in June 1988, when Senator Timothy Wirth (D-Co) called for hearings on a day when tem- peratures were expected to reach a scorching 36°C and when anxiety was growing about a drought affecting the American South and Midwest. The hearing’s star witness, James E. Hansen, the director of NASA’s Goddard Institute for Space Studies, testified that the world was warmer than at any time that century, and that man-made GHGs – not natural climatic variations -- were the cause. He was the first scientist of his rank and prestige to unequivocally state that the burning of fossil fuels was related to global warming. The results of his testimony were initially dramatic. Both the Los Angeles Times and the New York Times reported that a broad consensus in support of environmental regulation to halt global warming had developed.2 His testimony and the subsequent public and political debates it sparked led to a flurry of activity in the late 1980s and early 1990s, which led to the establishment of the Intergovernmental Panel on Climate Change (IPCC) in 1988 and the Framework Convention on Climate Change (FCC) in 1992. ”you know, i’m not going to get involved in a mumbo-jumbo of peer-review documents. there’s politics within the scientific commu- nity, where they’re all intimidated to speak out once someone has staked a position” Rep. John Doolittle (R-Ca) in a 1995 hearing, where he and a number of subcommittee members wanted to debunk the science behind ozone depletion 2 Maxwell T. Boykoff, et al. ”Balance as bias: Global Warming and the US prestige press” Global Environ- mental Change 14 (2006): 130. 26
  • 26. Despite this initial activity, divisions quickly arose between the United States and Europe, and within the United States between environmental reformers, moderates, and climate- change skeptics who are supported by political, industrial and commercial inter- ests. By 1997, the US shifted from a being an anti-global warming proponent to a country where the science behind global warming, and policy solutions to address the problem, came under attack. On July 1997, the US Senate unanimously passed the Hagel-Byrd resolution. This resolution notified President Clinton that the Senate would not ratify any treaty that would result in serious harm to the US economy and that would impose mandatory emissions reductions for the United States without imposing corresponding reductions on large developing nations (such as China and India). Even though President Clinton would eventually sign the Kyoto Protocol in November 1998, this resolution effec- tively killed US participation in the treaty. The treaty lay dormant until President George W. Bush renounced any attentions of abiding by the Kyoto Protocol in 2001. What happened? The climate-change debate became embroiled in broader debates over environmental regulation that had been brewing since the early 1980s. The environ- mental legislation that had been enacted in 1970s, when many of the first US environ- mental laws were passed, overestimated the speed with which new technological innova- tion would occur, and underestimated compliance costs and the difficulties associated with writing standards for hundreds of industries. A backlash developed. In the 1980s, under the Reagan administration, a broad consortium of anti-environ- mental regulation and anti-global warming actors emerged. This consortium included: - Regulated industries and businesses that chafed at the costs associated with compli- ance and who resisted the enactment of new legislation; - Ideologically motivated players (conservative think tanks, politicians, and commen- tators, for example) who strongly believed in limited government, property rights, humanity’s dominion over nature, preferred private sector solutions, and resisted federally imposed regulations; and - Members of state and local government who resisted the expansion of federal authority.3 The thought of a binding international treaty regulating CO2 emissions struck this conser- vative consortium as direct threat to such core principles as sustained economic growth, free trade, national sovereignty and continued abolition of governmental regulations. The most radical shift in the US political landscape regarding global warming and climate change occurred after the 1994 Republican take-over of Congress. A majority is important in the US Congress, since the majority party appoints committee chairman- ships, convenes hearings and composes witness lists, and decides which bills will come to a vote. The 104th and 105th Congresses (1995-1998) were adamantly opposed to federally imposed environmental regulations and to international solutions to climate change. Republican congressional leaders, particularly those who led the House Commit- tee on Science, attacked existing environmental policies and research and sought to 3 Michael Kraft, “US enivornmental policy and politics” Journal of Policy History 12 (2000):17-42 27
  • 27. promote those policies and scholars who supported their perspectives. Studies have shown that the number of independent expert natural scientists -- unaffiliated with environmental organizations, industry or the government – called to testify before Congress fell during this period. The number of climate change skeptics, however, who were affiliated with industry organizations and conservative think tanks, in- creased sharply. The climate change skeptics’ testimony typically took three tacks: (1) the evidence for global warming is weak or wrong; (2) if global warming actually does occur, it will help, not hurt, humanity; and (3) proposed efforts to limit GHG emis- sions will do more harm than good.4 As the skeptics appeared more often before Congress, they appeared more often in US media. Global warming skeptics, many of whom were employed at such conservative think tanks as the Heritage Foundation and the American Enterprise Institute, began sending their findings to politicians, bureaucrats, and media outlets. This development amplified uncertainties within the US public arena about whether global warming and climate change were actually occurring. Studies of US media outlets have shown that, despite growing consensus among environmental scientists about manmade causes of global climate change, the media’s professional requirements to provide balanced cover- age (equal time to both sides) made it appear there was greater disagreement within the scientific community than there actually was.5 The climate change skeptics’ approach dovetailed with popular resistance to public environmental policies. This popular resistance had several causes. First, automobile and energy industry interests are more deeply entrenched in the United States than in Europe. These industries have resisted and still resist attempts to set mandatory GHG emission limits.6 Second, some US unions feared that environmental regulations limit- ing GHG emissions would affect production capacities, threatening members’ jobs. Third, many Americans have grown used to a lifestyle of high consumption and relatively cheap transportation. These consumption habits, combined with a relatively lower population density and longer traveling distances, meant that many Americans felt that increasingly stringent environmental regulations – such as President Clinton’s proposed taxes on energy consumption to force conservation in 1993 – would attack their way of life and, as a result, were deeply unpopular.7 Fourth, many in the United States perceive environmen- talists as being doomsayers and scolds who are anti-technology and anti-growth. These attitudes clash with US popular beliefs in a boundless future.8 As a result of these developments, the science of climate change and prospective policies designed to limit the emissions of GHGs came under increasing assault. This trend intensi- fied in 2001, when George W. Bush became president. For the first time, individuals who were critical of both the science behind global warming and potential policies to hinder it 4 Aaron McCright, et al. ”Defeating Kyoto: The Conservative Movement’s Impact on US Climate Change Policy” Social Problems, Vol. 50, No. 3 (2003): 348-373. 5 Maxwell T. Boykoff, et al. ”Balance as bias: Global Warming and the US prestige press” Global Environ- mental Change 14 (2006): 131. 6 The automobile industry has launched a number of legal challenges to California and New Hampshire’s attempts at strengthening automobile emissions regulation. 7 J.W. Andersen, How Climate Change Policy Developed: A Short History (Washington, DC: Resources for the Future, 2005): 5. 8 Mark Horowitz, “Burning Down the House” Wired Magazine. (October 2007), 128. 28
  • 28. controlled both the legislative and executive branches of government. In 2007, Dr. James Hansen, the scientist who launched the climate change debate 18 years earlier, testified before Congress that he had “never seen anything approaching the degree to which informa- tion flow from scientists to the public has been screened and controlled as it has now.”9 Despite the growing influence of US climate change skeptics during the 1990s and early 2000s, environmental organizations were able to block most of conservative efforts to loosen or repeal environmental legislation. A stalemate developed in the legislative branch, and most action regarding climate change, as a result, was delegated to state-level actors and the Bush administration.10 the Current situation US attitudes and the political debates surrounding climate change have changed rapidly over the last few years. Many point to Hurricane Katrina and growing media coverage of events that can be attributed to global warming – increased hurricane activity and glacier melting – as the tipping point in popular and political attitudes towards global warming in the United States. By early spring 2007, the former Vice-President and presidential candidate Al Gore won an Oscar for his film An Inconvenient Truth. And on 12 October 2007, he won Nobel Peace Prize. The debate about whether global warming exists and whether human beings are responsible is now largely over. State and municipal govern- ments have begun filling the void left by the lack of federal government action on climate change. Many of the business that supported the global warming skeptics now want clear international and national global warming regulations in order to avoid a patchwork regulatory environment. Broad sections of the US population are now starting to view climate change as a global problem, although most still do not see it as the most important problem. Despite executive branch intransigence, President George W. Bush has convened a climate change conference, where he stated that “climate change is a real problem – and human beings are contributing to it.” Congress, since the Democratic takeover in 2006, appears to be increasingly interested in enacting climate change regulation. Despite this trend, the debates over climate change are not over. They have shifted to arguments over whether a mandatory regulatory framework, like the Kyoto Protocol, is the best solution to solve the climate change problem. Due to the lack of political action at the federal level, state and local governments began to fill the void. States are developing plans to mitigate climate change, mandating investments in energy efficiency and renewable resources, and setting emission reduction targets. California’s environmental policies are the most internationally recognized. On June 1, 2005, Governor Arnold Schwarzenegger committed California to GHG targets that match 2000 levels by 2010 and 1990 levels by 2020. According his order, emissions would be 80 percent below current levels by 2050. In his signing ceremony, he stated: “The de- bate is over. We know the science. We see the threat. And we know the time for action is now.”11 In 2006, the California state legislature made the 2020 target enforceable by law. 9 Kelly Young, “US funding of climate science – details revealed” New Scientist Environment. 20 March 2007. 10 Barry Rabe, Can Congress Govern (New York: Robert F. Wagner Graduate School of Public Service, New York University, April 2007). 11 Governor Arnold Schwarzenegger, “Governor’s Remarks at World Environment Day Conference” 1 June 2005. 29
  • 29. The nature of the US regulatory framework gives an important role to play in the domestic regulatory framework. States have primary jurisdiction over many areas of importance to GHG reduction policies such as land use, agriculture, and electric power generation. Many states also perceive climate change as both a threat to their economic wellbe- ing and a possible future revenue stream. Coastal states worry about rising sea levels; agricultural states are growing increasingly concerned about unpredictable weather and droughts. Many states view climate change as an opportunity to improve the citizens’ health and well being and to boost their local economies. For example, states can: - Become producers and exporters of alternative, renewable fuels. - Sell carbon-reduction credits. - Attract and retain high-tech industries and businesses, etc. In addition, individual states produce large amounts of GHGs. For example, California produces more GHGs than Brazil, while Texas releases more than France. This despite the fact that Brazil’s population is five times larger than California’s and France’s is two and half times larger than Texas’.12 Many states are enacting their own legislative priorities, or they are creating regional alli- ances with neighboring states. As a result, a “patchwork” of varying regulatory frameworks aimed at combating global warming is developing across the United States at the regional, state, and local levels. As of March 2007, there were five regional initiatives that address climate change and clean energy. At the state level, states have passed a myriad of laws and initiatives that cover: low carbon electricity, transportation, and agricultural policies; emis- sions policies; and climate action plans. For example, twenty-three states and the District of Columbia have mandated that a specified amount of electricity must come from renewable sources, and almost half of US states have policies dedicated to supporting energy efficiency and renewable energy products.13 Only states in the American Southeast have not enacted GHG emissions reduction policies.14 In addition, more than six hundred and fifty US cities have formally adopted ordinances that commit them to honoring the Kyoto Protocol. There are several problems with this localized, patchwork approach. First, businesses are forced to deal with many uncertainties about compliance with local and regional regulations, which lead to inefficient business. Second, many states have strict budgetary requirements that limit their ability to fund long-term climate policies. As a result, many cities and municipalities expect federal funds to pay for their climate change policies.15 Third, most state policies do not go far enough in reducing GHG emissions. Only some are delivering real reductions in GHG emissions, and only a few are inline with what is 12 Learning from State Action on Climate Change (Arlington, VA: Pew Center on Global Climate Change, March 2007). 13 Learning from State Action on Climate Change (Arlington, VA: Pew Center on Global Climate Change, March 2007). 14 Barry Rabe, Can Congress Govern (New York: Robert F. Wagner Graduate School of Public Service, New York University, April 2007). 15 John Bailey, ”Global Warming Requires Local Solutions” StarTribune.com (5 October 2007). 30
  • 30. and will be required globally to combat climate change. As a result of this patchwork of policies, many businesses now want a uniform, national approach to reducing GHG emis- sions. Ten major US companies, including General Electric, DuPont, and Alcoa, recently joined with four nonprofits to create the US Climate Action Partnership.16 Dow Chemical, Shell, Chrysler, General Motors, which once supported the Global Climate Coalition – a now defunct industry alliance that promoted climate change skeptics and organizations – have also joined US Climate Action Program. The US population is likewise becoming increasingly concerned about global warm- ing. US popular attitudes are divided and are as partisan as those in the political sphere. Despite the growing concern, Americans, however, are less concerned about global warm- ing than they are other policy issues, such as the war in Iraq, health care, etc. In January 2007, the Pew Research Center conducted a survey of US attitudes towards climate change. They found that most Americans (77 %) now believe that global tempera- tures are rising, but there still remains a great deal of debate as to its causes. Less than half believe that it is caused by human activity (47 %), while one-in-five believes that it is caused by natural causes.17 Popular American opinions regarding climate change, however, are divided largely along party affiliations. Democrats are more than twice as likely to think that global warming is a very serious problem than Republicans (54 % v. 24 %). Conservative Repub- licans and college-educated Republicans are the least likely to believe that climate change is due to human activity.18 Despite the growing unease, Americans do not believe that global warming is of great personal concern to them when compared to other countries. Only 19% felt that global warming was of a great deal of importance to them, lower than any of the fifteen coun- tries the Pew Center surveyed.19 In addition, most Americans – Democrats included – ranked climate change lower than most other policy priorities. Since taking office in 2001, President Bush and his administration have been par- ticularly intransigent on the issue of manmade global warming. Since he renounced the Kyoto Protocol in 2001, he has proposed plans calling for an 18% reduction in US emis- sions intensity from 2002 to 2012 – this goal will actually allow a 12% increase in the total amount of GHGs emitted during this period. His plans also call on businesses to volun- tarily cut GHG emissions and rely on the development of technology to fight the effects of rising temperatures. The President has softened his tone regarding GHG emissions. On February 16, 2007, he agreed to the non-binding “Washington Declaration,” where he agreed to outline a successor to the Kyoto agreement. In addition, he hosted the afore- mentioned climate change conference in September 2007. The administration’s intransigence in combating global warming has been called into question by state and local governments. In March 2007, the US Supreme Court ruled that the executive branch must revisit its decision not to define carbon dioxide as an air 16 Eileen Claussen, et al. ”A New Climate Treaty: US leadership After Kyoto” Harvard International Review Vol 29 1 (Spring 2007). 17 Global Warming: A Divide on Causes and Solutions (Washington, DC: Pew Research Center, January 24, 2007) 18 Global Warming: A Divide on Causes and Solutions (Washington, DC: Pew Research Center, January 24, 2007) 19 Little Consensus on Global Warming (Washington, DC: Pew Research Center, July 12, 2006). 31
  • 31. pollutant (Massachusetts v. US Environmental Protection Agency.) In this case, the admin- istration’s lawyers mounted a vigorous defense that claimed that, since the 1990 Clean Air Act did not explicitly define carbon dioxide as a pollutant, they were under no obligation to do so. While the opposition – led by the Massachusetts attorney general and which consisted of counterparts from ten other states – argued that US government had to. The issue became a messy fray as municipalities filed briefs in support of state governments and business groups and organizations filed in favor of the federal government.20 This situation largely arose due Congress’s unwillingness and inability to legislate effectively on environmental and climate change issues. Since the Democratic takeover of Congress in November 2006, climate change has once again come to the forefront of congressional discussions. As we saw previously, the increasingly politicized nature of the climate change debate from 1990-2005 in the United Congress has meant that most congressional hearings on the issue devolved into political grandstanding. Reviewing the Congressional Record from this period, one is more likely to learn about the climate science views of the novelist Michael Crichton than states’ and other nations’ experiences with GHG emissions regulation. In 2005, Congress’s attitude towards climate change began to change. In 2005, the Senate passed a resolution stating the time had come for Congress to enact limits on GHG emissions that would first cause them to slow, then stop, and finally reverse. The vote was 55 to 43. The 110th Congress (2007) has introduced 125 different climate change related bills, resolutions, and amend- ments. This compared to the six major environmental laws enacted in the preceding 12 years. The proposed legislative activity includes calls for US participation in international climate change negotiations, the establishment of cap-and-trade systems, and funding for climate science and climate-friendly technologies. Congress is currently considering seven bills proposing alternative cap and trade systems. The proposed legislation all plan for cuts in US GHG emissions, though they all differ in degree to which emissions will be cut. The most aggressive of the seven is Sanders-Boxer-Waxman bill, which proposes an 80% reduction below 1990 levels by 2050.21 Despite the recent congressional activity, the debates about how best to solve the global warming crisis are far from over. Some conservatives claim that mandatory GHG emission limits, as required by Kyoto, are the worst way to tackle the global warming crisis, saying they would cost too much and unnecessarily risk jobs and future economic development. They often cite the works of Bjørn Lomborg, arguing that the money would be better spent on other alternatives – technological solutions, for example. On the left, there are those, such as Michael Shellenberger and Ted Nordhaus, who claim that only calling for limits on emissions will not inspire the technological advances necessary for successfully combating global warming. There are also questions about the likelihood of overcoming internal congressional turf battles over climate change and the current state of legislative and executive branch relations. Climate change is one of those issues that cross a number of congressional com- mittees within both the House of Representatives and the Senate. This is problematic as 20 Barry Rabe, Can Congress Govern (New York: Robert F. Wagner Graduate School of Public Service, New York University, April 2007). 21 Economy-wide Cap-and-Trade Proposals in the 110th Congress. (Washington, DC: Pew Center on Global Climate Change, September 2007). 32
  • 32. committees often compete with one another for jurisdiction and influence. A committee chairman can call hearings and delay action on proposed bills and amendments. For ex- ample in the Senate alone, the following committees can claim some form of jurisdiction over the issue of climate change: Energy and Natural Resources; Commerce, Science and Transportation; Agriculture, Nutrition, and Forestry; Environment and Public Works; and Appropriations. Each committee has several subcommittees, further complicating quick action on climate change. The success of any proposed legislation will also depend upon legislative and execu- tive branch relations. Currently, the Democrats control both houses, although their con- trol is weakest in the Senate (51-49). Any legislation limiting GHG emissions, therefore, must attract the support of the president and congressional Democrats. The Democrats’ slim Senate majority make it unlikely that Congress can overcome a presidential veto. According to recent statements by the US Director of the National Renewable Energy Lab of the Department of Energy, it appears as if President Bush may be open to some form of mandatory national GHG emissions limits in the future. two possible Future scenarios for us participation in Frameworks for Climate Change towards 2012 As we have seen, climate change is a highly polarizing and contentious issue in the United States. The following is a presentation of two future scenario projections of US participa- tion, or lack thereof, in future international framework agreements on climate change. The two future scenarios are: the united states signs and ratifies the successor treaty to Kyoto. the united states develops a voluntary GhG emissions’ reduction agreement with China, india, and australia regarding climate change – Kyoto expires. chIna and GhG emIssIons: - China is the world’s largest consumer of coal. Coal has twice the amount of carbon per unit of energy than natural gas, and 20% more than petroleum. - China relies on coal for over 80% of its electricity and two-thirds of its total energy. - there are more coal-fired power plants in China than there are in the United States, United Kingdom, and India combined. - Its coal fleet is expected to double by 2030. - It will be difficult to rein in its GHG emissions as industrial energy demands consumes 70% of China’s energy consumption. - China’s industrial base supplies 35% of the world’s steel and 28% of its aluminium. 33
  • 33. i. the us signs and ratifies a successor treaty to Kyoto. It is November 1, 2012, and President Hillary Clinton is running for re-election. After a long arduous series of international and congressional negotiations, the Copenhagen Protocol is set to take effect, replacing the controversial Kyoto Protocol. This is one of her major accomplishments as president. The Copenhagen Protocol (signed in 2009) includes not only Annex I (industrialized) countries, but, most importantly, includes the major industrializing countries as well. This hurdle, which was a major sticking point for congressional leaders during the negotia- tion of the Kyoto Protocol 12 years earlier, was only overcome following the Democrats’ victory in the 2008 presidential and congressional elections. The Democrats gained an additional four seats in the Senate, bringing their majority to 55-45. The Democrats’ vic- tory was interpreted domestically and internationally as mandate for US participation in international global climate change protocols. This change in US attitudes towards climate change was essential in breaking the deadlock in the negotiations. Sensing that the window of opportunity for successfully negotiating a successor treaty before the Kyoto Protocol expired was closing, President Clinton called on the newly elected 111th Congress to pass the Combating Global Warming Act of 2009 as one of its first acts of business. Supported by Vice-President Barack Obama, “First Gentleman” Bill Clinton, Nobel Peace Prize laureate and former Vice-President Al Gore, and California Governor Arnold Schwarzenegger, she was able to overcome congres- sional opposition, including the Senate’s limited-government and climate-change skeptics’ attempts to filibuster to this act. This legislation, modeled on California’s landmark climate change legislation, enacted a mandatory cap-and-trade system that called for emission reductions to 60% below 1990 levels by 2050. With Governor Schwarzenegger and former Vice-President Gore looking on, President Clinton signed the Combating Global Warming Act of 2009 into law. This law, although not a ratification of the Kyoto treaty, was designed to be compatible with the Kyoto Protocol system. Although Kyoto Protocol countries could not buy US GHG credits, American companies could buy theirs to meet compliance requirements.22 The Chinese and Indian delegations, who previously refused to give up the exemption status they enjoyed under Kyoto without a demonstration of US intent, likewise gave up their wait-and-see approach.23 Getting China and India to give up their exemption under Kyoto and accept a staged application of absolute “Kyoto-like” targets, did not come easily. It was, however, es- sential as developing countries are expected to surpass developed ones as the world’s biggest emitters of GHG before 2030.24 China, which has been building one pulverized coal-burning power plant a week since in the mid-1990s and two a week since 2006, demanded dramatic expansions to bilateral and multilateral efforts to develop and expand 22 This is possible under the Kyoto Protocol. For more information, please see: Linking US and International Climate Change Strategies (Washington, DC: Pew Center on Climate Change, 2002). 23 Jeffrey Logan, et al. ”For China, the Shift to Climate-Friendly Energy Depends on International Collabora- tion” Climate Change Science and Policy (2007). 24 Wilbur Perlot, Post-Kyoto and the position of the European Union (Amsterdam: Cliengendael international energy programme, 2005) 34
  • 34. its use of the latest green-technologies. They demanded more technology transfers and joint venture-arrangements between Chinese and US and European firms. These projects expanded greatly on upon such current arrangements as US-China FutureGen “clean coal” project that includes a collaboration of 12 energy companies and the China-EU Partner- ship currently led by the UK. These projects are seen as essential to increasing developing countries’ energy intensity, which allows them to decouple the linkage between economic development and increases in GHG emissions. India made similar demands as a price for their participation, and negotiators from Europe and the United States agreed. As part of the deal struck, China also agreed not to further develop coal as a transportation fuel through coal liquefaction until it could successfully be decarbonized. With these agree- ments in place, the Copenhagen Protocol was signed on 11 December 2009 – the last day of the UNFCCC and the fifth meeting of the parties to the Kyoto Protocol, which took place in Copenhagen, Denmark. With a 67-33 vote, the US Senate ratified the treaty in 2010. With that vote, the Senate has overcome international skepticism regarding the United States’s ability to not only sign, but also ratify a climate change treaty. This is a proud moment for both President Hillary Clinton, former President Bill Clinton and former Vice-President Gore, as they have finally been able to overcome one of their significant political defeats from the 1990s. ii. the united states enters into a voluntary agreement with China, india and australia – Kyoto expires It is November 1, 2012. Kyoto is set to expire at the end of December, and its expiration is mourned in Europe and Japan. In the United States, its passing is also mourned by environmentalists and members of the Democratic Party. Much to the Democrats dismay, Fred Thompson and the Republican Party were able to separate themselves from President George W. Bush’s poor popularity ratings. He was elected president in 2008, and although the Democrats maintain control of both houses of Congress, the Republicans were able to re- gain some of the seats they lost in the House in the 2006 election. Despite former Vice-Pres- ident and Nobel Peace Prize winner Albert Gore’s best efforts to raise Americans’ concerns over the environment and climate change, American voters were not swayed by his argu- ments. Climate change is too distant a threat to them. Republicans successfully persuaded the majority of voters that that the global war on terrorism, education, the economy, and illegal immigration are more important and immediate concerns. Despite the population’s concerns over the wars in Iraq and Afghanistan, the Democratic candidates were still unable to shake their reputation as being weak on national security and terrorism. Despite the Republican victory in 2008, President Fred Thompson – a noted climate change skeptic and an advocate for a limited government – recognizes that Americans still want some action to be taken in regards to global warming and climate change. Instead of mandatory limits like those that are called for in the Kyoto Protocol, he believes in voluntary and technical solutions to reduce GHG emissions and to limit climate change. Building on President Bush’s climate change policies, President Thompson calls for increased efforts to improve the United States’ energy intensity and decrease its reli- ance on foreign energy sources. Congressional Democrats realize that they do not have 35
  • 35. the necessary two-thirds majority required to overcome a presidential veto. They decide to reach a compromise that will at least increase funding towards research in improved climate-friendly technologies and alternative fuels. As a result, President Thompson is able to push legislation through the Congress that increases US funding for research into alternative transportation fuels, especially ethanol. Thompson’s victory is widely perceived as a sign to the international community that the United States is unwilling to agree to mandatory GHG emission limits. As a result, China and India see little reason to take on new mandatory GHG emission limits. In heated discussions throughout 2009 and which culminated at the Copenhagen Fifth Meet- ing of Principals in November – December of that year, China and India refused to even accept a staged application of mandatory limits, citing the US apparent unwillingness to do the same. At the same time that he was able to secure victory for his domestic climate change policies, President Thompson calls for the reinvigoration of the Asia Pacific Partner- ship on Clean Development and Climate (commonly referred to as the AP6). Officially launched in January 2006, the AP6 brings together Australia, China, India, Japan, the Republic of Korea, and the United States. The AP6 focuses on fostering clean energy tech- nology cooperation. Within this ad hoc organization, President Thompson was able to secure agreement for the establishment of GHG emission reduction targets, which allow each country choose how best to meet them (for example, through mandatory cuts or in- vestments in technology). He then announces that the AP6 member countries will invest a total of USD 10 billion over the next three years towards climate-friendly technologies. Without China and the United States – the world’s two largest emitters of GHG – oth- er Kyoto countries, most notably Japan, are unwilling to take on new emission reduction requirements. Negotiations are deadlocked, and there is no chance that it can be broken before US presidential elections are decided on November 6, 2012. As a result, the Kyoto Protocol will expire without a successor agreement. The efforts to create an expansion of a global mandatory emissions reduction regime are thrown into disarray. Depending on the outcome of the 2012 election, which pits Thompson against a Democratic challenger, a new mandatory regime could not enter into effect before 2015 at the earliest. 36
  • 36. #5: what’s up for the future? The consequences of climate change and the impact of the climate change debate are inherently uncertain. This uncertainty, combined with the long-term aspects of climate change, makes this an area where most organizations must consider carefully if, how and when to act. The climate debate has moved considerably during the last two years. From a debate based on interpretation of basic scientific facts, combined with a debate on actions and consequences in some parts of the world. Today, we have a debate almost entirely occu- pied with the consequences: - Who should act? - How fast should we act? - Do we act inside one global frame or many regional/national frames? - Will the actions be visible in people’s daily life (changing habits, values etc) or will they be invisible (system changes)? The change in the debate is perhaps most striking when looking at the major oil compa- nies throughout the world. A cursory glance at the website of state-owned Saudi Aramco (the biggest oil company in the world) still shows a stunning silence when it comes to climate change. But the story is different at the websites of the three major private-sector companies. Exxon Mobil (by far the largest private-sector oil company)just about recognizes the environmental challenges, while Shell and BP write at length and in depth about the link between energy companies and the climate. Which strategy is correct? And can we speak of one right strategy? Doesn’t it depend on the characteristics of the market? In the oil industry, for example, is the company mostly “upstream” or does it have downstream, consumer market interests, too? The oil industry example shows that the consequences of climate change are being felt even today. But the main issue seems to be when and how to act. For reference, please see the following web sites: 37
  • 37. http://www.saudiaramco.com/irj/portal/anonymous http://www.exxonmobil.com/corporate/ http://www.bp.com/home.do?categoryId=1 http://www.shell.com/ A final example from the oil sector emphasizes that the questions are now focused on the when and how. A good indication of the change in the global debate on climate change can be seen in the position of Exxon Mobil, which until 2007 had been quite skeptical about the greenhouse effect. But this year, we have seen the CEO of Exxon Mobil stating: ”We know our climate is changing, the average temperature of the Earth is rising, and greenhouse-gas emissions are increasing” Rex Tillerson, CEO, Exxon Mobil, Feb. It was also in 2007 that Wal-Mart famously made the cover of Fortune under the headline “The Green Machine.”1 long term consequences – but for whom? In the long term, several issues will decide the consequences on different parts of society. It should be stressed that this chapter of the report looks at the consequences of mitigat- ing the GHG emissions. For companies today, it will also be important to begin thinking of the consequences of climate changes from the greenhouse effect: the opening of the Northwest Passage from Asia to Europe, rising sea levels, the shortening of winter sport seasons, etc.2 strong or weak sustainability One of the major uncertainties is the aggressiveness with which we will tackle the climate change. One example is taken from a letter from Canadian business leaders, which stated: “Our organizations accept that a strong response is required to the strengthening evidence in the scientific assessments of the Intergovernmental Panel on Climate Change (IPCC). We accept the IPCC consensus that climate change raises the risk of severe conse- quences for human health and security and the environment.” -[PDF] which is signed by3: 1 http://money.cnn.com/magazines/fortune/fortune_archive/2006/08/07/8382593/ 2 The author of this chapter lives in Denmark, a low-lying country. The author, in a conversation with the neighbors this year discovered that “we live 32 meters abovw sea level”, which was kind of reassuring ;) 3 Travis Engen, President & CEO, Alcan Inc. Bob Elton, President & CEO, BC Hydro Laurent Beaudoin, Chairman of the Board and Chief Executive Officer, Bombardier Inc. Russell Horner, President & CEO, Catalyst Paper Corporation John Murray, President, CH2MHILL Canada Ltd. Alban D’Amours, President & CEO, Desjardins Group George Cooke, President & CEO, The Dominion of Canada General Insurance Company Doug Muzyka, President & CEO, DuPont Canada Derek Pannell, President & CEO, Falconbridge Limited Annette Verschuren, President, The Home Depot Canada David Wilmot, Chair, Institute for Catastrophic Loss Reduction John R. Wells, President & CEO, Interface Americas Brian Foody, President & CEO, Iogen Corporation Jack Cogen, President & CEO, Natsource Asset Management 38
  • 38. The question seems to be: What is a strong response? In the environmental debate one often sees references to the term strong and weak sustainability4. These terms might be useful when discussing the consequences of cli- mate change. Weak sustainability is a future where sustainable development means that natural stocks (the Earth’s ability to cope with GHGs) can be substituted by manmade stocks (gains in knowledge - R&D). Or to put it bluntly: We can pollute today, as long as we make sure we invest in research and development that will solve the problem in the longer run. Strong sustainability can be interpreted as saying there is no such substitution be- tween knowledge and nature. Strong sustainability will advocate dramatic cuts in GHGs right here and now. And furthermore will tend to focus on major changes in markets, behaviors, organizations and society in order to achieve this goal. bottom up solutions or not The second issue worth considering is whether the public will act voluntarily in changing habits, consumption patterns, transportation use, geographical location, etc. This question is very important for companies and the way they must approach cli- mate issues. Do companies act together with consumers and staff, because consumers and staff demand carbon labeling, no air miles, zero-emission products etc. Or do companies act because of command and control from government organizations and price signals (i.e. Increasing prices on carbon emissions in the form of taxes or tradable carbon credits) In the following table, the differences in opinion between the populations of a number of major countries is quite clear. André Desmarais, President & Co-CEO, Power Corporation Clive Mather, President & CEO, Shell Canada Frank Dottori, President & CEO, Tembec Inc. Gregg Hanson, President & CEO, The Wawanesa Mutual Insurance Company 4 Sustainability comes in many forms. The most accepted seems to be from the Brundtland report: “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” 39
  • 39. GLobaL opInIons on cLImaTe chanGe. % CoNFIDeNCe CoMMItMeNt optIMISM the people and organi- I am personally making I believe we will stop zations who should be a significant effort to climate change doing something about help reduce climate climate change are change through how I doing what is needed live my life today France 7 30 5 UK 5 19 6 Germany 6 25 11 USA 13 23 18 Mexico 14 43 24 brazil 14 47 26 India 19 47 45 China 46 44 45 Hong Kong 38 37 30 Source: HSBC Climate Confidence Index 2007. HSBC. www.hsbc.com/committochange The European countries can be described as skeptical pessimists. The population believes that we are not doing enough and that organizations and governments should be doing even more. On a personal level, 20-30% feel they are trying to reduce their own carbon footprint. USA seems to be like Europe but with a more optimistic streak. Mexico, India and Brazil are labeled the Committed Concerned countries. They take a great interest in climate change, they show high personal commitment, have some faith in the overall efforts, but would still like to see organizations and governments do even more. China and Hong Kong seem to stick out as the only Committed and Confident coun- tries. Climate change is high on the list of priorities, they have high personal commitment, believe that we can succeed in combating climate change and they believe that the efforts of today are what is needed in the long run. This position seems somewhat at odds with the positions taken by the Chinese government when it comes to global commitments. And the personal commitment from Chinese consumers could have something to do with the absolute (and relatively low) consumption levels of Chinese consumers rather than an actual commitment to reduce the carbon footprints in the households. For global companies this is a very scattered picture. It seems as if climate change is a subject that divides people. This could be an argument for implementing local/regional climate strategies and communication efforts. the post-green generation According to the HSBC survey, there seems to be a global trend saying that the green- house effect is truly a long-term trend, with small consequences in the near term but great 40
  • 40. potential consequences in the future. 72% of the respondents agree that climate change will affect their children, if not themselves. One might think that the logical consequence would be for youth to be the most con- cerned segment. But this is only true for USA. There seems to be a vocal minority, labeled “green rejectionists”, which, according to the HSBC survey, is different from the green fatigue syndrome. Green fatigue is seen in places like Europe where the public has discussed the environmental issues for genera- tions. The fatigue sets in when a certain topic has been on the agenda for “too long” with- out any serious consequences for peoples lives. Green rejectionists seem to be people who have never recognized the climate change issue. One major European consequence could be that the greenhouse effect debate will esca- late in the coming years. As we continue to debate the climate changes, talk about global agreements, and as consumers see more and more companies focusing on climate issues, a backlash could set in. It might mean that companies that are focusing on a proactive carbon strategy and are expecting the consumers and co-workers to increase their loyalty, towards the company might be in for a very negative surprise. This could mean that corporate climate change policies might become commodified: (of little interest to the outside world). Thus, communication and branding efforts related to climate issues might be the wrong strategy. One sector that might be hit by this – temporary? - backlash is the global retail in- dustry. In 2007, Marks & Spencer, Wal-Mart and Tesco have taken major initiatives. The Tesco initiative is, among other things, based on a comprehensive carbon-labeling project, which includes all products sold at Tesco. Projects like these might experience some prob- lems, if we end up in a situation with carbon fatigue, rejection and backlash. the two major issues seem to be: Strong sustainability or weak sustainability And bottom-up solutions and top-down solutions or top-down solutions The combination of these two issues give four different scenarios with different consequences. 1. strong sustainability and top-down solutions Where there is a strong focus on sustainability and climate change and focus on top down (or systems) solutions the key word would be: action. In this scenario, the general feeling is that it is two minutes to midnight and the time for talking, bickering and green-wash- ing is over. We face a future that demands action on the main systems responsible for car- bon emissions – the energy system, the transportation system, the consumption system. 41
  • 41. International organizations International organizations – in the shape of UN or other groups of the major carbon emit- ting countries – agree on major cuts in CO2 emissions. The agreements might have a com- mand-and-control element, as well as market-based emission trading schemes and taxes. The basic outline, however, is that all must contribute to the cuts and there will be agreement on investing in common systems and standards in the energy and transportation sector. States Nation-states will focus on compliance with international agreements. The main focus will be on implementing international/global common solutions, but, due to the dramatic cuts needed to reach the goals, we will also see a variety of national and regional plans. The national plans will operate with a number of goals depending on the sector in focus. Investment programs for hybrid cars, hydrogen pumps, intelligent traffic systems, and carbon sequestration will be put in place. The number of regulations and commitments will rise, and society as such will be focusing on carbon emissions no matter the activity or sector. Companies Companies must focus on compliance and adjust to the new rules and regulations. It will not be important to communicate much about carbon strategies, since the government will be the main driver on greenhouse effect issues. Price incentives and cost concerns will be main drivers. Transportation costs will rise dramatically and global sourcing, air cargo, global tourism will undergo dramatic changes. Carbon-related problems would be added to all sectors. New houses should be carbon neutral, IPOs will include sections on future carbon commitments, insurance companies will charge higher prices, etc. Companies will experience a zeitgeist that is very much based on facts. The only thing that matters is carbon (and methane, as well as other GHGs). Communication strategies Compliance is all that matters. As everybody agrees on the importance of the issue – it is two minutes to midnight – it will be very difficult to build brand capital on the green- house effect and environmental issues altogether. If you are not in compliance you are not on the market. To brag about carbon footprints or labeling is like bragging about not breaking the law. Households People are extremely concerned about the greenhouse effect, as its impact is showing in everyday life. But at the same time, there is strong feeling that we should act together. This means that even though the level of concern is high, it is still a matter for governments and big companies to deal with. The problem for households is that the difference they can make on their own is too small to be measured, but if society installs systems that take care of the GHG emissions, we can make a difference. People accept being forced to buy fuel- efficient cars etc., even though they would not have bought them in the first place. Carbon taxes, fuel taxes, rising environmental standards are accepted. 42
  • 42. 2. strong sustainability and bottom-up and top-down solutions This scenario is the same as the previous scenario: Strong sustainability and systems solu- tions, but with the added proactiveness of households. One could argue that people were somewhat hypocritical in the first scenario. In this scenario, however, they not only act when forced by regulations and taxes, they also act on their own. International organizations International organizations are forced by the public to make global deals. There is a race to the top: which organizations are most sustainable? G8 meetings are renamed Green 88 meetings. EU, NAFTA, ASEAN, NATO, WTO, MERCOSUR, UN, and OPEC all have a sustainability focus. States Nation-states implement local action plans on top of international agreements. Suburbia is closing down in the US; France becomes the first nation where all electricity is carbon neutral; Australia makes the world’s largest solar power plant; public transportation becomes the only permitted transport in the German state of Bremen; Statoil becomes the first oil company with a positive net influence on GHG emissions (Statoil is sequestrating more CO2 than they are producing). Companies Companies take part in the race to the top. Globalization is taking a back seat and local sourcing and CO2 neutral strategies are implemented and communicated to the rest of the world (and especially to the consumers). Transportation is reduced dramatically and e-solutions are implemented, wherever possible. Triple bottom lines are becoming more important and the net environmental effect must be reported and communicated. Communication strategies The main focus in communication strategies is transparency. Consumers are demanding that every product, service etc., is carbon labeled. What is the exact CO2 equivalent of this holiday, this apple, and this investment fund? Communication to consumers should be based on facts and numbers. Color codes related to energy use or air miles are not enough. This gives rise to many discussions on definitions. Where does the environmental consequence of a company’s action end? What should be calculated and how? Furthermore, the communication effort should focus on the here and now. Commit- ment to actions in the future is seen as green-washing and is unacceptable. Households Ordinary citizens take charge. They are increasingly concerned with the environmental consequences of their consumption and lifestyle choices. In everyday life, environmentally-acceptable consumption patterns should be easy and convenient. Malls, hypermarkets and big retailers are still accepted, as long as they can document they are reducing their carbon footprints. 43
  • 43. Households have a very professional attitude towards environmental issues. The greenhouse effect is too important for us to be guided by emotions. We need to reduce our carbon footprints, and those who are good at it, win. And we see attitudes change. From SUVs to fuel cells and hydrogen. From cruises around the globe to rediscovering the local tourist attractions. From global luxury brands, mass class, and conspicuous consumption to a “less is more” attitude. From Live Earth to the first U2 World Tour done entirely in cyberspace 3. weak sustainability and top-down solutions In this scenario, we have a weak sustainability paradigm combined with top down solu- tions. This is a scenario where the greenhouse effect is competing with other important political issues, and where most consumers are uninterested in changing their habits. The main focus is investing more R&D to provide the world with cost-effective envi- ronmental solutions that lower GHG emissions. International organizations The commitment to reduce GHG emissions today is quite small. The political treaties are not reflected in actual actions. Kyoto and Kyoto 2 are like the Lisbon Goals or the Millen- nium Development Goals: they make us feel good, they make the nightmares disappear, but they don’t make a difference. The only solutions that seems to have a real impact are the technological programs that give us technologies that let us make a cost-effective transition from a carbon-based economy. Greenhouse gases (and the burning of fossil fuels) are like stones in the stone age: The stone age did not disappear due to the lack of stone, but rather due to the invention of new effective technologies. Investments in nuclear energy, fusion power, solar power, efficient engines, etc., are prioritized. States Even though states signs pacts to reduce GHG emission, they are do not comply. This does not stop them from signing new treaties. But climate policy is also a question of competi- tiveness. This means that different regions in the world will focus on different solutions. R&D is at the core of the programs. Companies For most companies, climate change is a long-term risk with few near-term consequences. Some companies may feel that they can increase their competitiveness by focusing on environmental issues. But it is a highly heterogeneous picture. For a few sectors, it will be extremely important to influence the global and local R&D programs. The energy and transportation sectors are obvious candidates. But for most companies, it is not strategically important to focus on climate change. When consumers shop, or when suppliers sell to companies, the greenhouse effect is way down the list of customer concerns. 44
  • 44. Communication strategies Some companies might find a niche strategy in communicating their carbon footprint to the public. But, for the global middle class, this is not a top priority. Households Consumers are in a waiting position. When asked, they do care about the environment, and when asked, they do try to be environmentally responsible. But the responsibility is based on systems solutions: They would like to buy an even more fuel-efficient car; they would like to know about carbon footprints, etc. But they still buy flowers from Africa, enjoy tomatoes all year, and take two or three vacations a year. 4. weak sustainability and bottom-up and top-down solutions In a world of weak sustainability – i.e. the environment is only one among a number of important political issues – and moderate interest from the public as well as politi- cians, we will see a world where climate change has to fight for its position on the social agenda. Other issues – terror, globalization, consumption, education - are equally or more important. Climate change needs to focus on communication and marketing in order to get noticed. International organizations International organizations are only committed to a certain extent to climate issues. Compliance is not a top priority, and there seems to be a greenhouse fatigue spreading. Artists and populist journalists manage, together with NGOs, to put climate change back on the agenda. But most of the time, climate change loses out out to problems right here, right now. States The difference between states when it comes to climate change is huge. Some states – mostly in Europe – put a high emphasis on climate change, and try different nation- branding exercises based on climate change. Other states commit to long-term goals, without needing to focus on compliance in the short run (10-20 years) Companies Most companies have triple bottom lines and other environmental and social tools at their disposal. They are mainly used as marketing tools. Some companies are very conscious about choosing a sustainability strategy, but it is mainly niche producers and rarely the big players. Lobbyism is working and many industries are exempt from changing their GHG emis- sions. And we find many local and regional exemptions, too. Communication strategies It you want to excite co-workers and consumers about environmental issues, you must focus on the emotional content. Most consumers care little about GHG emissions, and 45
  • 45. they perceive climate change as some vague concept that might affect us in the future. But until we reach the future: Let’s shop. Companies and NGOs focus on the furry animal and poor peasant strategy when try- ing to excite consumers about environmental and social issues. Drowning polar bears and crying children seem to work, so emotional campaigns based on this flourish. Households When asked “do you care about the environment?” most people answer “yes.” And when asked “do you want to contribute to creating a more sustainable future?”, they answer “yes.” But consumers have many interests: They would like to go skiing before the snow melts. They would like 2 or 3 cars per family, 2 or 3 vacations per year, luxury brands, big- ger houses, cabins in the mountains, etc. People care but they don’t act. 46
  • 46. #6: future losers The problem of climate change is like Pascal’s wager, who asked “Does God exist and should I believe in him?” Pascal concluded that it made sense to believe, if only to avoid the chance of eternity in Hell. If God does not exist, the worst consequence is time wasted praying. Statistics, however, show that female “believers” add a year to their life expectancy, which may justify some wasted time. Pascal’s argument was based on the principle of the safer bet given insufficient knowledge. Similarly, if we believe that climate change is happening, we must act now. If we don’t believe, we don’t have to act. The pragmatic solution is to compromise, that is, to act in a way that doesn’t upset the economic system, thus minimizing immediate losers. This is a utilitarian approach in the short term. However, in the long run, this can potentially cause more losers. It is essentially a battle between the physical world system and the economic system, between the people who focus on the consequences on the economy and those who consider the Earth system as their primary concern. Companies and, to a certain degree, politicians have a responsibility to shareholders and the electoral base. They focus on the short to medium-term, while scientists have a responsibility to the people who come after us. When the futurist Herman Kahn wrote the book The year 2000 in 1967, he wrote that what is needed is a respect for:“ those who in the future may experience their problems differently and would not want to find that we have already-unnecessarily and unwisely- foreclosed their choices and altered their natural and social world irretrievably.” (The year 2000, p. 413) If we believe climate change is happening, then Kyoto simply isn’t a solution to our problem. We are in need of a much more drastic approach. As Bjørn Lomborg, the famous climate skeptic, said two years ago at a conference held at Copenhagen Institute for Futures Studies: the consequences of Kyoto are really about whether a guy living in Bangladesh will see his cottage flooded in 2100 or a week later in 2100. If we believe climate change is happening, the approach of reducing CO2 by less than 10% is not nearly enough. What we need to look at is a reduction closer to 80%. Such a reduction will affect mobility and our entire lifestyle. So, when we talk of losers, we simply cannot escape looking at scenarios. In one scenario, we could put the reduction at less than15% and, in another, above well above 70% These two scenarios are vastly differ- ent. In the following, we will call them scenario (M)oderate and (H)igh reduction. 47
  • 47. This chapter mainly looks at the effects of a reduction of about 15%. Where we con- sider scenario H reductions, we say so. Any conflict has a loser. We do not always agree who the loser is and sometimes history shows us that the apparent winner was, in the great scheme of things, actually the loser. But we operate with winners and losers, if not as universal categories, then as functional categories to describe how we depict the world around us. The effect of climate change can be categorized in three domains of influence. We will show how the consequences of actions taken by actors might take effect in these domains on selected regions, sectors and companies the 3 general categories are: regulatory exposure: Government can act by regulation and taxation. reputation and litigation exposure: Consumers can show loyalty to brands or they can punish companies by refusing to purchase their products. new technological and business opportunities lost: Companies can act too slowly or too quickly, measured on a scale of innovativeness These tentative categorizations by no means cover all the aspects that could be consid- ered, but suffice as a framework for analysis. regulatory exposure One way in which consumers and business will feel the consequences of climate change is by being exposed to regulatory measures. Plans are afoot to regulate the market both on the national and international levels. The taxes and regulations will focus on a reduction of greenhouse gas emissions. The European Union Emissions Trading Scheme (EU ETS) is such an example. reputation Corporate responsibility and ethics are two areas corporations take increasingly seriously. Since 2000, they have been part of IMD’s competitiveness index. In this period, we have seen increasing interest from the public in the values exhibited by corporations. Henry Ford once said the consumer could have any color car he wanted, as long as it was black. Today, this monopoly is long gone. Consumers can take their business elsewhere and they do. Bad publicity can shut down business. During the Mohammed cartoon crisis, Arla, a Danish/Swedish dairy manufacturer, lost almost all of its business in the Middle East overnight. new technological and business opportunities lost What we essentially are talking about is how people in all spheres of society react and adapt to change. When a paradigm shift occurs: who are the laggards and who are the in- novators? In adapting to climate change, as previously emphasized, we are talking about adaptation to a future that is probable-but-uncertain, involving some risk on the part of business managers who strategize about the future. It seems fairly certain that climate 48
  • 48. change is happening, but the actual effects, and how and when the regulatory measures that need to be made will take effect, are less certain. In this, as in many other things, we can paraphrase Alexander Pope who wrote “Be not the first by whom the new is tried, Nor yet the last to cast the old aside.” A too-conservative take on the future makes for a laggard’s attitude. On the other hand, a company that is too progressive might find itself catering to consumers-to-be, thus losing market share to less-aggressive competitors. 1. regulatory exposure The Case of Thailand Changes in climate policy will affect everyone, but some countries more than others. In the Asia-Pacific area, Thailand has become the fifth biggest tourist nation measured by tourist receipts, surpassing the rest of South Asia combined. Thailand’s international tourist receipts totaled US$ 10.1 billion in 2005, up from US$ 4.3 billion in 1990. The tourist industry is a big part of the Thai economy, and over the last 15 years, extensive modernization has taken place. What started as a backpacker’s paradise is now a haven for charter tourism. In 2006, 651,000 Scandinavians went to Thailand, among them an increasing number of families with children. This is possible in no small part to lower prices and increased charterization. The Thai- land that not long ago was known for sex tourism has cleaned up; today, it caters to families and boasts family-friendly resorts and atmosphere. Resorts and hotels are being built in anticipation of the glorious future that awaits Thailand. The future of Thailand may be, however, less bright than hoped. The obvious problem is, of course, that when the growth of disposable income levels off, tourism is one of the first industries to feel the pinch. Green taxes affect disposable income, and so will affect tourism and the Thai economy. According to EU legislation endorsed by the International Civil Aviation Organiza- tion (ICAO), greenhouse emissions from air transport might be incorporated into the EU emission trading schemes (EU ECT). This would mean that, by 2012, passengers would have to pay between $2.5 and $12.6 more per ticket on return flights within the EU. The alternative could be higher prices due to passenger or fuel tax. In February 2007, the air passenger duty levied at UK airports was doubled as a response to de- mands for environmental action. What would significantly harm Thailand wouldn’t be so much the increased taxes, but laws seeking to reduce passenger airplane speeds. None of us wants to spend more time in an airplane than absolutely necessary. But few of us realize that flight speed is correlated exponentially to the amount of carbon dioxide released into the atmosphere. When we double the speed, we quadruple wind resistance. The easiest way to reduce CO2 emissions when we fly is to reduce speed. A 30%-40% reduction would mean a substantial decrease in carbon dioxide emissions. Let’s consider the consequences for a country like Thailand in a high reduction sce- nario in which airspeed is affected. Europeans have recently begun buying condos in Thailand. This has generated income and business. Few Europeans, however, would buy condos in Thailand if it cost more and 49
  • 49. took longer to go there – so we would expect that part of the market to collapse. In recent years, more families with small children have traveled to Thailand. If flight time exceeds 16 hours, we are unlikely to see this traffic continue. The consequences for Thailand would be dire. Thailand is but one example. Any taxation or tampering with airspeed could have great consequences on the global economy. Which is why differentiated flights, or the possibility for airlines to pay for cheaper carbon reductions from other industries, are more likely in a moderate scenario. The reduction in airspeed is far from an optimal solution, but one that might be neces- sary in a high reduction scenario. The best solution would be to innovate, finding solu- tions that neither reduce airspeed or impose green taxes, thus not affecting the historically low-margin airline industry. One solution could be to develop planes better able to use the high altitude jet stream. Boeing is working on the prototype plane X-48, which uses a revolutionary, blended wing/body design. The plane is part of Project Clean Sky, which promises a 50% reduc- tion of carbon dioxide emissions and could be ready in 2022. But since the replacement of the airlines fleets will take 10-15 years longer, tax incentives to accelerate the replace- ment cycle time could be effectuated. 2. reputational-litigational exposure Consumer boycott: The case of Brent Spar and French Wine The term consumer power was first coined back in 1995, when Greenpeace suc- ceeded in stopping the dumping of the offshore installation Brent Spar. Initially, Shell refused to comply with Greenpeace’s protest because it had the British govern- ment behind it. A fight broke out between Greenpeace and Shell, and daily photos of Greenpeace activists being hosed down by water guns were shown in the media. In June, Shell began to tow Brent Spar away from the planned dumping site. The battle now shifted from the political arena to the consumers. The boycott began in Germany and soon spread northwards. In Germany alone, Shells fuel sales fell 50%. With the consumer boycott spreading, Shell was forced to give up the dumping. In 1998, the member countries of the North Atlantic OSPAR commission declared it illegal to dump rigs in the north Atlantic. The fight between David and Goliath had shown that Goliath could be forced to his knees. This newfound awareness of consumer power was not to go unused. The same year, consumers found themselves engaged in a new fight, this time against French wine. In Denmark, 50% of consumers boycotted French commodities, especially wine. Large retail- ers decided to go along and, in Japan, even the finance minister urged a boycott. For eight months, the Danish market was closed to French wine producers, causing a loss of FFr89 million. French wine has never recovered. The reason for this stalemate is found in classic diffusion theory and is called “trial ability.” If a consumer gets to try a new product, the chances are that he will buy it. This is why we often are given free samples of a product. What happened to French wines in Denmark was that, while the pre-1995 consumer con- 50
  • 50. sidered French wines to be the real thing, French wines lost their brand appear after 1995 to the fabulous, often cheaper wines around the world. Unlike the boycotts in the 1990s, today’s boycotts can be planned more quickly and effectively thanks to the internet and mobile phones. Movie clips of a rainforest being chopped down or pollution crippling a community can now be spread to a global audi- ence quickly with devastating effect for the multinational or countries concerned. In his book, The Civil Corporation, Simon Zadek show how one out of five global con- sumers have punished or rewarded companies for the environmental or social role they play. In the US, 50% of consumers have neglected to buy product that they didn’t think were ethical enough. In the future, companies that soil the environment will potentially suffer large conse- quences. We already see a change in media coverage. The media are interested in scandals and companies now supply the stories. Documentaries are being made and are shown Txu - Txu corporaTIon Stock Charts 1 year price - tXU 72,00 70,00 Reaction Acquisition 68,00 66,00 64,00 62,00 60,00 58,00 56,00 54,00 52,00 50,00 oct 9, 2007 2007 Apr 51
  • 51. worldwide in primetime. Documentaries like “Who killed the electric car” and “The Com- pany” are giving multinationals a really bad name. Companies such as Shell have been shown to destroy the land of the Ogoni people Nigeria. Shell has also been implicated by association in the massacre of the Ogoni in the 1990s and the execution of their leader, Ken Saro-Wira. In recent years, the reputations of multinationals such as Shell, Monsanto and many others have caught the interest of the public. When Shell was shown to be financing a corrupt regime and its military, the stories did little to contribute to its good name and reputation. In the future, the losers might well be those companies piling up a multitude of sins committed today. Its poor image forced Shell to invest heavily in changing the public’s perception of it. In 1998, Shell left the Global Climate Coalition, a group founded in 1989, in response to the creation of the IPCC, with the explicit purpose of opposing and influencing policies aimed at reducing greenhouse gas emissions. The group included several prominent mul- tinationals, including Exxon, Ford, Texaco, British Petroleum and GM. Shell left the GCC and joined the World Business Council for Sustainable Develop- ment. It has since invested in advertising to give itself a greener image. The shift in Shell’s position illustrates the necessity of corporate responsibility and exemplifies a trend, which will almost certainly grow much stronger. Most compa- nies tout their corporate responsibility policies, but we may soon see a similar trend among companies aiming to be carbon neutral. Companies like Ricoh and the global law firm Simmons & Simmons are already carbon-neutral. Timberland will be carbon- neutral in 2010, and Honda has created a new product package for new Honda owners: carbon-neutral driving. The pack offsets one ton of carbon dioxide through a mix of offset programs. Carbon-neutral flight is possible if you fly SAS or British Airways. A carbon-neutral flight between Copenhagen and Rome cost about $8 more. The money is invested in sustainable energy projects such as Climate Care’s projects in South Africa, where 50,000 energy efficient lamps were distributed via school groups as part of an environmental awareness campaign. Another way to offset carbon dioxide over time is to invest in companies such as Vestas, a Danish windmill maker. Greater focus on the environment would probably mean that pension funds would invest in companies that are environment-friendly, thus making investments in companies working within the alternative energy sector even more attractive. An example is the $350 billion Nor- wegian pension fund, which must consider environmental factors when investing. It recently sold its shares in a polluting mining company. When we purchase consumer product in the near future, the label may well read “Carbon Neutral!” Caught in the middle: It’s up to the consumer to punish companies that don’t adhere to the moral green code. That’s not an easy task, because the solution to any given problem can appear counter- intuitive. How can it be better for the environment to import sheep from New Zealand to Denmark than just raise the sheep in Denmark? The problem of being unable to determine the right answer intuitively can be a great nuisance and problem. Most of us will recognize these problems from the health debate. Now it’s healthy to eat eggs, now it’s not. We look for the truth to guide us in our choices, but, in an increasingly complex 52
  • 52. ToTaL us hybrId saLes, yearLy february saLes 25000 20000 15000 10000 5000 0 2004 2005 2006 2007 prius 07 neW-vehIcLe saLes and markeT share, by manufacTurer, % GM toyota 35 30 25 20 15 10 5 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 53
  • 53. world, the truth in one case can be different from the truth in another. One might very well find oneself at a dinner party, discussing the pro and cons of a product, arguing for one thing when the counterargument can be just as valid. For the consumer not to feel like a frustrated loser, standards are needed. Preferably one, not many. lawsuits The case of TXU vs. environmental groups. In April 2006, the American energy company TXU announced plans to build 11 coal-fired power plants. If they had been built, they would have emitted 78 million tons of CO2 a year, more than the combined emissions of 21 US states. But a coalition, the Texas Clean Air Cities Coalition, representing 37 cities, sued TXU. Using TV ads and an aggressive public campaign in which nearly 50,000 Environmen- tal Group members participated and a letter signed by 50 environmental groups was dis- tributed, TXU soon found itself cornered. The increasingly bad publicity sent shareholders running for cover, sending TXU shares down. As a result, two private equity firms, TPG and KKR could acquire the company, but only if they could attract the backing of the environmental groups. When the agreement was made, the road was paved for the $45 billion buyout — the largest in U.S. history. The backing of the environmental groups, however, was expensive. The following demands had to be met: - TPG and KKR had to agree to permanently withdraw the permit applications for 8 of the 11 plants. - Forego plans to build conventional coal plants in Pennsylvania, Virginia or any other state; - Reduce TXU’s carbon emissions to 1990 levels by 2020; - Endorse the platform of the U.S. Climate Action Partnership (USCAP) coalition including federal legislation for a mandatory cap-and-trade system for greenhouse gas emissions; - Turn TXU into a leader in tackling global warming; - Tie executive compensation at TXU to climate stewardship; - Double the company’s spending on energy efficiency; and - Establish a Sustainable Energy Advisory Committee to help the company implement a business model that includes leadership on tackling global warming. Susman Godfrey, an attorney representing the Texas Clean Air Cities Coalition, has stated that he thinks this is just one of the first lawsuits of many. He compares the lawsuits against oil, car and power plants with the lawsuits that made big tobacco pay after a long struggle. Others do not share his conviction that a causal relationship can be found that would make such lawsuits possible, but, as Godfrey argues, it is not the first time that a verdict has been made on health issues, where a direct connection between damager and damagee hasn’t been established beyond a reasonable doubt. Thus big companies could be in for a surprise, as the TXU example illustrates. Bad publicity can do the trick. 54
  • 54. 3. new technological and business opportunities lost The case of SUV vs. Hybrid We have already seen casualties from the war against carbon dioxide. The fuel-thirsty sport-utility vehicle was a big seller in 2005, but now it seems the party is over. Sales have tumbled. Not only is it now expensive to own a SUV. It is no longer considered a cool car by many consumers. Back in 2000, however, burning gasoline was, as then-White House press secre- tary Ari Fleischer put it, “part of the blessed American way of life”. After 9/11, when the American way of life was actually attacked, no car like the Hummer could express American greatness. The Hummer is based on the Humvee military vehicle, and was made popular by Arnold Schwarzenegger in his pre-environment-friendly phase. The Hummer, like the rest of the SUVs, expresses power and safety. The bigger the car, the safer you are. Buy- ing a macho car like a Hummer was like parading up the street saying “yes to invading Iraq, no to environmentalists”. By driving a Hummer, you could imitate the troops in Iraq and stimulate the economy at home. In 2005, Hurricane Katrina drove gasoline pump prices above $3 a gallon, which hurt SUV sales and helped sales of smaller Japanese imports and “hybrids” such as the Toyota Prius, with its fourfold fuel-economy advantage over SUVs. SUVs, however, still have one advantage. While SUVs enjoy large federal tax breaks, the Prius does not. According to Congress, this gives American carmakers a fighting chance against Toyota especially, which produces better fuel economy and higher quality ratings than any American-made car. For many years, General Motors was the biggest company in the world, with a market share of 45% in 1980. For 78 years, it was the leading maker of cars driven in America. Today it is a shadow of its former self, and may be on its last legs. We have seen this battle – and the sales charts – before. In the 1990s, IBM, the GM of the computer indus- try, tried to fight off Dell, an upstart. If history repeats itself, GM is headed for a fall, and Toyota may soon be the leading maker of cars on American roads. It would be wrong to say that GM’s product mix, based heavily on pickups, trucks and SUVs, is the only problem. GM has also wrestled with healthcare costs for 1.1 million employees, adding $1,300 to the price per car. In the book Blue Ocean Strategy, Mauborgne and Kim talk of the small car as a blue ocean that that American carmakers didn’t see. As a result, Toyota and oth- ers bypassed them. In their defense, US carmakers probably failed to see the threat because, when it comes to cars in America, big is beautiful. In the early 1950s, when more and more cars hit American highways, carmakers did in fact begin to consider the obvious: why not smaller cars? Chrysler led the way and suffered a historic loss of 50% in sales. Not until 1955, when it made all its cars longer and pictured them in double-page ads, did Chrysler regain its market share. So the American car industry had actually ventured out in the Blue Ocean, but got wet. Consequently, small cars were pigeonholed as a bad strategy. 55
  • 55. So is the American car industry the loser? Not likely in the short to medium terms. New markets are opening that show great promise. China, however, has applied a 20% tax on large cars to reduce pollution. China’s pollution problems will probably result in more regulations on the car industry. Sixteen of the world’s most polluted cities are in China. From 1995 to 2010, the cost of air pollution alone is expected to rise from 5% to 13% of GDP, which is why China cannot ignore the problem. Small, low-emission cars are the future. This is why it might seem unfair that the biggest loser in the short-run probably will be European carmakers – unfair because the European auto industry has become a scapegoat when, in fact, it emits only 1.5% of global CO2 emissions while the average American car emits almost twice CO2 as much as the European car. In 1996, the European Automobile Manufacturer Association (ACEA) com- mitted to an emissions goal of 140g/km by 2008. Projections show that they will miss the goal by 14% and will suffer the consequences as a result. A second loser in the current situation could be the electric car. In the 1990s, the American car industry was forced, according California’s zero emission mandate (ZEM), to produce electric cars. The electric car EV1 was the result. ZEM’s goal was that 10% of cars on California roads should be low or zero-emission cars by 2003. In 2001, GM sued California to overturn the zero emission vehicle program, with the result that the California Air Resources Board (CARB) dropped the ZEM. Subsequently, all EV1s were pulled from the market amidst massive protest from the “owners”. The widespread belief at the time was that carmakers simply did not want to create a product that would cannibalize their core business. But, GM argued that consumer demand was insufficient. The electric car has been under development a long time, and is the best alternative if we want to address automobile pollution now. Critics claim that the focus on hydro- gen, which will not be a viable alternative for at least 20 years, is just a way of support- ing gasoline-fueled cars. Electric cars such as the Reva reach speeds of 80km/hour, have a range of 80km between recharges, and cost only $1-2 to “tank up.” Studies show that 90% of urban dwellers drive less than 40km a day – even in an age when an increas- ing number of families have two cars. So, the Reva is perfect as a second car – and, in Norway, it’s a winner thanks to free parking, free public recharging and zero taxes. In Denmark, it’s a loser. Denmark is considering lifting its very high automobile registra- tion fees on hydrogen-fueled cars. While commendable, hydrogen is not a realistic alter- native in the short or medium terms. Incentives such as the Norwegian program could help the electric car and the environment now. 56
  • 56. #7: future winners At a first glance, everybody seems to lose from climate change. However, where there are losers, there are almost always winners. As stated in the previous chapter, sometimes the initial losers become the real winners in the end. For example, post-war Germany was a bombed-out shell. The loser, however, quickly rebuilt its industry and fortunes – and became so competitive that it brought the industries of Britain, the winner, to their knees. Why? German industry had no choice but to invest in new technology and machinery, while many British companies were content to keep using old ones. The same logic can be applied to climate change. We are all losers by definition1. The countries and companies, however, that are most able to adapt to the new situation and act proactively will be tomorrow’s climate change winners. There are signs that this is already happening. Take, for example, Toyota’s rise among carmakers and the parallel demise of the U.S. car industry, where increasing consumer demand for more fuel-efficient cars is a part of the explanation. Another example is Denmark’s longstand- ing commitment on renewable energy, which has generated a multibillion-dollar wind power industry in the country. Due to rising economic and social consequences of climate change, it can be expected that political incentives to implement tougher policies on greenhouse gas emissions will continue to increase in the future. As of today, political discussions and negotiations on a global level are still more about who should reduce emissions than when and how much. This will probably change as more and more countries and regions become affected. The only way to effectively battle climate change is to make substantial cuts in the emissions of greenhouse gases. If this is to be done, tough measures to increase the price of carbon in relation to renewable energy must be implemented on a worldwide scale. In general, this gives early adapters an advantage over slower ones. It will force companies to start focusing on opportunities in a climate-changed world, rather than being hit by dramatic changes later on. Additionally, the returns on clean-technology investments and early investments in ‘green branding’ will likely increase over time. We can expect short-term winners to be companies that already offer low-carbon products and services, and successfully manage to integrate climate change in their brand- ing strategy and CSR policy. In the long term, however, winners are more likely to be 1 Intergovernmental Panel on Climate Change, IPCC WGII Fourth Assessment Report: Climate Change 2007: Climate Change Impacts, Adaptation, And Vulnerability – Summary for Policy Makers, April 2007. 57
  • 57. companies that can afford substantial investments in new technologies and solutions in accordance with the demands of a climate-changed world. Below, seven winning categories will be presented and discussed in brief: - The fittest - R&D intensive firms - High ground and pleasant climate - Healthcare and pharmaceuticals - Clean-technology - The energy sector - Local producers the fittest The growing consensus among scientists and the growing concerns of voters and interest groups have already persuaded many governments to act on climate change. An emission- trading scheme in accordance with the Kyoto Protocol has been introduced in the EU. The Scandinavian countries have also all introduced a carbon tax. Even China has introduced measures to curb emissions, for example by lowering VAT export rebates and introducing a new export tax to discourage exports of energy-intensive and environmentally-unfriend- ly products. This trend of increasing use of government rules and regulations to combat climate change can be expected to continue long into the future. Additionally, the debate about climate change makes consumers more aware of how their consumption affects global warming. Together, they create a growing need for companies to adapt their products and production methods in accordance. At the same time, many companies are already fighting to cope with an accelerating pace of change due to globalization and the expand- ing flow of new knowledge and new inventions. So we can expect companies and sectors that are already lagging behind or are under great financial pressure to be hit hardest. Examples include carmakers and the aviation industry. The winners, on contrary, will likely be those who already enjoy strong financial margins, and are used to seeing change as an opportunity. A striking example is the energy industry. Developing countries generally have greater constraints in adapting to change than developed ones2 due to differences in resources and capacity. Because of this, it is also harder and relatively more costly for developing countries to implement effective mea- sures to limit emissions of greenhouse gases. As a result, we can expect the speed and scope of government rules and regulations will be slower there. That might give some industries in the developing world an initial advantage over competitors in richer parts of the world. But in the long run, it might harm their competi- tiveness, if they meet tough carbon decreasing policies later. If this happens, look for a positive effect on the competitiveness of some industries in the developed world. 2 Intergovernmental Panel on Climate Change, IPCC WGII Fourth Assessment Report: Climate Change 2007: Climate Change Impacts, Adaptation, And Vulnerability – Summary for Policy Makers, April 2007, p9. 58
  • 58. r&d-intensive firms As with any major change, global warming could bring huge opportunities for companies that can effectively respond with new innovations. This could involve the introduction of new products, packaging, new routes to market, or the development and use of new technology. Such things would tend to benefit innovative and R&D-intensive firms. This seems especially important in industries with low profit margins and a high profile on green house gas emissions, such as the auto and aviation industries. Like many other industries, the auto industry will probably be changed by climate change. About 11% of greenhouse gases come from cars3. This is rather modest compared to emissions produced by power generation, manufacturing and farming. These, however, present a rather diffuse image to the public and press, while cars are highly visible. The car industry is already a target for both consumers and politicians in the fight against global warming. The result is expected to be tougher political regulations and an increasing demand for low-carbon cars. This will benefit companies involved with alternative propulsion technologies in the long term, including advanced hybrid systems, fuel cells and alternative fuels. But because of low- profit margins, few car makers can develop and implement such technologies on their own. high ground and pleasant climate For now, the effects of climate change are unlikely to be severe enough to significantly af- fect where we live and move. Growing public knowledge, the result of the current debate and media coverage, could soon start affecting the real estate and tourism sectors. Residential and commercial areas in low-lying areas close to rivers and coasts will become less attractive and more expensive to insure if it is widely believed they will be prone to flooding or devastating storms in the future. This could change investment and settlement patterns, to the benefit of higher elevations and areas less affected by extreme weather. We see this in New Orleans, for example, where real estate prices in previously less-desirable quarters have risen sharply since hurricane Katrina4. Besides high ground, high latitudes may soon grow more valuable. With longer sum- mers and a more pleasant climate, Scandinavia, Russia, Greenland, Canada and Alaska will probably become more attractive places to live. We can expect this to favor the tourism industry in these locations. The opposite is likely for destinations further south. Frequent heat waves and fresh water short- ages along, for example, the Mediterranean will probably hurt summer tourism. The Mediterranean rim now includes some of the world’s most popular tourist destinations. France, Italy, Spain and Greece alone generate over one billion overnight stays a year5. If just a fraction of this tourism moves to Scandinavia, it will have a great effect on the tourism industry there. healthcare and pharmaceuticals The effects of climate change will be first seriously felt during the coming decades. Heat waves, droughts, storms, and extreme rainfall are expected to become more common, af- fecting an increasing number of people around the world. 3 Lehman Brothers. 2007. The Business of Climate Change – Challenges and Opportunities. 4 MSMBC, “Post-Katrina real estate booming”, http://www.msnbc.msn.com, October 14 2007. 5 SOU 2007:60, 405. 59
  • 59. This is likely to increase the spread of water-borne and vector-borne diseases6. Old illnesses might reoccur, and tropical diseases may spread to temperate climes. Malaria, once common in Europe and North America, but then eradicated, is slowing recover- ing its ground. The West Nile virus is already causing substantial problems in the US every year, and the Chikungunya virus emerged in Italy for the first time this year.7 The spread of such diseases to the rich world will make their treatment far more commer- cially interesting. We can expect respiratory diseases such as asthma and bronchitis to become more common as well. Hence the demand for vaccines and treatments of infections will probably increase both in the developed and the developing world. This will benefit some companies in- volved in healthcare and pharmaceuticals. Rising death tolls as a result of frequent heat waves and other extreme weather patterns might, however, hurt companies focused on geriatric care. Clean-technology The debate about global warming and the subsequent increasing regulatory pressure, along with increasing urbanization and a growing scarcity of raw materials, have already made clean-technology a hot business area. As a result, clean-technology attracts more than 5% of all venture capital investments in the US, compared with less than 1% just a few years ago.8 This has been particularly visible in California and Silicon Valley, where venture capitalists spend money made from IT on emerging clean-tech projects. Such projects includes knowledge-based products or services that improve productivity, ef- ficiency, or operational performance, while reducing costs, inputs, energy consumption, waste, or pollution. California’s tough regulations on green house-gas emissions and energy-efficiency is one reason why Silicon Valley has become a hot spot for clean-technology. This has created an incentive for investments in clean-tech, and promoted early starters. Another reason is investment by local universities in large clean-energy programs, based on an early acceptance of climate change as a man made phenomenon. The boom in clean-tech is not only creating start-ups and attracting venture capital, it also attracts attention from big business. Large firms such as General Electric and Siemens already views clean-technology as an opportunity in the light of global warming. In 2005, GE launched its Ecomagination program, bringing together 40 environmen- tal friendly technologies under one marketing umbrella, covering industrial, energy and transport products. In doing so, GE also committed to doubling the annual sale of clean- technology and R&D spending by 2010, to US$20 billion and US$1.5 billion respectively. Unlike many other companies, Siemens views climate change more as an opportu- nity than a threat. Due to increasing regulatory pressure on greenhouse-gas emissions, Siemens expects increasing demand for its wide range of products and services for renew- able energies and energy efficiency. Siemens currently invests about €2 billion a year in climate-relevant R&D9. 6 Lehman Brothers. 2007. The Business of Climate Change. 7 BBC. ”Mosquito virus arrives in Europe” http://www.bbc.co.uk, 6 September 2007. 8 Nutek. ”Potential för investeringar i svenska miljöteknikbolag”, August 2006. 9 Siemens. http://www.siemens.com/, October 15 2007. 60
  • 60. the energy sector Increasing awareness that climate change is really happening has already made energy the hot new area for governments and venture capitalists. On top of this trend comes ris- ing oil prices and energy security concerns. Still, it might seem odd that the sector that is responsible for about a quarter of all greenhouse-gas emissions is booming partly because of global warming, and is likely to continue to do so. Obviously, one explanation for this is that the demand for energy is closely correlated to the global economic activity, which is currently growing quickly and is expected to continue to do so over the coming decades. Other reasons are that many companies in the energy sector show large profit margins. This creates room for substantial investments in R&D and innovation, making it easier for companies to adapt to regulatory pressure and to exploit new opportunities due to climate change. Finally, the energy sector has success- fully coped with dramatic changes before, including nationalization of assets, volatile oil prices and consumer taxes close to 80% in some countries.10 One particular winner in this sector will probably be the nuclear industry. Since the accidents on Three Mile Island and Chernobyl in the 1970s and the 1980s, nuclear power in Europe and the US has been stagnant and characterized by pessimism. This is now quickly changing due to concerns about global warming. Globally, 30 new reactors are un- der construction, and at least 60 more are expected to begin construction over the next 15 years. This is probably only a start. The reason is that nuclear power is the only large-scale alternative to fossil fuels, which is carbon neutral and stabile enough to satisfy the need for energy security.11 local producers The debate about climate change is making consumers more aware of what they buy and how it affects greenhouse-gas emissions. This makes it increasingly important for companies to have environmental-friendly policies in order to be seen as good corporate citizens. Thus, in order to present an acceptable corporate image, companies will have to show rising concern about the impact on the environment caused by the production of their consumer products. This will likely benefit local production close to the consumers, as it requires shorter transportation and thereby creates less carbon emissions. It can also be expected to ben- efit organic foodstuffs and clothes, which generally require less energy to produce than ordinary products. This tendency is already evident in the UK, where supermarket chains lately have been trying to ‘out-green’ each other.12 A way to do this has been to show customers how carbon emissions are reduced in sourcing and transporting of food. Several retailers have also begun to proclaim how much local UK produce they sell, compared to imported goods, in order to limit transport. 10 Lehman Brothers. 2007. The Business of Climate Change 11 World Nuclear Associations. http://www.world-nuclear.org/, October 15 2007. 12 Lehman Brothers. 2007. The Business of Climate Change, p55 61
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  • 64. some consequences for year 2025 Working at home A positive look at biotechnology An efficient solution to the Co2 emission biotechnology has long been frowned problem could be mandatory telecom- upon, but since the effects of climate muting. Research shows that employees change may outweigh the negative working at home get more done. Families impacts of biotechnology, we are likely with children – especially women – would to see more of it in the future. In a 2005 enjoy greater flexibility. Men, however, are survey, 55% of Danes said biotechnology less productive when working at home, if would better our way of life over the next the children are present. the problems of 20 years. In many parts of the world, ge- telecommuting are not just social; there netically modified crops could be essential are technical problems as well. to securing food and containing conflicts Many of these problems have now arising from thirst and hunger. Genetically- been solved. banks now have videocon- modified trees could help prevent erosion ferencing, so customers can meet their and desertification as well. bank consultants online. the amount of money that can be saved by telecommut- New nature ing is extensive. Roads would be in less Areas once thought to be unproductive will urgent need of expansion. people would be used to combat climate change. Cal- get to work faster, reducing Co2 emis- culations show that if the Mongolian plain sions. british telecom claims that enabling were covered with windmills, all of China telecommuting and conference calls has could be supplied with energy. Windmills saved the company £360 million, and are, however, too expensive today. parts saved staff 315 million miles of travel. of the ocean can be used to grow algae to make ethanol or to absorb Co2 that later Gardens turn Japanese can be buried in the sea floor. Semi-desert visitors to Denmark are often surprised areas can be covered with nano-coated by the beauty of private gardens. Danes solar cells so that windblown sand won’t are notoriously involved in their gar- destroy its glass. dens. the problem with climate change is that it brings alternating periods of Nuclear energy is back heavy rainfall and drought, turning lawns the accidents at three Mile Island and brown – not something Danish gardens Chernobyl have given nuclear power a bad will benefit from. We therefore expect reputation. but the great problems pre- Danes to make their gardens look more sented by climate change require urgent like Japanese gardens, with special, solutions. Nuclear energy is a solution. It change-tolerant plants. the typical Dan- is one of the cheapest ways to combat ish suburb will therefore change appear- Co2 and is emission-free. the new nuclear ance, and the great biodiversity found power plants are much better designed here will likely shrink. and are safer than first-generation plants. 65
  • 65. In the future, advanced reactor design will New demands on retail make it possible to use available fissile and Awareness of climate change has in- highly enriched materials, promising a way creased over the past few years. Many out of current waste disposal problems. companies want to assume responsibility for what it means to do business today. Zombie products Instead of waiting for regulations, they are We can assume many product catego- taking the first steps themselves. they ries will be obsolete in 15 years because introduce policies aimed at offsetting the they do not sustain the environment and carbon footprint their business would are seen as politically “incorrect.” these otherwise leave. In the struggle between “zombie products” – the living dead – will commerce and ordinary people, they certainly disappear unless great effort is are on the side of the people, thus partly made to reinvent them. by “reinvent,” we dismantling the old barrier between capital do not mean spending billions on lobbying and labor. Many modern companies know and communication to revive the zombies. they must do good to keep their good Zombie products include: charcoal name and remain true to their values. grills, bottled water, SUv cars in cities, this is especially true in retail. Soon, non-organic food, excessive packaging, many “carbon neutral” labels will be as the concept of single-use disposable commonplace as “fair trade” or “organic” products, patio gas heaters, fireplaces, labels are today. extra space on business class travel and wood-burning fireplaces. More regulation Will the changes in behavior required by climate change be prompted by the mar- ket or regulation? More and more people realize that the market cannot solve the problem alone – time is often too short. When scarcity occurs, increasing prices and reducing demand, it is often too late. Supply and demand cannot solve our problems without the help of regulation. bjørn lomborg, a Danish climate skeptic, has a point when he says history shows us that politicians will not act, so we need to find other and cheaper solutions. His somewhat cynical and pragmatic ap- proach is that regulatory measures will not be enforced globally, but that they are the only way to approach global warm- ing. Hopefully, the public will back up the politicians when they venture out in to this politically dangerous field. 66