Bac Bc3 Platform On Climate


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Principles agreed on addressing global climate change by business leaders.

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Bac Bc3 Platform On Climate

  1. 1. BAY AREA COUNCIL POSITION ON CLIMATE CHANGE Climate change is a global issue and national policy should be the basis for unified action. In its absence, the state of California , ranked in the top 10 economically of all nations, should take a leadership role. Time is of the essence, therefore, we support California taking leadership on this issue. A. The state should strive to reduce greenhouse gas emissions at the state level with clear goals. B. The reporting of climate change emissions should be made mandatory by the largest contributors of emissions to enable the state to track its success at meeting the targets. C. Market-based approaches should be embraced so California businesses can participate in a market that financially benefits business performance for reducing greenhouse gas emissions. D. A coordinated investment strategy should be deployed to cost-effectively apply emissions reductions technology and employ alternative fuels that reduce greenhouse gas emissions. Strategic investments can accelerate California leadership in the clean energy sector. E. Early Action Credit: Advanced action by businesses and other institutions to reduce climate change contributing emissions should be given credit and provided a verifiable system so that proactive companies are not penalized for their action. SUPPORT AB 32 (PAVLEY AND NUNEZ) AS MADE TO BE CONSISTENT WITH BAY AREA COUNCIL CLIMATE CHANGE POLCY AB 32 is a first step in California taking leadership in addressing the conditions that contribute to climate change. AB 32 establishes targets for emissions reduction of greenhouse gases for the state as a whole. Mandatory reporting of greenhouse gas emissions will be required for the largest contributing industry. AB 32 should make sure that the required reporting is compatable market-based trading and credit schemes. Government agencies implementing these regulations should do it effectively and with maximum flexibility provided to the implementers to achieve the performance targets. Executive Committee asked to formally support AB 32 provided it is consistent with the Climate Change Policy above. 1
  2. 2. BAY AREA COUNCIL POSITION ON CLIMATE CHANGE, GREENHOUSE GAS EMISSIONS REDUCTION and SUPPORT FOR AB 32 (Nunez and Pavley) The Bay Area Council supports California taking leadership to address climate change. The Council represents CEOs from the largest employers with an estimated 495,000 in employment in the Bay Area. Climate change is a global issue requiring a response from all nations that contribute to global warming. California and its businesses should play a leadership role, as time is of the essence. If it were a nation, California would be ranked in the top 10 of the world and the Bay Area itself with 155,000 companies would be ranked 29th behind Saudi Arabia. If time was a luxury, the business community would prefer a level playing field be established with national targets and policies to address climate change. Scientific evidence has shown global warming accelerating at a rapid pace. Recent studies have corroborated that that ice belt is melting much faster than previously reported. Human activity is a significant contributor through increasing greenhouse gas emissions. The economic opportunities for addressing climate change indicate growth will occur in new industry sectors, new jobs will be created and additional revenues for the state and businesses will be realized. Conversely, if leadership is not applied from the business community at this time, the world may soon pass the tipping point with significant negative economic and environmental consequences to California and the world. We support the Governor’s leadership in addressing climate change and AB 32 (Nunez and Pavley) to begin implementing a climate change policy in California to reduce greenhouse gas emissions. We support the following goal and strategies to meet the targets: • The Goal: Bay Area Council does think the state should strive to reduce greenhouse gas emissions. The targets to reduce greenhouse gas emissions in California to meet targets of 2000 level emissions by 2010, 1990 level emissions by 2020, and 80% below 1990 levels in 2050 are ambitious. And we think reaching for these targets will have an economic benefit in the state generating jobs and economic activity and facilitating the growth of the clean technology and alternative fuel sectors. • Mandatory Reporting: The Bay Area Council supports the comprehensive and rigorous reporting of climate change emissions by the largest contributors of emissions to enable the state to track its success at meeting the targets. Initially, it will be most cost-effective to have energy, oil, oil refining, cements, and land fill businesses report on their emissions. Clear and transparent protocols and accounting methodologies need to be developed and applied. The California Climate Action Registry currently provides the best protocols and infrastructure to support this reporting. Full credit and recognition needs to be provided to businesses that have historically implemented energy efficiency and pollution prevention measures. The Bay Area Council supports AB 32, the California 2
  3. 3. Global Warming Solution Act of 2006, establishing actual limits on the state’s global warming pollution, and developing a mandatory reporting system to track progress toward those limits. The Bay Area can continue to be a world economic leader by establishing an enforceable statewide limit on global warming pollution. It is the market signal needed to promote innovation and growth in the clean technology, manufacturing and energy sectors and keep California businesses competitive in a carbon-conscious global marketplace. • Access to Markets for Emission Reductions: The reporting should be a pre-cursor for California businesses to participate in market-based schemes that financially benefit business performance for reducing greenhouse gas emissions. California businesses should have access to a growing global credit and trading market for emission reductions. • Investments for improved performance and reduce emissions: Emphasize investments in cost-effective energy and water efficiency and in cleaner energy technologies and resources as a means to achieve targets. A coordinated investment strategy coupled with financial means should be implemented to provide incentives for industry to develop emission reduction technologies for use in California and abroad, thereby maintaining California’s lead in technology development. • Early Action Credit: Advanced action by businesses and other institutions to reduce climate change contributing emissions should be given credit and provided a verifiable system so that proactive companies are not penalized for their action. It is likely regulations will be imposed on greenhouse gas emissions at some time in the future. Credit should be given to direct emissions reductions and consideration should be given to companies for indirect emissions reduction. It is essential that the economic, job and environmental benefits for Californians be maximized, and any economic disadvantages be minimized to meet the greenhouse gas reduction goals. We look forward to working with the California legislature and regulatory bodies, and Governor to achieve the above objectives for Climate Change policy in California. Rationale for Position on Greenhouse Gas Emissions Reduction and Climate Change 1. Business should take the lead in greenhouse gas emission reduction a. The United States has four per cent of the world's population, 20 per cent of the world's Gross Domestic Product, 25 per cent of the greenhouse gases. If California were a country, California would be ranked as the 7th largest producing country. Businesses are responsible for a significant proportion of the productivity and emissions. b. There is an economic opportunity for leading the way with greenhouse gas emissions reduction technology, clean technology and alternative fuels that substitute for fuels that emit greenhouse gases. California businesses 3
  4. 4. can reap reward by applying the technology development in California and then exporting them to the world. i. There is a growing global market for greenhouse gas emissions reduction technology. California businesses could generate revenue by taking part. For instance, Europe has created $60 billion carbon-trading market based on 50 million tons of carbon dioxide traded. The right to emit a ton of carbon, which began trading at about $10, is currently going for $27.60, an increase that analysts say signals a robust market. c. The risk of climate change left unabated will be costly: i. If climate gradually warms, the chances of the industry getting wiped out by weather-related catastrophes will rise from about one in 100 worldwide today to nine in 100 by 2050. A ninefold increase in the risk of collapse places a heavy burden on insurers. However, factoring in the risk of abrupt climate changes that lead to catastrophic weather-related losses rises to about nine chances in 100 by as early as 2010. To insure a property or business affected by that degree of risk, a carrier would have to charge annual rates as high as 12% of insured value--most businesses and individuals start self-insuring when premiums reach 3% of value. (Tyndall Center for Climate Change Research, Britain). ii. If greenhouse gas emissions are not cut, global warming is expected to raise temperatures between 8 and 10.4 degrees in California and diminish the Sierra snowpack — a major source of drinking water — by 90% in the next century, according to recent studies that have been incorporated in the state's draft plan. Warming could also raise the sea level between 4 and 33 inches, causing coastal erosion and sending salt water surging into Sacramento Delta water supplies. iii. The economic impact of climate change on agricultural profits in California is equal to -$2.4 billion (or nearly 50% of state agricultural profits). Source: Olivier Deschenes, Michael Greenstone January 2006 AEI-Brookings Joint Center). 2. Goals set for greenhouse gas emissions reduction do make good economic sense. a. The state's plan to cut greenhouse gas emissions could create 83,000 new jobs, $4 billion in income and dramatically boost the economy in coming years according to the draft Climate Action Team analysis and according to two new independent analyses. b. One analysis used a different economic model than the State Climate Action Team and analyzed eight policies the state could undertake to reach half of the 2020 target. That goal would result in an additional 20,000 jobs for the state and an increase in the gross state product of $60 billion. The authors concluded that the entire target could probably be met with a net gain as well but did not provide specific numbers. Alex Farrell, an assistant professor in the energy resources group at UC Berkeley co-led 4
  5. 5. one study with W. Michael Hanemann, an economist who directs the Climate Change Center at U.C. Berkeley. c. Emissions reduction on air pollutants have coincided with economic benefits during economic expansion. i. European Union officials say total emissions are running 2.9 percent below 1990 levels. Kyoto targets require them to be 5 percent below 1990 levels by 2012. Among the best performers has been Britain, which according to the United Nations reduced emissions 14.5 percent from 1990 through 2002 during a record economic expansion. ii. Overall, the economic benefits of tackling air pollution are likely to be six times higher than costs of introducing pollution control measures in factories, power stations and cars, according to GEO Year Book by the United Nations Environment Programme (UNEP). The US EPA for example estimates that the benefits of America’s Clean Air Act will be around US$ 690 billion over the period 1990 to 2010. d. Businesses are increasingly championing actions to reduce greenhouse gas emissions and address the risk of climate change: i. General Electric: GE's corporate goal is to cut its emissions by 2012 to 1 percent below their level in 2004—an ambitious target given the company's growth plans. ii. DuPont, the chemicals manufacturer, has predicted it will save $2 billion by reducing its greenhouse gas emissions by 65 per cent by 2010, relative to 1990 levels. iii. BP, CEO John Browne has talked about stabilizing the concentration of carbon dioxide in the atmosphere at about double the pre-industrial level while continuing economic growth. 3. Mandatory Reporting a. It is cost effective for the largest economic sectors contributing the most in greenhouse gas emissions to report their greenhouse gas emissions. Companies in the energy, oil, oil refining, cements, and land fill businesses already track their emissions and pollution sources. These sectors together account for 30% of California greenhouse gas emissions. i. The Investor Owned Utilities in California are participating in an emissions reduction effort to meet targets. b. Business investors are increasingly seeking reporting on greenhouse gas emissions. Carbon Disclosure Project – Acting in the name of 211 institutional investors with 31 Trillion dollars under management the organization asked companies to disclose their assessment of the risks to their business from climate change and how much greenhouse gas they emitted. c. In Canada, 60 medium-sized and large electricity generation, mining and manufacturing companies were asked about their greenhouse gas emissions reduction and strategy. Among the key findings: i. 83 per cent indicate that they will meet their compliance obligations by maximizing energy efficiency, investing in new technologies or purchasing emissions reduction credits; 5
  6. 6. ii. 72 per cent of respondents say their boards of directors have a high level of understanding of carbon-related business risks and opportunities. 4. Coordinated Investment Strategy to reduce Greenhouse Gas Emissions and Investments from Public Goods Charge on Transportation a. Investments in technologies that reduce emissions and in energy sources that can be substituted for greenhouse gas emissions help reduce the price of energy. In an economy that is sixth in the world in output, real benefits could be achieved. b. Clean technology can strengthen California’s position as a leader in innovation, growth, and quality of life. Clean tech ventures have attracted $4.5 billion worldwide over the past four years, and they are projected to draw $10 billion over the next four years in North America alone. i. The more you use the cheaper it gets. Wind is going up to 30 per cent a year utilization - that means it doubles every two-and-a-half years ii. In 2005, solar cell usage - had been going up 30 per cent per year – in 2004, it increased 57 per cent in one year. Every time the capacity doubles, the price drops 20 per cent 5. Support for providing credit to Early Actors and the development of Carbon Trading a. quot;Carbon trading, which used to be regarded as a fantasy marriage of environmentalism and economics, is now seen as the least costly, least distorting and most effective way to curb carbon emissions.quot; Economist Magazine, June 2005. b. In August 2005, nine northeastern states, including New Jersey and Delaware, announced a preliminary agreement to launch an emissions cap- and-trade scheme. c. Some U.S. companies and one state, New Mexico, already have joined a voluntary emissions-trading program. d. 131 mayors who have signed a pledge agreeing to meet what would have been Kyoto's U.S. target -- emitting 7 percent less carbon dioxide than 1990 levels by 2012. e. The European Union program begun in 2005 is a forerunner to the larger Kyoto emissions-trading system, which starts in 2008 for all Kyoto signatories, including Russia and Japan f. Twenty-five leading U.S. economist, including three Nobel laureates, in December 2005 urged President Bush to control greenhouse gas emissions through mechanisms such as setting limits on the amount of carbon dioxide countries could produce and allowing them to trade carbon allowances with one another. 6
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