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
A. The state should strive to reduce greenhouse gas emissions at the state level with clear
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
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.
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
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
• 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
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
• 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
• 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
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
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 $60
billion. The authors concluded that the entire target could probably be met
with a net gain as well but did not provide specific numbers. Alex Farrell,
an assistant professor in the energy resources group at UC Berkeley co-led
one study with W. Michael Hanemann, an economist who directs the
Climate Change Center at U.C. Berkeley.
c. Emissions reduction on air pollutants have coincided with economic
benefits during economic expansion.
i. European Union officials say total emissions are running 2.9
percent below 1990 levels. Kyoto targets require them to be 5
percent below 1990 levels by 2012. Among the best performers
has been Britain, which according to the United Nations reduced
emissions 14.5 percent from 1990 through 2002 during a record
ii. Overall, the economic benefits of tackling air pollution are likely
to be six times higher than costs of introducing pollution control
measures in factories, power stations and cars, according to GEO
Year Book by the United Nations Environment Programme
(UNEP). The US EPA for example estimates that the benefits of
America’s Clean Air Act will be around US$ 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
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;
ii. 72 per cent of respondents say their boards of directors have a
high level of understanding of carbon-related business risks and
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
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
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-
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.