The Cost of Business As Usual
Part 3
Whethor or not you ascribe to the schools of thought on the matter at hand, one underlying principle remains at the heart of the matter. Cost. How much will implementing mitigating mechanisms cost? How much will doing nothing cost? What are the costs of a changing climate?
Frequently programs set up to reduce the emissions rely on the trading of emisisons credits.It seems counter-intuitive to some that these programs actually acomplish anything. How does continuing to pollute while spending money in other areas accomplish any of the goals set out? The critical notion that we have to consider is this; if we all share the same atmosphere, and as we all know pollution from one geographic area will of course spread to other areas, it makes very little sense to isolate emissions and treat them as a localized problem. The bigger picture is that by spending money to make efficient use of energy elsewhere, the planet as a whole has also become more efficient, and thus cleaner.
The population growth dictates that more energy production will be needed. Research and development of energy alternatives is big business these days. Renewable energy will be increasingly important as the population of the planet continues to grow. Renewable energy also offers a cleaner alternative to conventional energy production.
As we continue to place reliance on governments to achieve these goals, industry often takes the brunt of the criticism. I will posit that this is unfounded. Insurance companies have allready been implementing climate change in their cost models. When assessing claims, some companies are directing their customers to green materials.
The relatively unknown Chicago Climate Exchange has been up and running since December of 2003. It is the worlds first trading market for greenhouse gas emission reductions and offsets, and includes six of the most forcefull greenhouse gases. Methane, carbon dioxide, nitrous oxide, hydrofluorocarbons, perflourocarbons and sulphur hexafluoride. Greenhouse gases not included in the list are converteed to an equivalent CO2 weight based on a 100 year global warming potenmtial based on IPCC values. Member corporations, provinces, states and municipalities all agree to mandatory reductions from a baseline established from 1998-2001 numbers.
The emssions schedule looks like this:
Phase I CCX Emission Reduction Target 2003 1% below Member's baseline, 2004 2% below Member's baseline, 2005 3% below Member's baseline, 2006 4% below Member's baseline
Phase II CCX Emission Reduction Target 2007 4.25% below Member's baseline, 2008 4.5% below Member's baseline, 2009 5% below Member's baseline, 2010 6% below Member's baseline.
The mechanisms by which these members can reduce emissions (keeping in mind that global picture I mentioned earlier,) include :
- Methane destruction:
- Initiating and operating landfill methane collection and destruction in the United States, Canada, Mexico, Brazil and other countries as applicable
- Initiating methane collection and destruction systems at livestock operations
- Agricultural practices:
- Committing land to continuous no-till, strip-till, or ridge-till cropping in the central United States and other regions or countries as applicable
- Initiating grass cover planting in specified states, counties and parishes in the United States
- Forestry practices:
- Initiating forestation and forest enrichment projects
- Initiating combined forestation and forest conservation projects in Brazil and Mexico
- Other GHG emission mitigation in Brazil:
- Fuel switching
- Renewable energy generation from solar, wind, small hydroelectric and biomass systems
- Renewable energy:
- Displacement of CO2 emissions by eligible renewable energy facilities
- Clean Development Mechanism Eligible Projects:
- Acceptance of Certified Emissions Reductions (CERs) from the Clean Development Mechanism (CDM)
The members involved realizing that government control is inevitable, have voluntarily entered this market, and have been making gains or rather reductions all along. Members that have made significant reductions beyond the minimum required are even generating revenue which in turn can be used as capital for further investment in reduction technologies and methods.
It seems that many corporations and government entities have realized the costs of
business as usual and are making their own way towards efficient energy usage and an environemntal ethic that is based on capitalistic mechanisms. Some of the notable members of this exchange include: Rolls Royce, Ford Motor Company, Dow Corning, Dupont, Manitoba Hydro, Motorola, Inc., Waste Management, Inc., Stora Enso North America, and many other corporations, municipalities and universities.
These gains being made by these corporations have also allowed them to remain competitive over-seas and in Asia where regulations prohibit some of their competitors from operating.
As the market grows, it will serve to show other governments and their regulatory bodies that a cap and trade system can work, can generate revenue, and can be effective at making real progress.