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Companies pioneer in climate protection
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An industry perspective on the 5 IPCC Report, issued September 2013
by Renat Heuberger, CEO, South Pole Carbon
The hour of the climatologists comes around every six years; time for the Intergovernmental
Panel on climate change (IPCC) to summarize the latest research results on climate change.
The IPCC is not an environmental lobby group, but a panel of over a thousand researchers
from the best universities in the world. In clear and distinct terms that one rarely hears from
academic ivory towers these researchers unequivocally state "Yes, climate change is
happening and its 95% probable that man has a hand in it. CO2 concentrations have
undeniably risen to a level last seen nearly a million years ago.” Every few weeks the world
is experiencing some extreme weather phenomenon that basically should never occur: an
extreme drought in Australia, snow in June in Switzerland, a huge forest fire in the United
States, a vast flood in India.
The hour of climate sceptics also however comes around every six years: they make a
sport of finding the needle in the haystack that doesn’t quite fit the picture amongst all of
the results which indicate that climate change is extremely likely. This year it's the average
global temperature because, contrary to expectations, it has not risen significantly over the
last 15 years. However, the average temperature is not really of interest to the Filipino
family whose home has just been swept away, nor the Swiss hotelier who has to make
ends meet now that his hotel no longer overlooks the glacier. Yet the sceptics dominate the
headlines: "There is no proof of climate change!"
One is tempted to ask; has it actually been proven that cigarette smoke is harmful? I know
an old man who has smoked all his life and never seen a doctor. And wouldn't it be an
interesting business idea to take on clandestine cash accounts from the United States?
After all, there is no proof that the American tax authorities are really taking action against
my bank. It has not been proven, but it is very probable. People have trouble dealing with
probable events, especially if they appear to show that an unpleasant change in behaviour
is necessary.
But wait - is it proven that looking after the climate demands that we make unpleasant
changes in our behaviour? The opposite is far more likely; good money can be earned from
climate protection. Many Swiss companies have become specialists in high-tech solutions
which improve industrial processes and therefore also save energy. If the waste of energy
and consequently CO2 emissions has a global price, then such technologies become even
more competitive because efficiency leads to cost savings for the customer. For example, if
a high-rise building is built in China to undemanding standards innovative building
technology from Switzerland has little chance of being competitive. However, the situation
immediately changes to the benefit of the building technician if CO2 has a value then the
Swiss technology is worth real money.
Emission trading could be used to establish a price on CO2; the state would set the total
quantity of CO2 emissions to be saved. An industrial enterprise would have the option
either to reduce CO2 itself or to buy emission rights from another industrial enterprise. The
result is a market price for CO2. This price would rise until it is financially worthwhile for a
sufficient number of companies to reduce CO2 emissions rather than buying emission
1 rights. It would become worthwhile for the company to invest in efficient technologies and
this would bring about a new technologies breakthrough.
Emission trading has decisive advantages over other measures such as a CO2 tax. Firstly,
CO2 is reduced at plant level, where the most cost-effective savings are possible. Secondly,
the absolute amount of CO2 reduction is defined from the outset, whereas no one can
precisely predict the incentive and controlling effect of a tax. And thirdly - particularly
important for the economy - emissions trading works counter-cyclically; in a boom phase
energy consumption increases and with it the price of CO2. In a recession the opposite
occurs.
So, emissions trading would be an efficient and economically-friendly instrument for climate
protection – however there is quite a different problem. Since the onset of the financial
crisis worldwide political ambition to take responsibility for the climate has collapsed. Even
the extremely low CO2 targets of the Kyoto Protocol have been extended more than once;
consequently the price of CO2 has fallen. Currently it costs virtually nothing to pump CO2
into the air using inefficient technologies.
As long as the global policy makers are not taking any action companies with a responsible
energy policy still have the opportunity to take voluntary action. Many companies now
measure and seek to reduce their CO2 footprint wherever possible. Innovative companies
go a step further and offset residual CO2 emissions outside of their enterprise. This has
enabled COOP Switzerland in collaboration with South Pole Carbon and the WWF to
provide family run farms in Kenya growing fair trade roses for COOP with new, more
efficient cooking stoves. Instead of spending hours collecting firewood, young girls can
now attend school - and large quantities of CO2 are also saved.
Pioneers take responsibility even when the policy makers are asleep. Thanks to global
communications and social media, consumers can recognize and appreciate climatefriendly business strategies and ultimately set policies in motion for a global CO2 price,
which, in turn, leads to rewards for the pioneers.
The good news is that we can still curb climate change. And make a profit by solving the
problem.
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Disclaimer: Please note that this publication is for your information only. Neither South Pole Carbon nor any
person acting on behalf of South Pole Carbon is responsible for the use which might be made of the above
information, especially not for the completeness and correctness of the material contained herein.
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