Two notable events occurred this morning as I started to write this article. First, scientists reported that the earth reached its highest temperature on record for the third year in a row; second, the Senate Committee on Environment and Public Works met to question Scott Pruitt, a man long supported by the fossil fuel industry, on his qualifications to lead the EPA.
The timing would be ironic, except there is nothing remotely amusing about denying the empirical science proving the earth’s atmosphere is rapidly warming due to human-induced activity, primarily the combustion of fossil fuels. To continue to dismiss this science as debatable, as many on the political right are inclined, endangers the survival of most of earth’s species, including our own.
Just when the world coalesced around taking immediate action to limit global temperate increase to 2.0 degrees Celsius, the political winds shifted in America, and Donald Trump, a man who once suggested climate change is a Chinese hoax, was elected President. As Commander in Chief, he has the authority to appoint whoever he chooses to his Cabinet, and with a Republican-controlled Senate, most, possibly all, of his choices will be approved.
This is a distinct problem for those who understand that truth is not relative, that alternative facts are not a thing, and that climate change is real and human caused. Despite the fact that 125 parties have already ratified the Paris Agreement, including the United States, it appears we are about to have a minimum of 4 years of inactivity or backsliding on climate policy. While Trump may not know his own stance on climate change, and though Tillerson perhaps recognizes climate change is both human caused and a problem, Pruitt seems set on rolling back the Clean Power Plan and halting any meaningful policy curbing emissions in the U.S.
Furthermore, increased drilling for oil and gas on public lands, which will help keep gas prices low, and a 5% increase in coal consumption, will almost certainly slow the pace of renewable energy development under the Trump Administration.
A few states in the northeast and on the west coast will buck these trends, but going into 2017 it does not appear there will be much, if any, federal policy focused on holding global temperature increase to 2.0 degrees C or lower.
That is why it is critically important that U.S. businesses pick up the slack and fill the vacuum created by Tillerson and Pruitt. Luckily, there is some reason to be optimistic that this just might happen.
Shortly after Trump won the Electoral College, a group or more than 360 businesses and investors released a statement to Trump and Congress calling for the U.S. to continue working to mitigate climate change and move towards a low-carbon economy. This group, called 360+, and made up of many well known companies including Hewlett Packard, Nike, and Starbucks among others, urged for continued U.S. participation in the Paris Agreement, stating that: “Failure to build a low-carbon economy puts American prosperity at risk. But the right action now will create jobs and boost U.S. competitiveness.”
The 360+ statement served as a perfect precursor to the newest report from the Risky Business Project, an initiative launched by Michael Bloomberg, Hank Paulson, and Tom Steyer, that seeks to publicize the risk climate change poses to the U.S. economy. This new report quantifies the economic costs and opportunities of switching to a low-carbon economy and achieving an 80% reduction in greenhouse gas emission by 2050, while still providing the current level of energy to U.S. businesses and consumers.
The numbers are staggering—$10.1 trillion in new investments in renewables, biofuels, and carbon capture and storage is needed between 2020 and 2050. However, the report concludes that a successful transition is not only possible, it is also not too far out of line from other major infrastructure investments made over the last half-century. The report points to an average of $350 billion per year invested in computers and software over the past decade as one example. Furthermore, while $10.1 trillion is a massive investment, according to the report, the savings from avoided fuel costs are even greater at $11.5 trillion over the same time period.
Accordingly, it is possible that a lack of forward-looking climate policy in the U.S. will not stop businesses from considering the risks that climate change poses to their bottom line. In fact, a report produced by the CDP surveyed over 1,000 business and found that reduced energy consumption does not lead to reduced profitability. Rather, a number of businesses successfully decoupled profits from emissions and significantly outperformed businesses that did not change their energy output.
A legitimate concern, however, is that as other nations move forward with energy and climate policy, these businesses, and all the associated jobs and increased GDP, will relocate elsewhere leaving U.S. businesses behind.
The conversation about why businesses and investors are starting to factor climate change into the bottom line is changing. For years the dialogue centered either on the moral imperative to take action, or the regulatory burden associated with federal climate policy. Now it appears a third perspective is entering the mix—one where taking action against climate change is considered an economic opportunity that is worth seizing.
Perhaps because of the opportunities investing in a low-carbon economy presents, a network of 120 institutional investors with more than $15 trillion in assets have recently committed to addressing climate change and investing in low-carbon opportunities. If those assets are directed towards opportunities in the U.S., we could be on our way to hitting the 80% reduction in GHG emissions by 2050. But the stakes are too big to leave anything to chance. Now is the time for businesses to seize those opportunities, ensuring their own economic prosperity, and because it’s still the right thing to do.
Image credit: Flickr/Bureau of Land Management Oregon and Washington