As I mentioned in my earlier blog post, the Intergovernmental Panel on Climate Change (IPCC) issued a report titled “Climate Change 2013: The Physical Science Basis” that removed any doubt about the role of humans in global warming. Although there has been some skepticism, the scientific community appears to accept the findings which raise questions about energy and environmental policy.
I can’t help but wonder what the role of sustainability and sustainability communication should be in companies’ responses to the recent news. Clearly, corporations need to continue to reduce emissions and begin to adopt more clean energy and renewable sources of energy. But, I would go one step further. As part of their social and environmental responsibility, corporations need to consider promoting sustainable behaviors to their audiences. Some of my prior research suggests that corporation spend a lot of time talking about their environmental good works but very little time trying to encourage the public to think critically about environmental issues or take action toward issues. Yet, engaging the public in solving environmental problems will lead corporations to greater respect and trust by the public.
Carbon Emission: Where do we go from here?
According to the EPA and IPPC, the energy supply contributes more greenhouse gas emissions than any other source. However, the competition in the energy business is heating up as new energy sources are becoming more readily available – particularly natural gas from shale drilling. And, investment in emission reduction and new technology development does not seem realistic without incentives that balance the competitive landscape and reward environmentally responsible behaviors.
The findings from the climate change report are grim, and experts are calling for action. According to a column in the New York Times by Eduardo Porter “William Nordhaus of Yale, to cite one estimate, wrote recently that allowing uncontrolled carbon emissions would raise the world’s temperature 3.4 degrees Celsius (6.1 degrees Fahrenheit) above that of the preindustrial era by the end of the century and cost the world a fairly modest 2.8 percent of economic output.” Something really does need to be done.
Two popular options for motivating emission reductions are a carbon tax and a cap-and-trade system. Both have benefits and drawback, as we have seen in other countries and regions. For example, according to the National Renewable Energy Laboratory’s report Carbon Taxes: A Review of Experience and Policy Design Considerations, countries such as Finland, Norway, Sweden, Denmark, and some Canadian provinces have experienced success with a carbon tax. They have seen marked decreases in carbon emissions, and the tax funds have been redirected to environmental projects, and in some cases to reduce income taxes and other taxes. But, carbon taxes raise a number of concerns. First, while a carbon tax sets a known cost per pound of emissions, it does not inherently limit emissions. It may increase costs to businesses but not achieve the overarching goal – reduce emissions. Recently, the Australian government announced its intentions to repeal a carbon tax in the near future.
The other common approach is cap-and-trade, which seemed to be welcomed policy in 2009 when the American Clean Energy and Security Act was approved by the US House of Representatives. However, later, it was defeated in the Senate. In many ways the bill was similar to the European Union Emissions Trading System, which has had the greatest volume of CO2 allowance trades of any carbon market program. Despite a few bumps in the road, it has been successful in reducing carbon emissions. The advantage of a carbon market is the ability to set an emissions threshold and permitting allowances to be traded on the market, setting a reasonable price. As the economy improves, prices rise, and should the economy fall, prices follow.
But, as Newell, Pizer, and Raimi write in the journal article Carbon Markets 15 Years after Kyoto: Lessons Learned, New Challenges, “A key question for – and sometimes criticism of – current market-based policies concerns the degree to which they encourage long-term investment in new technologies rather than solely short-term fuel-switching and energy conservation” (p. 132). Will cap and trade programs lead to the long-term goal of creating technologies that reduce emissions and/or use renewable energies?
To add a dose of reality, the current political environment in the US would hardly allow for either policy. Congress can’t even get a budget passed. That is why we see regulations on emissions coming from the Whitehouse and EPA in conjunction with programs that will fund research into new technologies that will help industry reach the regulation requirements. It’s not a perfect solution, but considering the current state of our political system, it may be the best solution to keep forward momentum.