Seeing U.S. Business Opportunity in a Low-Carbon Economy
Editor's Note: This blog post was originally published for The Hill.
America’s smartest business leaders are pursuing a strategy unheard of a few short years ago: they are building economic growth while tackling climate change at its source. We believe this is one of the true mind-shifts in modern commerce, as U.S. business leaders see the opportunity of investment in a low-carbon economy and the risk of following a business-as-usual, high-carbon path.
This phenomenon debunks the popular myth that cutting greenhouse gas emissions must put a damper on economy growth. Apple CEO Tim Cook talked plainly about the benefit his high-tech company has reaped as it has curbed carbon emissions and other environmental impacts.
“People told us it couldn't be done and that it couldn't happen, but we did it,” Cook said at the start of Climate Week in New York City. “It’s great for the environment, and by the way, it’s also good for economics. It’s both.”
Cook articulated a phenomenon that isn’t only for the future. It’s happening now. There are welcome signs that corporate America gets it. U.S.-based food products giant Mars joined multinational firms including IKEA, H&M and Phillips in a movement to shift completely—100 percent—to renewable energy. More than 1,000 corporations, including Coca-Cola and DuPont, expressed support for setting a price on carbon emissions. And the venerable Rockefeller Brothers Fund, created with U.S. oil money, announced a plan to divest its investments in fossil fuels.
These companies all understand the economic case for climate action – and the risks from inaction. Doing nothing leaves businesses more vulnerable to the effects of a changing climate: damage to facilities from extreme weather, disrupted supply chains, jeopardized food and water resources and added market uncertainty.
The old equation that linked carbon emissions to economic growth simply doesn't add up anymore. Real U.S. gross domestic product grew 11 percent from 2005 to 2013 even as energy-related carbon dioxide emissions dropped 10 percent.
Regional, state and corporate initiatives are moving in the right direction too:
Coca-Cola, General Motors and Red Bull have already cut energy costs by switching to safer, cheaper alternatives to high-emission hydro-fluorocarbon (HFC) refrigerants.
State energy efficiency programs save consumers between $2 and $5 for every one dollar invested; in Wisconsin, the state’s energy efficiency program is expected to inject over $900 million into the state’s economy and bring over 6,000 new jobs in the next decade.
Eight states got more than 15 percent of their electricity from non-hydro renewables in 2013, with Iowa among the leaders with more than 27 percent. An anticipated $1.9 billion investment in new wind power in Iowa is expected to cut consumer’s power rates by $10 million annually, create jobs, and bring in more than $360 million in new property tax revenue. Similar price drops are happening in Illinois and Ohio.
A growing body of evidence indicates we don’t have to choose between improving economic performance and reducing climate risk. Building on a September 2014 report by the Global Commission on Economy and Climate, a new analysis on the United States, Seeing Is Believing, shows that not only is the shift happening, it’s happening even faster than expected.
As just one example, increased energy efficiency has helped make American appliances as much as 80 percent more efficient than they used to be, while shrinking the annual growth in energy demand to about one-sixth what it was in the 1970s.
By removing existing market barriers to investment, we could cut the demand for electricity by 14 to 30 percent below what’s projected for the next 20 years, saving hundreds of billions of consumer dollars and slashing U.S. greenhouse emissions in the process.
Across the country, business leaders are making decisions for the most basic reason: they seek to limit risk and increase opportunity, and a well-designed low-carbon strategy can do both. But we need to do more to feed this nascent trend. Putting a price on carbon can be an economic engine. At the same time, U.S. markets need strong policy signals to encourage investment in the five sectors that are primed to capture additional economic returns and combat climate change: power generation, electricity consumption, vehicles, natural gas systems and HFCs. Planning for a low-carbon future also must include funding for innovative technologies. Finally, Washington needs to end the gridlock that has been an obstacle to progress in this area and many others.
That means creating long-term policy certainty by setting standards and carbon pricing, direct public investment in research and development of new technologies, and refining regulations to encourage investment in low-carbon infrastructure.
We already see strong signs that U.S. business is ready to make this quantum leap. Now we need leaders to support the policies and strategies that can put the United States at the forefront of the low-carbon economy.