Channeling Energy into Climate Change
By Doron Melnick
Climate change has now become recognized as one of the key concerns of the twenty-first century. The UN Intergovernmental Panel on Climate Change (IPCC), widely accepted as an impartial observer of climate change science, stated in February 2007 that the balance of evidence strongly suggests human activity has a real impact on the Earth's climate. In fact, the potential implications to human health, security and prosperity are alarming.
Urgency for action is growing. The G8+5 countries have agreed to work towards a global system of GHG emissions caps and trading. Among consumers, concern for the environment has begun to influence demand patterns. In a 2007 study of US consumers by Ipsos Research, more than half of those surveyed claimed that more information about companies' social and environmental impacts would influence their purchase decisions, and indeed 19% reported they had chosen a particular product or service purchase because of an established link to a charitable organization. In response to these regulatory and market trends, leading multinationals, such as British Petroleum, General Electric, WalMart, Citigroup and Pfizer, have begun to adapt their strategies to a GHG-limited future.
However, industry progress is slower than it could be. Recent studies of business managers in Canada, the US and UK (by Deloitte, Gallup and KPMG, respectively) found that more than 75% are aware of climate change as a key strategic issue, but less than half include GHG emission management in their overall strategy. In the UK, only 21 percent of those surveyed have, or are working to, achieve carbon neutral status.
This research suggests that senior managers are unsure of how to proceed and may be awaiting regulatory direction by government. The hesitation is understandable; the options before them are manifold, but it is uncertain which of the options will effectively reduce GHG emissions while also serving the interests of shareholders. The key question is: which options are the most cost-effective, in the specific context of each industry?
This question merits close study. In past years several GHG containment measures have gained a high profile among businesses, governments, the media and the public. However, recent information sheds doubt on the true cost-benefit profile of these measures. Before taking action, government and business leaders ought to have solid evidence that they are designing the right approach.
Fuelling Alternatives
There are several ways to reduce or mitigate GHG emissions, for example: switching energy sources from fossil fuels to low-GHG alternatives; reducing energy demand and inefficiency of usage; reducing non-energy-related emissions; offsetting emissions through carbon credit trading, reforestation or other means; and purchasing fewer emissions-intensive goods and services. Among these options are several that appear attractive on the surface, but present significant issues on closer inspection.
One option is the use of ethanol as a gasoline additive. The biological sources of ethanol, including corn, sugar cane and cellulose, absorb carbon as they grow, so on first glance the net GHG impact of ethanol is better than that of gasoline. Corn ethanol, however, has two potential strikes against it. First, its energy efficiency has been called into question since the 1970's. The US Department of Energy and the Wall Street Journal report a wide range of estimates from various studies looking at how much energy goes into production and distribution of the additive versus how much is released in combustion; on balance, corn ethanol as it is produced today is likely 10-15% better than gasoline for overall GHG emissions. Second, there are wider economic and ethical impacts caused by corn ethanol. Rising demand for corn has led farmers to switch production away from other staples such as wheat and soya, causing inflation of global food prices. This impact is felt most acutely by the world's poor.
Hydroelectric power is a second example of an alternative energy source that is not as climate-friendly as widely perceived. It is well known that hydro dams and reservoirs impose dramatic environmental impacts on a local scale. Additionally, a growing body of evidence shows that reservoirs are significant sources of GHGs, produced by the rotting of flooded organic material. The massive amounts of methane produced by reservoirs in the tropics mean that these dams can have a much higher GHG impact than even the dirtiest fossil fuel plants generating similar quantities of electricity. A peer-reviewed scientific paper published by Brazil's National Institute for Space Research in 2007 estimated that the world's large dams could be emitting 104 million metric tonnes of methane each year, equivalent to more than 4% of total GHGs generated by human activity. It is not surprising then that nuclear power has regained some popularity among energy policy makers as a climate-friendly alternative.
A GHG reduction measure that is attractive to both consumers and businesses is the use of hybrid gas-electric powered vehicles. Some hybrid models deliver as much as twice the fuel efficiency as conventional vehicles in the same class. However, a full life cycle assessment of a hybrid uncovers hidden costs. A controversial 2007 study by US-based CNW Marketing Research argued that the supply chain for some hybrid models has a significant ecological impact, degrading the vehicle's overall environmental footprint. Although this assessment is widely contested, it highlights the need to evaluate carbon abatement options from a holistic perspective.
Where to Turn?
Public and private sector leaders are being presented with a very real opportunity to drive clear, realistic and meaningful change in curbing greenhouse gas emissions. The attention of the global community has been captured and there is considerable willingness to do what is needed to solve the problems. However, if investments are misdirected, progress towards GHG reduction goals will be minimal, or worse, they may exacerbate the problem. And if people feel like their efforts and sacrifices are for naught, the issue may fade from public consciousness.
The key challenge then is to channel pent-up interest and resources towards the right areas, despite the time pressure and uncertainty. Decision makers can take heart in the fact that the rich debate over climate change solutions has generated considerable evidence to mull over. There is a sign of hope that choices will be made on the basis of fact and scientific insights over guesswork and good intention.