Global Warming: Time to Begin Taking Small Steps?

Abstract: With no international agreement to combat global warming, businessmen can begin taking small steps to do it on their own.

Analysis: Global warming is real. That fact was confirmed this week by discovery in London of southern green stinkbugs. Heretofore, the climate in Great Britain has been too cold for the insects. That news may not be all bad. The stinkbugs are considered a delicacy in Mexico, according to a Reuters report. And the image of waiters passing among gowned and tuxedoed Brits with trays of fried stinkbugs may provide a moment of levity.

But only a moment. Climate change is serious business.

There are many other indicators in Nature that the world is getting warmer: "satellite measurements suggest that spring arrives about a week earlier now than in the late 1970s, for example, and records show that migratory birds fly to higher latitudes earlier in the season and stay later. Global temperatures have risen by about 0.6 degrees Celsius since the nineteenth century."

These latter facts are contained in an article by Sir John Browne, group chief executive of BP plc, in the July/August issue of Foreign Affairs. Titled "Beyond Kyoto," it confronts the problem of dealing with greenhouse gases to mitigate climate change/global warming.

Browne notes that the 1997 provisional agreement "[Kyoto,]...is coming unraveled. Despite nearly a decade of effort, it may not even enter into force as a binding instrument. Canada, Japan, and the European Union--the most enthusiastic advocates of the Kyoto process--are not on track to meet their commitments. And the United States has withdrawn from the agreement entirely. Those concerned with the sustainability of the earth's climate could be forgiven for feeling depressed."

One of those depressed is Ron Oxburgh, a member of the British House of Lords, chairman of its science and technology select committee and newly appointed chairman of Shell Transport and Trading Company. Oxburgh replaced the ousted Philip Watts in the wake of Shell's reserves downgrade.

In an interview published in the Guardian newspaper last week, Oxburgh is quoted as saying, "The other major consideration that we have to take into account is the greenhouse effect and global warming...No one can be comfortable at the prospect of continuing to pump out the amounts of carbon dioxide that we are at present...with consequences that we really can't predict, but are probably not good."

Oxburgh fingered the core problem in dealing with climate change. Even those who believe strongly in it, and feel it is underway now, can't predict how fast it will come on and how soon, or if, it will cause major difficulties.

In the absence of a focused and identified threat, odds are not good that the problems with the Kyoto accord can galvanize political action. But, just because the threat can't be measured precisely, doesn't mean you can't deal with it. Businessmen deal every day with problems involving insufficient information and uncertain consequences, and that suits them ideally to deal with climate change. Browne suggests the world's businessmen set about doing this with small, achievable steps and let the political agreements follow.

A Plan Beyond Kyoto
Browne's Foreign Affairs article is lengthy and wide ranging. Certainly everyone, especially those involved in the energy industry, should read it. But the basic idea that industry can begin on its own to reduce greenhouse gases and collaborate with national and international governments later, as time goes on, and without restrictive agreements, may be an idea whose time has come.

One reason small steps might succeed is that the world has gained a lot of experience dealing with emissions in the seven years since Kyoto. Knowledge of the challenges and uncertainties is improved and many countries and companies have had experience reducing emissions and have achieved such reductions without destroying competitiveness or jobs.

Based on an extensive review of the history of greenhouse gas buildup and trends, Browne concludes that any increase in the world's temperature should be limited to between 2 or 3 degrees Celsius above the current level in the long run.

Focused on that goal, a growing number of governments and experts have concluded that policy should aim to stabilize concentrations of carbon dioxide in the atmosphere in the range from 500 to 550 ppm over the next century, which is less than twice the pre-industrial level.

Costs Will Drop
Using known technology, the cost of meeting this goal would be high. But extrapolating the track record of technological progress in other fields, Browne sees an enormous potential for mitigation costs to fall as new ideas are developed and applied.

In just this way, he points out, deepwater oil and gas development costs have fallen by a factor of three over the last 15 years, and there is no reason to think that research and development in the area of benign energy systems would be less successful.

Businesses have already found much lower-than-anticipated costs from reducing emissions. BP, for example, reached its initial target of reducing emissions by 10 percent below its 1990 levels without cost. Browne says the company added around $650 million of shareholder value, because the bulk of the reductions came from the elimination of leaks and waste.

It is likely that some improvements will likely come from transforming the energy system itself, involving changes to transportation and power-generation and design of more energy efficient buildings. And a laundry list of ultra-efficient electrical appliances could emerge.

The role of business is to transform these possibilities into reality, undertaking focused research, and testing the different possibilities in real commercial markets.

Government's Role--And Plan B
To take the small steps, Browne says government must provide the business sector with fair and credible government incentives. Systems that might emerge include trading regimes similar to those successful in the U.S. in sulfur dioxide mitigation.

Government can also organize research to extend understanding of the science of climate change. Risks will be too high for private firms to provide all the needed investment. Collaboration and cooperation could easily be internationalized as with efforts in high-energy physics, astronomy, and nuclear fusion.

Countries struggling to achieve basic levels of development, and grow and improve their people's living standards, can't be expected to abandon their ambitions to emission limits. But by 2025, energy-related carbon dioxide emissions from these developing countries are likely to exceed those from the member states of the Organization of Economic Cooperation and Development. Instead of being daunted by the scale of this challenge--which has largely undone Kyoto--policymakers must recognize that developing countries have the potential to leapfrog the developed world's process of industrialization. This provides an enormous opportunity to improve energy efficiency and reduce emissions.

One general plan in this area has been recognized for a number of years. It is called "contraction and convergence," or C&C, and is often called "Plan B."

The "contraction" in C&C stands for reducing the output of greenhouse gases to hold average temperature rises to a fixed number--often 2°C, corresponding to concentrations of carbon dioxide below about 450 parts per million. One estimate is that a 60 percent cut in global emissions by 2050 would be needed.

This would provide serious incentives in industrialized countries for the kinds of technological improvements that Browne envisions. The "convergence" part of C&C comes in as emissions from developing countries rise. The emissions will converge year by year towards some agreed target, providing incentives for developing countries to install the best possible emissions reducing technology immediately.

At What Cost?
It's a big subject. And Browne's Foreign Affairs article will reach a large and influential audience. One that will doubtless find small steps inherently more palatable than mind-boggling international agreements. And if climate change turns out to be less fearsome than most people believe, what will it have cost us? We'll just have become more efficient than we actually needed to be.