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While Politicians Bloviate, Businesses Innovate

March 3, 2005

You wouldn't know it by listening to some of the tired rhetoric in Washington, DC, but there is money to be made in reducing emissions of carbon dioxide and other heat-trapping greenhouse gases.

In the DC echo chamber of climate skeptics, they say it can'Õt be done. In the real world of business, it can and is being done.

Blue chip companies that are at the top of the industrial food chain in energy, chemicals, household products, metals, transportation, equipment, and other industries have cut their costs and delivered more value to their shareholders by using energy more efficiently.

DuPont, for example, which produces everything from carpet fibers to cleaning fluids, has cut its greenhouse gas emissions 70 percent in the past 10 years, saving $2 billion in energy costs. DuPont shareholders surely appreciate that company managers have, in effect, boosted earnings by $2 billion rather than spending that considerable sum on wasted energy.

SC Johnson, which produces brand-name household cleaning products, reduced greenhouse gas emissions at its top five factories by 20 percent from 2000 to 2003. In that three-year period, the company's use of fossil fuels at those five factories fell more than 20 percent.

Interface, a flooring producer that sets a high standard for planet-friendly operations, reduced energy used per square meter of carpet by more than one-third between 1996 and 2003.

Such reductions can create a tradable product, in the form of credits that can be bought and sold on greenhouse gas emissions trading markets that are springing up around the world. Such markets reward innovators that find the most cost-effective means of reducing greenhouse gas emissions.

One driver for the emergence of these markets is the cap-and-trade provisions in the Kyoto Protocol, which took effect Feb. 16, with the U.S. and Australia the only two industrial nations on the sidelines.

There is a sense among top business leaders that someday, the U.S. will have to get off the sidelines, get into the climate game and set national caps on greenhouse gas emissions. DuPont, Interface, Ford, and other companies are learning the ins and outs of emissions trading by participating in the voluntary Chicago Climate Exchange. In 2003, member companies exceeded their first-year emissions reduction requirements by 8 percent.

The Chicago Climate Exchange is a school where businesses can roll up their sleeves and figure out how to use emissions trading to their best advantage. For these markets to work effectively, there is no substitute for learning by doing. As former EPA Administrator Christine Todd Whitman wrote in the Chicago Climate Exchange's fall 2004 quarterly journal, "waiting may not be the most effective strategy."

Many companies are taking her advice. While political types inside the Beltway fulminate about climate "hoaxes" and shout "never!" to greenhouse gas emissions limits, business leaders know better. They are ignoring the politicians, listening to the scientists, trying stuff out, learning, and moving forward.