CAN TECHNOLOGY TRANSFORM THE CLIMATE DEBATE?
REMARKS BY EILEEN CLAUSSEN, PRESIDENT, PEW CENTER ON GLOBAL CLIMATE CHANGE
EXXONMOBIL LONGER RANGE RESEARCH MEETING, MAY 16, 2007
PAULSBORO, NEW JERSEY
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Thank you very much. It is a privilege to be here at your longer-range research meeting. I must admit that I generally steer clear of events whose titles include the words “longer” and “meeting.” But in your case, I am happy to say I made an exception.
I know that all of you have been busy all week in these meetings—and I am sure you haven’t had much time to keep up with the news. So I thought I would start my remarks today by telling you a few things that have been happening in the outside world:
With that out of the way, let me say again how honored I am to be here. When I was told that I would be one of two external plenary speakers for your internal technology advances meeting … well, let’s just say I am internally grateful. And I hope that any internal technology advances you are working on with respect to climate change become external before very long.
The reason I say this is because climate change is a problem in desperate need of innovative solutions—the kind of solutions you are working on every day.
The title of my remarks is “Can Technology Transform the Climate Debate?” But I could just as easily use the title, “Can the ClimateDebate (and Climate Policy) Transform Technology?” And my answer to both is a resounding “Yes.” We cannot change the debate without the technologies to address the problem. And without the right policies, we will not see technology development and deployment proceed with the urgency that is required.
So let me briefly deal with the first of these questions, where you really know more than I do, and then proceed to the second question, where I hope I can provide some insights.
What kinds of technologies do we need to make a real difference in our ability to address the challenge of climate change? Well, all of you know as well as I do that we need new and better technologies across the board. But I like to think about the world’s technology needs in terms of key sectors. And, with respect to climate change, there are three: the power sector, transportation, and buildings.
In the power sector, which accounts for the largest share of our (and the world’s) greenhouse gas emissions, we have a number of specific challenges. We need to show that carbon capture and storage can work and be affordable; and we need to get renewables to a point where they are competitive on cost. In transportation, we need to work hard on engines and fuels, while at the same time devoting more energy (pun intended) to potential breakthrough advances like hydrogen and fuel cells. And, in buildings, it’s about taking energy efficiency to the next level, and making it easier and more feasible for people to consider on-site power generation using renewables and other low-carbon sources.
We have seen a certain amount of progress in all of these areas, but it’s been largely hit-or-miss. So let’s consider just one example, carbon capture and storage, or CCS, which I understand you’re doing a fair amount of work on yourselves. Carbon Capture and Storage (CCS) is the key enabling technology for a future in which we can continue to use our vast coal resources and also protect the climate. CCS involves the separation of CO2 from other gases emitted when fuels are combusted or gasified and the injection of the CO2 deep underground into geological formations. CCS is still under development, but many experts are optimistic about its advancement. The United States has the geological capacity to store the emissions from its coal–fired plants in depleted oil and gas reservoirs for several decades. Capacity in other geological reservoirs is estimated to be in the hundreds of billions of tons (500 billion tonnes of capacity), enough to store current levels of domestic emissions for over 300 years.
However, at current rates of technology progress and deployment, CCS will not be utilized by power companies at a meaningful level for many decades. We at the Pew Center believe we must accelerate the development of this critical technology. We are exploring a number of options for making this happen. One option would entail demonstrating CCS at a number of commercial coal-based electric generation plants.
While one could pick any number, we have focused on two possible size: A smaller-scale program involving 10 commercial-scale demonstrations, or a program of 30 such demonstrations. The total cost of the demos would be $10 to $30 billion for 10 to 30 plants. This could be funded, for example, by a Trust Fund created by very modest (a hundredth of a cent or less per kwh) fee on electricity generation. The smaller program would build confidence and experience with the technologies and related regulations both within industry and among ordinary citizens; and would provide real-world cost and reliability information. The larger program would be more likely to actually bring down the costs of these technologies, which would have significant national economic advantages if these technologies are to be widely used, as will be necessary if we are going to both avoid serious negative impacts from climate change and to continue to use fossil fuels for a large part of our electricity.
So simply waiting around for these technologies to make their way from the laboratory into mainstream use is not an option. We don’t have the luxury to sit and watch this process evolve ever-so-slowly, like we’re watching American Idol week after week to see who the ultimate winner is. We need to speed the process along. Without picking winners ourselves, we need to enact policies that provide the incentives and that create the climate in which new technologies can succeed.
The climate change problem is simply too urgent, too consequential and too big to do this any other way. ExxonMobil Research and Engineering has been a part of the IPCC process, so all of you know the facts by now: 11 of the 12 warmest years on record have occurred since 1995. Ice sheets are melting. We’ve seen a fourfold increase in major wildfires. And this is just the start of it. Looking ahead, the recent IPCC report projected that global temperatures will rise by between 3.2 and 7.2 degrees Fahrenheit by 2100, and sea levels will rise as much as a foot to a foot-and-a-half. In addition, there is a 90-percent or greater chance that the world will see more hot extremes, heat waves and heavy precipitation events. And it is likely that we will see more droughts as well.
The IPCC is now on record saying, and I quote, that “warming of the climate system is unequivocal.” The group also states that there is a 90-percent-or-greater chance that lion’s share of the increases in temperature we are seeing are a result of increasing concentrations of greenhouse gases from human sources.
All of the scientific evidence sends a clear message, and it is this: if left unabated, climate change will have tremendous negative consequences for our country and the world. And, to solve it, we need to spur a global technology revolution—and we need to do it quickly. For business and government leaders alike, that means acknowledging and understanding the risks, while also seizing the opportunities that climate change presents to think differently about the future of our businesses, our communities and our world.
Risks and opportunities. They are what drive business decision-making every day. And therefore, I don’t think it’s an accident that business leaders are in many cases leading the charge for climate solutions. Nine years ago, the Pew Center established the Business Environmental Leadership Council. The idea was to bring together a group of leading companies who agreed with us, very publicly, that enough was known about the science of climate change to justify taking action to address it.
Now remember: this was a time when most major businesses still looked at climate change as a fringe concern. The perception in business circles—and political circles too—was that serious action was decades away, if indeed it would happen at all. And yet a small group of business leaders were brave enough to join with us at the Pew Center to say the time was right to do something.
Our Council, which began with 13 companies, is now the largest U.S.-based association of corporations focused on advancing solutions to climate change. It includes 43 companies with 3.8 million employees worldwide and a combined market value of over $2.8 trillion. Members are a who’s who of U.S. corporate leadership, from Alcoa and GE to IBM and Intel, PG&E and many more.
Of course, the members of our Council are not the only business leaders who are embracing strong action on this issue. In all sectors of the economy, there are companies and CEOs who are reducing emissions and calling for broader action to reduce emissions. And the reason they’re doing this, as I said, is because they understand the risks and the opportunities that climate change presents.
Let’s start with the risks. These businesses that are out in front on this issue have seen the science, and they understand that our lives, our environment, and our national security – they are all at risk from climate change.
And these businesses also understand something else. They understand that climate change poses real risks to their operations. According to the global insurance giant, Allianz, climate change already is increasing the potential for property damage at a rate of between 2 and 4 percent each year.
Just last week, super-investor Warren Buffett said that climate change – and I quote – could “materially change” the probability of catastrophes, increasing both the frequency and the intensity of storms. Citing the risks to Berkshire Hathaway’s catastrophe reinsurance operations, he said the firm would be charging more for coverage. Because of global climate change, he said “it would be crazy” to keep the firm’s rates at the same level as before.
And that just covers the risk to the insurance industry. Tourism, agriculture, finance, real estate, offshore oil and gas exploration … all of these industries (and more) face serious and compelling risks. And consider the risks for electric utilities and other businesses that do nothing to address this issue now—and then are forced to play a costly game of catch-up down the road as governments finally (and inevitably) get serious about reducing emissions.
The Energy Information Administration says U.S. greenhouse gas emissions in 2005 were 17 percent higher than they were in 1990. Eighty-three percent of the total in 2005 consisted of carbon dioxide from the use of fossil fuels. This simply cannot continue—and business leaders increasingly understand this. They understand that climate change is a real problem, and that regulation is inevitable. They understand that they had better be ready to operate in a world of carbon constraints.
According to the group CERES, investors filed 42 shareholder resolutions on the climate issue as part of the 2007 proxy season. This was nearly double the amount of resolutions filed three years ago, and ExxonMobil was on the list of companies that were the targets. The filers of these resolutions included state and city pension funds, foundations, socially responsible investment firms, and religious pension funds. Altogether, they represented more than $200 billion in assets, so these aren’t your average board meeting gadflies. And an important focus of their resolutions was risk disclosure – in other words, the shareholders simply wanted to know what these companies were doing to prepare for looming constraints on their emissions.
Again, people see government regulation as inevitable. It’s going to happen – it is just a matter of when. Last October, the Pew Center released a report based on a survey of 31 members of our Business Environmental Leadership Council. In the survey, 90 percent of these companies said they believe that government regulation is coming. Seventeen percent, in fact, said regulation would take effect before 2010, and 67 percent said it would happen between 2010 and 2015. And remember: this survey was taken before the shift in congressional leadership in 2006.
So business leaders – and investors too -- understand that this train is rolling down the tracks. And, rather than trying to throw something in front of it, many leading businesses have made the strategic decision that they want to get on board and help shape the policies that are going to affect how they do business for years to come. Because not being ready is a serious risk.
There is also serious risk in not knowing what’s coming down the tracks at all. Consider this quote: “Uncertainty about regulations, both for 2008-2012 and beyond 2012, creates a higher level of risk for companies. In Europe and Canada, for example, concerns are growing regarding companies’ willingness to invest in energy-intensive activities … The uncertainty about future regulations raises questions about the longer-term viability of such investments.” End quote.
It sounds like part of a Pew Center report. But this is your company, ExxonMobil, talking about climate-related risks to its operations and the need for more certainty in government policies so that it can plan ahead. You can find that document on the ExxonMobil website. It’s called “Tomorrow’s Energy.”
Now, from the risks that climate change poses for business to the opportunities. There’s a little U.S.-based company you may have heard of called GE … and GE has done a remarkable thing. It has committed to doubling its investment in environmental technologies to $1.5 billion by 2010. This is the equivalent of starting a new Fortune 250 company focused exclusively on clean technology. Is GE doing this for PR purposes? Not only. No, they’re really doing it because they see enormous opportunities in developing and marketing the clean-energy and energy-efficiency technologies of the future.
And GE is not alone. In the energy business, ExxonMobil and other quote-unquote “oil” companies are investing billions in alternative energies and other climate-friendly technologies—not out of the goodness of their corporate hearts but because they see real opportunities for profits and growth.
Climate concerns have initiated a wave of new investments in the technologies that will help to reduce emissions in the decades ahead. Consider this:
Clearly, a growing number of businesses and a growing number of investors see a growing number of opportunities in developing the energy technologies that are going to help us finally get a handle on the climate problem. But still, the current level of investment and the current level of activity is not enough. Emissions continue to grow by leaps and bounds—even as scientists are telling us with almost unanimous certainty that our current course will take us to a very dangerous place.
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Links:
[1] http://ww.pewclimate.org/press_room/speech_transcripts/clauseen516_3.cfm