Arguing climate change to an energy executive
Environmentalism without tears: Arguing climate change to an energy executive
July 25, 2006
Arguing climate change to an energy firm while ignoring the science
Earlier this month I had the opportunity to make a pitch to “Mike,” a top executive of a major energy company, about climate change and green energy. Mike said he didn’t believe humans are influencing climate or that green energy is a key factor in the future business of his firm, “EnergyCo.” I tried to persuade him otherwise, not by focusing on the science of climate change but on economics and market opportunities. It’s not that science isn’t important—I just didn’t want to get caught up in an argument about core beliefs, which is akin to arguing over religion.
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Less than a week after the pitch, Mike’s firm made a green-energy announcement. I doubt this had anything to do with my efforts, but I was happy to see the press release come across the news wires.
Here’s the gist of what I said.
While there’s little doubt that the issue is heavily politicized, 2006 may go down as the year climate change gained mainstream momentum. It’s no longer the domain of fringe environmentalists and Hollywood celebrities—everyone from grandmothers to politicians is talking about topics like carbon-dioxide emissions, ocean acidification, and solar photovoltaics. Magazines from Time to The Economist are devoting covers to the topic, while green concepts have been recast as “economic” and “patriotic,” rather than being labeled “granola” or “vaguely French.”
At the very least, I suggested to Mike, EnergyCo should see this shift in public sentiment as an opportunity to improve its public relations and develop a framework to monetize a green movement. In an environment where perceived concerns over climate change are growing and energy from renewable sources is becoming increasingly price competitive with fossil fuel-based power, consumers want green energy. Further, I believe this shift in public sentiment will lead regulators to make green-energy mandates in the near future.
EnergyCo needs to be ready to take advantage of this shift in the regulatory climate—it could prove immensely profitable. In Europe, energy firms that were prepared for the recent introduction of binding emissions regulations saw tremendous returns from the emergence of the carbon trading market. In the United States, where carbon-dioxide emissions are not yet regulated as pollution and the government has not signed any binding treaties on this greenhouse gas, voluntary actions on such emissions have two likely outcomes.
In the first, the climate issue loses popular appeal, but EnergyCo still gets public-relations credit for addressing the issue, and its reforms have at least helped increase efficiency and reduce pollution. The potential savings from improvement in efficiency are not insignificant. A $20 million investment by British Petroleum in energy efficiency measures in 1999 had yielded $650 million in savings by 2002, while 3M’s pollution-prevention program had saved the firm $750 million by 1997.
In the second outcome, climate change remains a major public concern, and EnergyCo can point to its action plan while genuinely fighting the global problem. If EnergyCo gets on board with an innovative and extensive program, it can claim to be a leader in the battle against potentially catastrophic global warming.
EnergyCo shouldn’t be tempted to take superficial approaches to the challenge, claiming to support green-energy initiatives for reducing greenhouse-gas emissions, while in practice misleading the public.
As my colleague J.D., a sustainably-minded businessman, puts it, “Profitability will not result from a greenwash’ quick fix. Watch groups are getting more sophisticated and vocal. To earn credibility in an increasingly scrutinized marketplace where green-conscious investors are voting with their dollars, it’s in a firm’s best future financial interest to be both transparent and vocal in administering a sustainability program.”
As I talked to Mike, I touched on the science but tried not to get too specific or sound like a professor of ecology.
As Mike mulled over my points, he asked the inevitable: how do we know that humans are influencing climate? I’m not a climatologist, and anyway I didn’t want to plunge into a debate about the shape of the temperature record graph for the past 1,000 years. So I just noted that most climatologists do believe human carbon-dioxide emissions are affecting atmospheric temperatures. I told Mike, briefly, about a study in the journal Science which, though slightly flawed in methodology, found no scientific papers over the past ten years disputing the reality of human-caused climate change. The study is featured prominently in Al Gore’s film, “An Inconvenient Truth.” I told Mike that despite the film’s political overtone, which turn off many viewers including him, it provides a good review of the science behind climate change, and highlights recent research from prominent climatologists.
I also asked Mike to consider the potential risk of climate change, using the concept of a false-negative diagnosis as an analogy for the potential impact of human activities on future climate change.
A false-positive diagnosis is an inconvenience, but a false negative can be catastrophic, I said. Imagine a person who receives a false negative on an AIDS test. The person could spread the virus to others, falsely believing there was no infection. The analogy can be applied to climate change: by allowing runaway carbon-dioxide pollution to continue, we’re betting that human carbon-dioxide emissions aren’t affecting atmospheric temperatures and that no corrective action is needed. It may be a bad bet.
Mike seemed reasonably satisfied with the science. I think he also understood that no matter what scientists say, it’s possibly less important to him than public sentiment or the political climate. He asked how he should deal with environmentalists, with whom he’s had less than cordial relations in the past.
I proposed that instead of continually denying environmental concerns, he sit down with environmental groups to hear what they have to suggest. Chances are constructive compromise may be possible on such issues as trading solar and wind farms for new transmission lines that might otherwise be opposed if they were not carrying green energy to urban markets.
My goal was to portray climate change as an opportunity for Mike’s firm, and also help him look beyond carbon emissions and global warming, to see the environment as something other than an enemy of business growth.
While energy companies are easy targets when it comes to issues like pollution and waste, one could argue that they’re merely producing and selling what consumers demand. Consumers—individuals, families, businesses—are the ultimate users of energy and all other products. We all need to think about and change our behavior, if we’re serious about addressing the continued degradation of the world around us. Energy executive or environmentalist, we all live here. Seems like we should treat our home with respect.
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