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Is the pendulum starting to swing toward climate action?

Foucalt's pendulum at the United Nations in New York City
FlickrJavi Masa
Foucalt's pendulum at the United Nations in New York City

Typically I like my surprises in the form of flowers. But news of the recent U.S.-China agreement to pursue actions in support of a clean energy economy was the kind of surprise I’ll take all day long.

Opposition was immediate, of course. As was skepticism about just how bold the new commitments really are. We’ll certainly hear more of both, but neither can overshadow the important signal this agreement sends: The leaders of the two largest economies and GHG emitters believe thst our changing climate demands action — now. It was the kind of move that causes the pendulum to swing slightly higher on the progress side.

Many in the private sector greeted the news with great enthusiasm. They recognize the business risks associated with climate change, but also the inherent opportunities in transitioning to a clean energy economy. The key is the predictability that consistent policy provides. Clarity can act as an innovation accelerant and productivity driver; constraints in one area drive creativity in others.

According to a recent report published by We Mean Business, companies that have set targets aligned with climate science and publicly disclosed their performance on relevant metrics are seeing an Internal Rate of Return of 27 percent on low-carbon investments. Some report an IRR as high as 81 percent.

The U.S.-China announcement also comes as the Environmental Protection Agency's proposed plan to limit carbon emissions from electric power plants reaches a critical milestone. The public comment period for the measure ends on December 1.

The Clean Power Plan (CPP), as it’s officially known, sets goals for reducing power sector emissions based on local conditions, opportunities and policies. States are granted tremendous flexibility in how to achieve the targets, including through energy efficiency, expanded use of renewables and improvements to coal-fired plants. In addition, they can leverage multi-state solutions, such as the Regional Greenhouse Gas Initiative (RGGI).  

The nine participating RGGI states support the CPP because they have directly experienced the benefits of a structured program to limit GHG emissions: $70 million in clean energy investments; a 40 percent reduction in regional C02 emissions; job creation; an estimated $2 billion in lifetime energy cost savings.

Data points like these are why, increasingly, companies are stepping out publicly to call for smart energy policy. BICEP (Businesses for Innovative Climate and Energy Policy), the policy arm of sustainability advocacy group Ceres, includes a growing number of companies who see the urgency of being vocal. BICEP members are asking for some degree of predictability, not prescriptive rules, but guidelines — “policy guardrails, ” as Starbuck’s Jim Hanna likes to call them. BICEP members have made their case on Capitol Hill. We captured some of their comments here.

They are also thinking carefully about their trade associations and what those memberships say about their brand.  Consider the recent departures from the business group ALEC.  Much as they claim it doesn’t matter, having over 90 high-visibility brands, including Microsoft, Facebook, Google and now software giant SAP jump ship over its climate change position (among other things) sends a strong signal.

And the pendulum gains momentum.

BICEP was back on Capitol Hill again last week. Together, representatives from Kellogg, Nestle, eBay, KB Home and many more told lawmakers why the transition to a clean energy economy is important to business. We also released an open letter to the President expressing the support of companies for regulating carbon. And we closed the comment period with a social media Thunderclap to #GenerateChange.

In what might be the ultimate surprise, we could be witnessing a pendulum shift to a clean energy economy that appeals to Republicans and Democrats alike. Join us.

Cynthia Curtis

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