Not Ready for Cap-and-Trade: US Manufacturers

The carbon cap train may be leaving the station, whether aboard the EPA, White House & Congress Railroad or on the high-speed rail from the Copenhagen Circus.

But left behind and potentially dead on the tracks may be US manufacturers, especially those in the industrial equipment sector.

There are nearly 46,000 industrial manufacturing companies in the US and Canada ranging in focus from machinery, aerospace, and petroleum refining to printing, chemicals, food, and medical devices, to computer systems and peripherals, pharmaceuticals, and paper. (These are the Dunder Mifflins of the world.)

Imagine you are the CEO of a small to mid-size company with under a billion dollars in revenue that supplies a part or product for a larger original equipment manufacturer (OEM).

The OEM is charged with reducing its carbon footprint, but there is only so much it can do at the home office, facilities, and transportation. So the OEM turns to its suppliers and says, "What are you doing to reduce my carbon footprint?"

Suddenly, you are charged with meeting those targets or potentially losing their business. But your company is ill-equipped to track reductions or even to establish a benchmark against which to measure reductions.

"Well," one government official familiar with the situation said to me. "You can use your enterprise software to track various components, just like you do with other management issues."

Maybe, or maybe not.

A new survey conducted by Reed Business Information for IFS North America, a global enterprise applications company, shows that US manufacturers, even large ones, are not ready to measure their environmental impact. (The survey will be available December 28th.)

Many of these companies are currently not tracking environmental metrics, and most lack the technological or management infrastructure to do so in a cost-effective manner.

One survey respondent, who works for an aerospace and defense manufacturing company with more than $2.5 billion in revenue, said his company would "like to have this embedded, versus buying and integrating a third party package or writing my own solution."

Currently, neither Oracle nor SAP, the most widely used enterprise business software applications have built-in environmental footprint management tools.

Oracle recently entered into a partnership with OMRON to "create a solution that will help companies track and reduce energy consumption in manufacturing and non-manufacturing environments," according to a spokesperson with the company.

SAP has several solution modules, including SAP Carbon Impact, but as of this writing it is unclear whether they offer a fully integrated product.

IFS, which commissioned this survey, released a product with an embedded "eco-footprint" tool last February, but they only serve a fraction of this market in a specific niche.

"We are not an ERP solution for every manufacturer," says Chuck Rathmann, a spokesman for IFS North America. "We are kind of a niche player for complex, engineer-to-order manufacturing, asset intensive industry, aerospace and defense and a couple of other verticals."

So, even if the major enterprise solution providers are working on tools to help with the transition, many companies will need time to adjust to new regulations and expectations.

Middle-market companies, especially those doing under $1 billion in revenue, are in a particularly tough position. They simply can't afford the costs of consulting and integration necessary to track environmental metrics.

With only 20 percent of the over 260 mid-size companies in the IFS survey indicating they are tracking their eco-footprint, it could be a long process. And what about companies over $1 billion? Only 36 percent say they are currently tracking it.

Few would argue that tracking this stuff isn't important. In fact, 83 percent of those surveyed said it was important. However, the number one reason for that importance was compliance.

The timeline, however, is a different story. Regulators and government officials need to take into account that people can't just flip a switch and make this happen.

But is anyone in Washington or Copenhagen considering the unintended consequences of their decisions on this sector? I doubt it.

In fact, I'd be surprised if any one of these companies has a seat at the table in the global climate summit in Denmark -- they typically aren't heavy on marketing or lobbying budgets. But once again they may be left out in the cold.

The Green Skeptic on Fox Business: Paying for Green Demands

Here's a link and video from my appearance on Fox Business today with Eric Bolling:

Red Ink Watch: Paying for Green Demands

Boxing Match in the Senate? Boxer-Kerry Climate Bill Being Introduced Today

With Democratic Senators Boxer and Kerry preparing to launch their Climate Bill salvo into the Senate, opponents are gearing up for a fight.

According to USA Today, "Sen. James Inhofe, R-Okla., one of the Senate's most vocal opponents of climate-change action, predicted the bill won't even be debated on the Senate floor before the end of the year, let alone come up for a vote."

The New York Times reports that "...the 684-page Senate draft bill (pdf) diverges from the House measure in its push for a 2020 emissions target of 20 percent, compared with the House's bill's 17 percent limit.

Both the House-passed bill, H.R. 2454 (pdf), and the preliminary Boxer-Kerry proposal contain the same longer-term emissions limits of 42 percent below 2005 levels by 2030 and an 83 percent cut for 2050."

I haven't had a chance to read the Senate draft bill, but will try to have a look at it in the next day or so.

But it sounds like Senators on both sides may want to get out their boxing gloves.

Agree to Disagree: Cap-and-Trade vs. Carbon Tax?

NASA’s leading climate scientist, James Hansen, says he hopes that climate legislation proposed by Democratic Representatives Henry Waxman (CA) and Edward Markey (MA) to introduce carbon emissions trading to the United States fails.

Hansen says lawmakers should abandon cap-and-trade initiatives altogether and implement a simple carbon tax instead, according to Nathanial Gronewold, a reporter at Environment & Energy Publishing.

"Trading of rights to pollute...introduces speculation and makes millionaires on Wall Street," Hansen told an audience at a conference hosted by Columbia University climate policy students on Saturday. "I hope cap and trade doesn’t pass, because we need a much more effective approach."

This may be a nice way to curry favor with student environmentalists, but is it smart? According to Reuters, even the Chinese are considering a carbon tax over cap-and-trade. What's the difference, really?

Under a cap-and-trade program, the government will set the overall emissions cap and issue allowances or credits to businesses to pollute at a set amount. A company that reduces its emissions quickly and cheaply can auction their extra credits to another that, because of the nature of its business or available technology, may find it more difficult to comply with the caps.

This market-based approach helps ensure that overall caps are met at the lowest possible cost. Cap-and-trade has been modeled after the U.S. effort to control acid rain pollution, which saw greater reductions at lower costs than originally anticipated.

Under a carbon tax, such as that proposed by Rep. John Dingell (D-MI), emitters are required to pay a tax for every ton of pollution they produce. Carbon taxes lend predictability to energy prices, according to supporters, who claim that cap-and-trade systems will simply aggravate price volatility and adversely affect consistent investments in less carbon-intensive electricity generation, energy efficiency, and renewable energy.

But, argue cap-and-trade supporters, such a system also provides certainty: it fixes the ceiling on emissions (stepping it down over time) and lets the price vary with demand.

Despite rhetoric on both sides, neither system is really more complex than the other, as each requires often difficult monitoring and enforcement.

Cap-and-trade and carbon tax do share another issue: what to do with the proceeds? The Obama administration seems to favor distributing 10 percent of the proceeds to American citizens; others, including Representative Chris Van Hollen (D-Md.), would return 90 percent to Americans. Still others call that highway robbery.

Now, Jim Hansen says we'll create a bunch of robber barons on Wall Street if we go this route. But a carbon tax will simply create bigger government, or at least help pay for the biggering and biggering the government has done since last fall.

As readers of the green skeptic know, I firmly believe we won't make the shift until one of two things happens: 1.) we can make boatloads of money off of addressing the issue or 2.) oil prices go through the roof and supply plummets to worse than anticipated levels.

Rep. Markey claims his Bill, the Investing in Climate Action and Protection Act (HR 6186), or iCAP, is a cap-and-invest strategy.

President Obama has already included a line item for cap-and-trade in his budget, which clearly signals the Administration's preference for capping global warming pollution, auctioning all the emission allowances, and investing $15 billion per year in clean energy.

Wither a tax? It's probably, as every politician knows, an idea that is dead on arrival. And it is looking less and less likely we'll get a decent cap-and-trade program in place any time soon. So, perhaps we should just focus, as blogger Gar Lipow suggested in Grist, "on pushing for green infrastructure, paid for the moment by 10-year bonds with a 3 percent interest rate."

If time is money and we're running out of time, then why not support an approach that will generate more money and maybe, just maybe, buy us some time?

Related articles by Zemanta

• Oil Industry Ready to Work on Global Warming (nytimes.com)
• Democrats Unveil Ambitious Global Warming Bill (nytimes.com)
• Carbon trading 'undermined by boom and bust' (guardian.co.uk)
• European carbon trading scheme will not cut power sector emissions, MPs told (guardian.co.uk)
• Back to future for Liberals on carbon tax (nationalpost.com)
• China studies carbon tax (financialpost.com)
• On Climate Change, Henry Waxman Wants Congress to Act Now (usnews.com)
• Tax What You Don't Want: (brothersjuddblog.com)
• David Roberts: Carbon Tax is a Poison Pill (huffingtonpost.com)

Reblog this post [with Zemanta]">

Clean Tech: Bjorn Lomborg's Call for R&D Investments

Although we don't always agree, I share a healthy skepticism with Bjorn Lomborg, author of The Skeptical Environmentalist and adjunct professor at the Copenhagen Consensus Center, Copenhagen Business School.

And, as his opinion piece in the Washington Post last week revealed, we are both concerned that the United States is "missing the opportunity of a lifetime," as Sam Wainwright said to George Bailey in "It's a Wonderful Life."

Lomborg's assertion? That "the least effective use of resources in slowing global warming would come from simply cutting carbon dioxide emissions."

In other words, we need to get beyond global warming concerns and focus on accelerating the new green economy.

We are focusing on the wrong things.

As an example, "solar panels are one-tenth as efficient as the cheapest fossil fuels. Only the very wealthy can afford them. Many 'green' approaches do little more than make rich people feel they are helping the planet. We can't avoid climate change by forcing a few more inefficient solar panels onto rooftops."

The answer? We need to "dramatically increase research and development so that solar panels become cheaper than fossil fuels sooner rather than later," Lomborg asserts. "Imagine if solar panels became cheaper than fossil fuels by 2050: We would have solved the problem of global warming, because switching to the environmentally friendly option wouldn't be the preserve of rich Westerners."

"This message was recently backed up by the findings of the Copenhagen Consensus project," according to Lomborg, "which gathered eight of the world's top economists -- including five Nobel laureates -- to examine research on the best ways to tackle 10 global challenges: air pollution, conflict, disease, global warming, hunger and malnutrition, lack of education, gender inequity, lack of water and sanitation, terrorism, and trade barriers."

This group of experts did a thorough cost-benefit analysis of various response to these challenges. In the end, they "didn't conclude that the world should ignore the effects of climate change. They pointed out that a better response than cutting emissions would be to dramatically increase research and development on low-carbon energy -- such as solar panels and second-generation biofuels."

I've long argued here in The Green Skeptic that we've missed the opportunity thus far -- a 30-year opportunity to invest in the kind of R&D that gave us the Internet and other technological and economic advances. Lomborg agrees.

"The United States has an opportunity to lead the world on research and development," Lomborg argues. "Which would give it the moral authority to demand that everyone else do the same. The world's sole superpower could finally provide the leadership on climate change that has been lacking in the White House.

"Even if every nation spent 0.05 percent of its gross domestic product on research and development of low-carbon energy, this would be only about one-tenth as costly as the Kyoto Protocol and would save dramatically more than any of Kyoto's likely successors."

I concur. It's time to unleash the creativity and innovation that has long made this country a leader on the world economic stage, and set us on course for a low-carbon, economically prosperous future. A new green economy.

Earth: The Sequel by Fred Krup and Miriam Horn: A Review

Entrepreneurs can save the planet, but they need a cap-and-trade system to do it.

That's the premise of Earth: The Sequel, by Fred Krup and Miriam Horn, and published in March by W.W. Norton.

The authors, the head of Environmental Defense and a journalist now working for the same, respectively, argue passionately on behalf of emissions cap-and-trade as the solution to unleashing the entrepreneurial spirit of Americans (and others) to solve the climate crisis.

They also tell the story of some of "cutting-edge" innovators in the clean energy space, people like Conrad Burke of Innovalight, the solar nanotechnology company, Isaac Berzin, the chemical engineer who co-founded algae-farm biofuel developer GreenFuel Technologies, and the colorful Bernie Karl of Chena Hot Springs, who is trying to capitalize on geothermal energy found below the Alaska bush with the help of Fortune 500 company United Technologies Corporation.

The stories are simply told, some of them compelling, some bordering on boosterism, but the focus on entrepreneurs is welcome. There's nary a whiff of skepticism in these pages, however, which read like a virtual catalog of potential clean tech investments.

I realize the authors don't want to back one technology solution over another -- and the new green economy requires not just one silver bullet but a full chamber -- but a little more critical analysis of the full panoply would have been nice (see Pernick and Wilder's The Clean Revolution for more in-depth analysis of the sector).

Private investment is fine, the authors reason, whether entreprenuer or venture capitalist; however, it can't scale without a cap on carbon emissions. In their view, a cap is the only thing that will make alternative energy more affordable to generate. Without it, we will neither reduce emissions enough nor grow the burgeoning clean tech industry.

"To save the planet from calamity," write Krup and Horn, "innovation and deployment of known technologies must occur now at a pace as intense and a scope as vast as the settlement of the western frontier."

Scientists have determined we need to reduce CO2 emissions by 80 percent by midcentury to "stabilize the global climate." According to the authors, "we must produce at least 14 trillion watts of carbon-free energy by 2050 -- about as much power as we now get from the entire fossil energy business" to reach that goal.

The advantage of a cap is that it puts a true limit on total emissions; the problem is it can lead to higher prices for consumers and windfalls for certain companies.

Companies need the stability and predictability of a cap. As Dupont CEO Chad Holliday, whose company is part of a coalition calling for a national cap, says in a quote from the book, "You need some certainty on the incentives side and on the market side, because we are talking about multiyear investments, billions of dollars that will take a long time to pay off."

A national cap would provide that certainty. We just need to make sure it covers all the carbon economy and that the permits are sold not given away free, as in the current European Union scheme. There is even talk of a cap-and-dividend style program that would make equal payments to all Americans (along the lines of the Alaska Permanent Fund Dividend).

"We have before us an extraordinary opportunity," Krup and Horn conclude. "to harness the power of the United States of America's huge and dynamic markets to ensure a safe future...Enacting a cap on carbon will gather U.S. ingenuity and resourcefulness to serve a higher purpose: protecting this planet for generations to come. We have the talent and a brief window of time to create the world of possibilities. All we need is the resolve."

Higher purpose or base greed, I don't care; let's just get moving on the new green economy.

In the end, as NYC Mayor Michael Bloomberg offers in his advance praise blurb, "Earth: The Sequel makes it crystal clear that we can build a low-carbon economy while unleashing American entrepreneurs to save the planet, putting optimism back into the environmental story."

Global Climate Change: Times' Kristof Challenges Bush and Candidates on Climate

Nicholas Kristof challenges President Bush's latest statement about climate change in today's New York Times. According to his Facebook page, he was inspired to write the opinion piece by a recent study in the journal Nature, titled "Dangerous Assumptions" by Roger Pielke, Jr, Tom Wigley, and Christopher Green.

"Imagine if President Bush announced a plan for Iranian and North Korean nuclear programs that declared: They will cease accumulating nuclear weapons by 2025. We will accomplish this through incentives and voluntary action, without mandates.

"Mr. Bush would be ridiculed, but in essence, that’s the plan he announced for climate change on Wednesday. He set a target for halting the growth in carbon dioxide emissions by 2025, without specific mandates to achieve that, and in the meantime he blasted proposed Senate legislation for tougher measures as unnecessary.

"Unnecessary? When scientists detect accelerating melting in the Arctic and confidently predict centuries of coastal retreats and climate shifts, endangering the only planet we have?"

Kristof closes his piece with a call for a new green economy, even if he doesn't call it that:

"So the next president should start a $20 billion-a-year program (financed by a pullout from Iraq) to develop new energy technologies, backed by a carbon tax and cap-and-trade system. Each of the presidential candidates favors some form of a cap-and-trade and would mark a step forward from President Bush’s passivity — although John McCain’s recent proposal for a summer holiday from the gas tax would be a deplorable step in exactly the wrong direction, unless he hopes to turn his land in Arizona into coastal property.

"The bottom line is that none of the candidates focus adequately on climate change, for this will be one of humanity’s great tests in the coming decades — and so far we’re failing."

Read the full opinion piece here: Kristof

Global Climate Change: Vienna Talks Focus on Economics and Energy Investments

The global economy will be fueled by over US$20 trillion of spending on energy over the next two decades and this week's round of talks on global warming, which begin today in Vienna, Austria, will focus on how to make that investment as green as possible.

"We need to 'climate-proof' economic growth," said the UN's top climate official Yvo de Boer yesterday. The UN Framework Convention on Climate Change believes additional investments of about US$210 billion a year are necessary to maintain greenhouse gas emissions at current levels until 2030.

More than 1,000 delegates from around the world will gather to talk about how best to ensure energy investments will contribute to reducing emissions rather than adding to it.

"The war against climate change is not a war against oil," De Boer said, recognizing that the world will likely be dependent upon oil and coal for many years to come. "It's a war against emissions."

The goal should be to find every way possible to reduce those emissions, increase efficiency, and catalyze investments in alternative energy, carbon capture, such as sequestration, and making what fossil fuels we do continue to use be more clean and efficient.

I've often been critical of the UN-led discussions for being nothing more than hot air. Let's hope this meeting and the others leading up to the climate summit in Indonesia this December will have concrete and economically viable outcomes.

View a webcast from Vienna: Climate Vienna

Ecosystem Benefits: Brand and Fink Creating Markets for Nature's Services

Next month's Wired Magazine features a piece by David Wolman on efforts by "eco-capitalists" to create new markets for the life-sustaining services provided by Nature. That's right. Call it natural capital, ecosystem services (see my earlier post on that subject), environmental markets, ecological assets, or as my former colleague John Kinch and I coined it, ecosystem benefits. Whatever. These are the services provided by nature free of charge -- or free until now.

In an effort to create viable markets for such services as clean water, storm surge protection, and greenhouse gas build-up, people like David Brand, founder of New Forests Pty Limited, and Priceline.com cofounder Jessie Fink, among others, "are betting that successful trading of carbon will kick-start the creation of other cap-and-trade systems for ecological services like watershed protection, biodiversity, and erosion control."

Read more @ Wired: Eco-Capitalists

Global Climate Change: TNC's Bill Stanley in "Plenty"

My Nature Conservancy buddy Bill Stanley is one of the smartest climate guys I know. Now he's been featured in Plenty magazine (love their tag line: "It's Easy Being Green") in an interview following on his recent bicycle trip across Montana, a kind of working vacation that allowed Bill to take the climate change pulse of real people.

Along the way, he explains why the Conservancy is focused on climate change and what they are doing about it.

And, while you're at it, check out the Conservancy's Climate Change calculator, recently featured on NBC's Today Show.

Read the interview: Plenty of Bill

Global Climate Change: Bush Weighing Emissions Caps

The Wall Street Journal reports this morning that George Bush and other top officials from his administration, including Treasury Secretary Henry "Hank" Paulson, are exploring a range of options to address climate change. These options may, according the WSJ article by John D. McKinnon, include "some form of economy-wide emissions caps."

The administration has long been opposed to caps, which helped lead to its position on the Kyoto Protocol, citing their opinion that emissions limits would hurt the U.S. economy while giving greater emissions freedom to developing powerhouses such as China and India.

Mr. Bush and his administration seem to be coming around. In May, the President promised to seek an agreement on greenhouse gas reductions on the international stage. Increasing pressure from industry, Congress, and pending international negotiations may be behind the conversion, along with growing concern about what some see as the inevitably of a cap-and-trade system.

Read the full article (registration may be required): WSJ Bush Cap

Global Climate Change: Business Leaders Call for Action

According to an article by Scott Malone at Reuters, "a major U.S. industry body said on Tuesday that human activity is changing the Earth's climate and urged Washington to take action to reduce greenhouse gas emissions nationwide.

"But the Business Roundtable, representing 160 of the largest U.S. companies with $4.5 trillion in combined revenue, stopped short of advocating a specific policy to accomplish that, saying its members did not yet agree on methods.

"'The thinking of U.S. CEOs on climate change is evolving significantly,' said Charles Holliday, chairman and chief executive of U.S. chemicals group DuPont, and a Roundtable member. 'A growing number of CEOs view it as a major issue for their companies.'

"In recent years, corporate America has dropped arguments that there is no proof human activity causes warmer patterns across the world, putting some business executives at odds with the Bush administration which rejected the Kyoto Protocol, the main U.N. plan until 2012 for curbing greenhouse gases.

"Many scientists say rising emissions of greenhouse gases, particularly carbon dioxide produced by burning fossil fuels, are linked to rising world temperatures. Many fear the warming trend could lead to more droughts, floods, heat waves and more powerful storms.

"'Some of our members like the idea of a cap-and-trade,' said John Castellani, president of the Washington-based organization, referring to programs in which companies could buy and sell the right to emit carbon dioxide.

"'Some members like a tax approach, we don't know which works best. So at this point we're calling for flexibility,' Castellani said in a telephone interview.

"The Roundtable's members include some of the biggest names in U.S. business, such as General Electric Co., Exxon Mobil Corp. and General Motors Corp.

"Environmental group the Sierra Club dismissed the Roundtable's statement as an attempt to appear environmentally sensitive while actually seeking to ensure any new regulations accommodate its members.

"'Businesses understand that any regulation that is going to pass this Congress and get signed by this president is going to be something very weak,' said Sierra spokesman Josh Dorner. 'It's no coincidence that a lot of huge emitters are tripping over themselves to call for some action on climate change.'"

Read More: Business Roundtable Climate Action

Global Climate Change: Emerging Leaders, Emerging Solutions Conference, Day One - The Debate About Carbon Trading

Day One of the ELP/NJIT "Emerging Leaders, Emerging Solutions" Climate Change Conference, for which I served on the planning committee. After the initial worry over whether all the panelists would show up for my morning plenary, "Seizing the Day: What We Need to Do to Take Advantage of Climate Change Awareness and Move to Action," and a fire alarm bringing the Q&A to an abrupt end, the day settled into a stimulating series of dialogues. (More specifically on my panel in later post.)

I'm particularly interested in how business and market-based solutions can be applied to address climate change, including such mechanisms as clean tech investments, innovative financing such as green mortgages, alternative energy credits, and energy efficiency.

But the liveliest discussion was around carbon trading and carbon offsets, as Professor Michael Dorsey of Dartmouth squared off with Neil Cohn and Eric Carlson, of Natsource and Carbonfund.org, respectively, on the issue of whether trading and offsets are flawed, failing, or just might solve the climate crisis. While the debate was lively and entertaining, it seemed Dorsey took it to an unfortunate personal level, which degenerated into a "he said, he said" debate, with Cohn and Carlson defending their body of work and attacking Dorsey for calling it into question. (It got pretty nasty.)

I love healthy debate. And, as readers will know from my questioning of the Live Earth concerts, I don't believe that questioning the tactic is the same as attacking the goal. Dorsey, who offered his criticism of the EU program earlier this year in the LA Times has some valid points, including the need for what he called a "Carbon Rescue Fund," which would tax key sectors. And there is no question that cap and trade is flawed. It needs better and consistent regulation (although I'm not convinced the UN is the best entity to serve that purpose) and more rigorous standards for baseline data.

I also don't necessarily agree with Carlson who said that 2-3 million people buying nothing but green power can change the marketplace, change how Wall Street operates and solve climate change.

For this dialogue, however, I would have preferred that the group move quickly from a debate about failure and accusations of fraud to what can be done to improve the system, make it better, and ensure the projects funded by offsets are community based and consider impacts on local people. In short, to make it work.

Global Climate Change: John Doerr on Climate Change

A friend of mine sent the following link to a video of John Doerr's absolutely moving talk about climate change from the TED conference.

Doerr and his colleagues at Kleiner Perkins expended a lot of CO2 investigating the climate change issue after his 15 year old daughter challenged him to do something about this problem our generation created. But what Doerr found in his travels gives him hope, despite the fact that he is afraid we can't make it. If you are not moved to action by this video, then you are not human.

A must see: Doerr on Climate Change

Global Climate Change: Energy Giant Backs Climate Trading at APEC Forum

Angela MacDonald-Smith of Bloomberg News reports that Russell Caplan, chairman of Royal Dutch Shell in Australia called for global carbon trading to set a price on carbon and allow for investments in new energy-supply projects while reducing emissions. According to the article, which appeared in yesterday's International Herald Tribune, Caplan said Monday at the Asia-Pacific Economic Cooperation energy business forum in Darwin, "that while the European Union's carbon trading system is 'a good start,' a worldwide plan is required."

"'Market mechanisms are likely to be the most effective means of implementing change,' Caplan said at the forum. 'Trading needs to become global to become truly effective and establish a clear market price for CO2 that will be factored into the investment evaluations of the new technologies and energy conservation measures that we need for a low-carbon future.'"

Read the full article here: Energy

Access Mr. Caplan's speech: Caplan

Global Climate Change: IPCC Says It's Possible to Mitigate Climate Change, Minimize Costs

The latest report issued last week by the UN International Panel on Climate Change (IPCC), a group of climate science experts, outlines the best ways to mitigate climate change. Their conclusion? We have what it takes to mitigate climate change and minimize the costs.

Working Group III's Report "Mitigation of Climate Change" (click here for a PDF Summary for Policymakers) is the third segment of the larger IPCC report. The first, released in February, concluded that global warming is almost certainly human-caused and the second, which came out in April, warned of the consequences already occurring and yet to come such as massive human death and disease, droughts, floods, and storms.

The new report proposes limiting concentrations of greenhouse gases, currently factored at 380 parts per million (ppm) to between 445 and 650 ppm. More importantly, however, the report indicates a variety of mitigation strategies, including energy efficiency and conservation, reducing deforestation, and investing in solar and other renewables to accelerate the world's response to the changing climate.

As many of us have maintained, the report concludes that the costs of tackling climate change now are dwarfed by the potential damages of global warming. There is also some consensus around the idea that investments now may foster economic development through investments in available technologies and other measures.

"This report for the first time has dealt with lifestyles and consumption patterns as an important means by which we can bring about mitigation of greenhouse gas emissions," says IPCC Chairman, Rajendra Pachauri. "Of course you can look at technology, you can look at policies, but what is an extremely powerful message in this report, is the need for human society as a whole to start looking at changes in lifestyles and consumption patterns,”

That may be tough for many to swallow, especially those opposed to actions that require such lifestyle changes, carbon taxes, or that strengthen limits to CO2 emissions in order to encourage carbon trading.

"There are measures that come currently at an extremely high cost because of the lack of available technology," said James Connaughton, head of the White House Council on Environmental Quality, in response to the report. Connaughton and others are concerned that some scenarios outlined by the IPCC report may bring cuts in world gross domestic product of as much as 3 percent. That, suggests Connaughton, is "something that we probably want to avoid."

One scenario would put the stabilization level of greenhouse gases in 2030 between 445 and 535 parts per million. This scenario estimates that the negative impact on gross domestic product would be less than 3 percent over more than two decades, with an annual impact estimated at less than 0.12 percent.

Much depends upon the price of carbon, as the Wall Street Journal reported over the weekend. The IPCC report used a range of between $20US and $100US for every ton of CO2 to analyze its scenarios. Carbon was trading at $25US in Europe under its carbon trading scheme as recently as last week. A McKinsey & Company study from January suggested "that greenhouse gas cuts approximately as stringent as those surveyed in the UN study would cost as much as $40US a ton of avoided CO2."

Whatever the costs, two questions remain: Will we make the necessary adjustments to reduce emissions now and possibly reap the benefits of a new economy? And will we make the necessary lifestyle changes to make a difference quickly and efficiently?

For now, the IPCC report suggests we have the know-how and can make it work economically. What remains is the will to change for the sake of a future, especially a future that remains uncertain.

Global Climate Change: Carbon Trading Global Market Exceeded $30bn in 2006

The Guardian (UK) reported yesterday that the global market in carbon trading tripled last year to $30bn (£15bn), but quoted the World Bank, which cautioned that the market's "role in the battle against climate change could be hit by worries about the effectiveness of unregulated carbon offset projects."

The bulk of carbon trading, some $25bn, was carried out through the sale of allowances under the European Union's emissions trading scheme, according to the World Bank's seventh annual carbon market intelligence report, which was published this week.

“These numbers are relevant because they demonstrate that the carbon market has become a valuable catalyst for leveraging substantial financial flows for clean energy in developing countries,” said Warren Evans, World Bank Director of Environment, in a press release.

The EU scheme has been criticized for being weak on allowances under the initial phase, which created little incentive to cut emissions and, subsequently, precipitated a fall in the price of carbon.

Sources familiar with the situation indicate that allowances have been toughened up for the second phase, which will begin in 2008 and be in force until 2012. The tougher standards may address the fact that polluters have been less obliged to trade. The weaker standards have also given detractors of cap-and-trade schemes fodder for arguing that carbon trading "doesn't work."

According to the Guardian article, officially-backed carbon offset projects, subject to the Kyoto agreement, wherein companies and countries invest in emissions reduction schemes in developing countries and emerging markets, doubled to $5bn over the same period and, the bank estimates, "carbon purchases have raised $14bn in 'associated investments' supporting clean energy in developing countries since 2002."

We've argued before on this blog that an overarching set of standards is needed to reduce reputational risk and so that both regulated and voluntary schemes can be judged comparatively. The World Bank study seems to corroborate this view.

Yvo de Boer, the head of the UN Climate Change secretariat, told The Guardian (UK) that "the official clean development programme (CDM) was working well but some analysis of the scheme was failing to differentiate between the highly regulated CDM and a growing number of unregulated or self regulated enterprises. 'Some confusion can be expected, but some analysis of the CDM has dangerously missed the mark,'" De Boer said.

To access the World Bank report, see the bank's Carbon Finance Unit's website.

Global Climate Change: IPCC Suggests Change Energy Sources

Andrew Revkin reports in today's New York Times. "The world needs to divert substantially from today's main energy sources within a few decades to limit centuries of rising temperatures and seas driven by the buildup of heat-trapping emissions in the air, the top body studying climate change has concluded.

"In an all-night session capping four days of talks in Bangkok, economists, scientists and government officials from more than 100 countries agreed early Friday on the last sections of a report outlining ways to limit such emissions, led by carbon dioxide, an unavoidable byproduct of burning coal and oil.

"The final report, from the Intergovernmental Panel on Climate Change, said prompt slowing of emissions could set the stage later in the century for stabilization of the concentration of carbon dioxide, which, at 380 parts per million now, has risen more than a third since the start of the industrial revolution and could easily double from the preindustrial level within decades."

Read Andrew Revkin's full article on Climate Panel