It is not government but businesses that are leading the charge to reduce global carbon emissions. They realize it is good for people and equally good for business to take the leading role in making an impact on meeting global climate targets.
— By Andrew Hale
The United Nations Sustainable Development Goal 13 addresses the need to take urgent action to reduce greenhouse gas emissions to slow down climate change. The 2030 Agenda for Sustainable Development identifies climate change as "one of the greatest challenges of our time," and the United Nations Framework Convention on Climate Change is the international intergovernmental forum for negotiating the global response to climate change. Updated 2030 goals include a global 45 percent reduction in greenhouse gas emissions (25 percent by 2025), 80 percent of electricity to come from renewable energy, and slowing climate change to 1.5°C above pre-industrial levels.
These are proving to be ambitious goals because the 2018 UN assessment of progress found there are increasing concentrations of greenhouse gases.
The challenge of meeting goals is that not all governments are striving to limit emissions for many reasons, including the fear of placing regulatory burdens on businesses when economic growth is desperately needed to pull people out of poverty. At the same time, continued growth in greenhouse emissions will have a major long-term impact on businesses and economies.
As governments move too slowly, a new trend is emerging – businesses taking the lead in reducing global greenhouse emissions. Politicians, regulatory agencies, legislative bodies, and other government participants are slow to make change happen, whereas businesses can step up without years of negotiating rules.
Committing to Action
Good things are happening, too. The shipping industry contributes more than 2 percent of global carbon emissions. It is a major event when Maersk, the industry's largest business, announced it had set a goal to cut its net carbon emissions to zero by 2050. There are companies across industries that have made public commitments to act.
Cargill maps emissions to reduce carbon output through its entire supply chain to pursue a goal of 10 percent reduction in greenhouse gas emissions by 2025. Monsanto has developed carbon-neutral crop production practices that are implemented on millions of acres of farmland. United Airlines, Greyhound, McDonald's, Shake Shack, Unilever, Amazon, and hundreds of other companies are working to reduce or eliminate carbon emissions. Walmart has ended doing business with some suppliers that add to carbon emissions, and store goals include eventually using 100 percent renewable energy sources. Siemens has said it will become completely carbon neutral by 2030.
Despite all good business efforts, it is not enough. Global greenhouse gas emissions continue to increase, and at the current pace and with the current practices, the earth's temperature will likely increase by 3°C or twice the goal. Deeper effort and change are needed.
Lyft, the rideshare company, offers only carbon neutral rides. The company makes donations to offset carbon emissions. But are these kinds of practices really going to make a significant impact? Though important, they are not enough.
Partnering for Significant Change
There are different approaches to reducing greenhouse emissions, but the best approach is business and government working together to make significant change. Economists recommend a policy of carbon pricing to spur more investment in energy efficiency and renewable energy, but not everyone sees this as a viable option. Putting a price on carbon could place a financial hardship on middle- and low-income consumers.
One alternative is carbon dividends. It works by taxing carbon emissions of businesses and then returning 100 percent of the revenue raised as a dividend paid to households to offset the higher energy costs that would be passed on. This system has been implemented in Switzerland and Canada. The idea is that businesses will reduce their carbon emissions to hold costs down, and consumers get financial assistance that in turn encourages them to adopt environmentally sustainable behaviours.
There is no such law yet in the U.S., but a bi-partisan bill was introduced in 2019 in Congress: H.R. 763 – Energy Innovation and Carbon Dividend Act of 2019. This proposal puts a fee on carbon at the point of extraction to drive market-driven innovation of clean energy technologies and passes on revenues, less administration fees, to households.
There is not much chance for passage, but its bipartisan support suggests there is growing interest in this option. One of the drawbacks to carbon dividends is that they could feasibly end in the future, if carbon emissions decline enough or fossil fuels are no longer used. When people receive money on a regular basis, especially from the government, there is a risk they will not be willing to give the money up.
Economic Impacts are Already Occurring
There is a business case for reducing carbon emissions. As climate change continues at a rapid pace and greenhouse emissions increase, there will be economic consequences. They include disasters disrupting supply chains; property damage from rising sea levels; more people experiencing health issues; additional stress placed on limited resources like water; and negative impacts on dozens of economic sectors, ranging from tourism to commercial fishing to agriculture. Emerging and developing economies will suffer excessive hardships.
This is not a "boy who cried wolf" scenario because many negative economic consequences are already occurring. For example, in Venice, rising sea levels are destroying an ancient cultural heritage and could make the city unlivable. In the U.S., thousands of miles of fiber-optic cable will be underwater by 2033 at the current rate of sea level rising, becoming a major threat for internet disruption. Air pollution directly impacts the health of workers, too, lowering productivity. This is a list that could go on and on.
There is a business case for reducing carbon emissions. As climate change continues at a rapid pace and greenhouse emissions increase, there will be economic consequences.
Action … Take Two
As governments wrangle over the appropriate laws and regulations to implement, businesses are taking the lead in many countries, like the U.S. They are reducing carbon emissions from operations or in their supply chains. They are investing in renewable energies and voluntarily setting emission reduction targets. Utility companies are using more alternative energy sources, like solar and wind power, to generate electricity and implementing incentives that allow consumers to receive rebates for installing energy efficient appliances.
In some countries, it is businesses taking the lead. In other countries, like China, it is government driving change. Imagine what governments and businesses could do globally by working together.