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Industries Look for Profit in Climate Change

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Industries Look for Profit in Climate Change

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Industries Look for Profit in Climate Change

Industries Look for Profit in Climate Change

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Governments around the world are either demanding or encouraging people to take action to slow climate change. A warmer climate would likely mean higher sea levels, stronger storms and more droughts. It could also mean new ways to make — or lose — money. Some executives and their shareholders are trying to seize this opportunity.

RENEE MONTAGNE, host:

Of course, governments around the world are either demanding or encouraging people to take action to slow climate change because a warmer climate would likely mean higher seas, stronger storms and more drought. It could also mean new ways to make or lose money. Some executives and their shareholders are trying to seize this opportunity, as NPR's Christopher Joyce reports.

CHRISTOPHER JOYCE reporting:

Executives at places like British Petroleum or American Electric Power have promised to reduce emissions of carbon dioxide, the ultimate greenhouse gas, from factories and power plants, and stockholders may hold them to that promise. There's an increase in stockholder resolutions warning corporations to take climate change seriously.

Mr. JONATHAN LASH (World Resources Institute): Some of these resolutions come from socially responsible investors who care that the companies are doing damage to the world.

JOYCE: Jonathan Lash runs the World Resources Institute, a Washington group that studies business and the environment.

Mr. LASH: But increasingly, it's coming from investors who say, `I don't want my company to be positioned so it loses money when the world begins to take climate change really seriously.'

JOYCE: Granted, these resolutions usually don't win many votes at shareholder meetings, but Lash says they indicate a new dollars-and-cents attitude toward climate change. That attitude parallels efforts by some state governments to require carbon cuts for power utilities and autos. The states are going beyond the Bush administration policy of encouraging voluntary efforts to cut carbon. Lash says some in business tell him they need that to plan ahead.

Mr. LASH: They don't know what the rules are because they know it's going to change sometime, but they look to Washington and they're getting no guidance. That's expensive.

JOYCE: So companies looking to either profit or to avoid financial pain are swapping ideas on how to get ahead in a carbon-regulated world at places like the recent United Nations climate conference in Montreal, for example. Unlike previous meetings, this one saw more gray suits than jeans and sneakers. Peggy Duxbury, vice president of the power company Calpine in California, says her company anticipated a low-carbon future by investing in gas-fired power plants. They emit less carbon than coal plants.

Ms. PEGGY DUXBURY (Vice President, Calpine): I think companies that have invested in low-carbon technologies should be able to thrive when we move toward a carbon-constrained world. I think that there will be some need for regulatory certainty. However, the fact that you've got states and regions acting somewhat ahead of the federal government is not necessarily a bad thing. It's the bottom-up approach.

JOYCE: Executives from European companies in Montreal have more experience operating in a carbon-constrained market. They have to live with greenhouse gas limits set under the Kyoto climate treaty. Bruno von der Boscht is the top climate expert for Holsom(ph), Europe's largest cement company.

Mr. BRUNO VON DER BOSCHT(ph) (Climate Expert, Holsom): In order to reduce emissions, in order to reduce energy consumption, we need new and better technologies, but the mere existence of better technologies is not sufficient. We need the mechanisms to bring the new technologies to the market.

JOYCE: That's led to mechanisms such as carbon emissions trading. Companies that can reduce emissions below their quota get credits they can then sell to other companies that have not met their quotas. Some companies have made a lot of money that way.

Businesses are also grappling with how to avoid climate-induced losses. Chris Walker is with Swiss Re, the world's largest reinsurer; they insure the insurance companies. They're counseling them to write policies to protect their clients from climate change.

Mr. CHRIS WALKER (Swiss Re): It creates unpredictability in the severity of storm events, the frequency of events, where these events will occur, droughts in places that traditionally didn't have droughts or floods in places that traditionally didn't have floods. That's the problem for the insurance industry, because you're relying on a predicted model, and if that predicted model is invalidated, then maybe insurance is only gambling.

JOYCE: One wrinkle they anticipate is a new kind of lawsuit. Let's say a Pacific island is flooded by rising sea levels. The victims could sue carbon-emitting companies for not cutting back soon enough. In fact, Swiss Re is already offering insurance policies to corporate directors to protect them from just such an occurrence.

Christopher Joyce, NPR News.

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