Voluntary Initiatives for Reducing Greenhouse Gas Emissions in the United States Proposers Erin Wessely

Faculty Sponsor Magali Delmas

MESM Class of 2007 [email protected] (319) 504-9329 Lijin Sun MESM Class of 2007 [email protected] (626) 277-8491

Statement Many chemical compounds found in the Earth’s atmosphere act as greenhouse gases. Levels of several important greenhouse gases have been increased by roughly 25% since the beginning of the industrial revolution 150 years ago. Computer-based models have shown that rising concentrations of greenhouse gases result in an increase in the average temperature of Earth. These rising temperatures may in turn lead to changes in weather, sea levels, and land use patterns (EIA). The possibility that human activities are releasing green house gases, at rates that could affect global climate has resulted in proposals for national programs to curtail emissions. The Kyoto Protocol is an international agreement, negotiated in December 1997, by which industrialized nations have committed to making substantial reductions in their emissions of greenhouse gases by 2012. A total of 155 countries have committed to the agreement thus far. Although the US has not ratified the Kyoto Protocol, various initiatives to reduce green house gases are carried out by policy makers in various states. Companies face much uncertainty about the competitive effects of the Protocol and upcoming regulatory measures. Faced with such uncertainty, firms can adopt various voluntary strategies to mitigate their emissions. They can adopt innovative strategies to improve their company’s assets and competencies as a result of the development of new environmental technologies or services that reduce emissions. Alternatively they can transfer their emissions through trade. Companies can follow either approach on their own or by interacting with external actors within their industry, with environmental non-governmental organizations or in partnership with regulatory agencies. However, because of the novelty of these

approaches and the uncertainty surrounding the regulatory landscape regarding GHG regulation, we still know little about the competitive effects of such strategies. This project will explore the risks, rewards, opportunities and barriers surrounding voluntary corporate strategies on climate change.

Objectives The objectives of this study are to: •

Provide an assessment of regulations regarding greenhouse gases in US state and selected countries. Provide a typology of the type of instruments used (command and control, tradable permit systems etc…).

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Evaluate current corporate strategies developed voluntarily by industry to reduce green house gases’ emissions in a limited number of industries.

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Forecast future needs for GHG professional resources and indications for training programs to meet those needs.

Significance The purpose of the project is to assess the effectiveness of voluntary approaches in quantifying, controlling and minimizing GHG emissions. Such an in depth analysis of the mechanisms currently in place within industry to control greenhouse gas emissions would: •

Provide alternative suggestions for policy and industry controls for greenhouse gas emissions.

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Recommend a mutually beneficial private initiative program for reducing greenhouse gas emissions for both environmentalists and energy-intensive companies.

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Explore alternative methods of reducing greenhouse gas emissions.

Background ENSR is a prominent full service environmental consulting firm dedicated to becoming a leader in environmental services and responsible corporate citizen by encouraging continuous improvement, innovation, and sustainable practices, and protecting, preserving, and enhancing natural and social resources. ENSR has currently over 100 ongoing projects worldwide. ENSR is interested in forecasting the market for GHG services and the specific professional resources that will meet those needs.

Stakeholders •

Intense energy-use industries (petroleum, paper, chemical, and etc.) nationwide (representative companies like BP, DUKE Electric, GE, among others)

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General public as consumers of products and services provided by energy-intense industries

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Policy makers

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Regulatory Agencies

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Other Environmental Consulting Agencies and Nonprofit Environmental Organizations

Approach and Available Data Approach We will use public information available to assess the various policies implemented in the US. In order to evaluate current corporate strategies we will focus on the electric utility industry. Because of the limited scope of the research, we think that it is best to get a good understanding of an industry rather than spread our effort across industries. The business logic for voluntary greenhouse gas reduction is very specific to the characteristics of the industry in which they operate. Electric utilities are among the leading dischargers of green house gases in the United States. For example, about 33.9 percent of CO2 emissions were attributed to the combustion of fossil fuels for the generation and distribution of electricity in 2000, the latest year for which data is available. We intend to conduct in depth interviews with several companies to assess the effectiveness of the strategies chosen. We will ask the companies about their strategies for balancing near-term emissions reductions from their own operations, R&D in future low-carbon technologies, R&D and/or increased investment in their products or services to reduce “upstream” or “downstream” GHG emissions along their “value chain,” and obtaining reductions through offsets and emissions trading. We will complement the information gathered through interviews using existing databases on electric utilities GHG emissions and strategies. Data EPA and EIA emission records EPA and state greenhouse gas emission regulations Industry greenhouse gas emission management strategies for specific case studies Existing greenhouse gas models (EPA, EIA, others).

Deliverables A final report and presentation will provide an evaluation of the current industry voluntary strategies and practices regarding greenhouse gases. This assessment will also forecast the market for GHG consulting services and the specific professional resources that will meet those needs.

References EIA Brochure on Greenhouse Gases. 2006. http://www.eia.doe.gov/oiaf/1605/ggccebro/chapter1.html EPA Global Warming – Emissions. April 2005. http://yosemite.epa.gov/oar/globalwarming.nsf/content/emissions.html Environment energy-related emissions data & environmental analyses. Dec. 2005. http://www.eia.doe.gov/environment.html WRI Climate Change Projects. 2005. http://climate.wri.org/index.cfm

WRI Project: Greenhouse Gas (GHG) Protocol Initiative. 2005. http://projects.wri.org/project_description.cfm?ProjectID=16

The Greenhouse Gas Protocol for Project Accounting. 2005. http://www.wbcsd.org/DocRoot/iaUwmANeUOYP8YRv7SwW/ghg-account.pdf The Green Power Market Development Group. http://www.thegreenpowergroup.org/ WRI Project: Green Power Market Development Group (GPMDG). 2006. http://projects.wri.org/project_description.cfm?ProjectID=61 Vitousek, Peter. (1994). Beyond Global Warming: Ecology and Global Change. Ecology: Vol. 75, No. 7, pp. 1861–1876 Hoffman, Andrew J. (2005). Climate Change Strategy: The Business Logic Behind Voluntary Greenhouse Gas Reductions. California Management Review: Vol. 47, No. 3, pp. 1-27. Kolk, Ans and Pinkse, Jonatan. (2005). Business Responses to Climate Change: Identifying Emergent Strategies. California Management Review: Vol. 47, No. 3, pp. 1-16.

Client ENSR International

Contacts ENSR INTERNATIONAL 1220 Avenida Acaso Camarillo, CA 93010 Phone: 805-388-3775, Fax: 805-388-3577 Web: www.ensr.com 1) Paul Smokler Vice President, Regional Sales Director VOICE: (805) 388-3775 [email protected]

Anticipated Financial Needs and Sources of Support • • •

Modest supervision of the project with group members and Bren faculty. Direction on acquiring sources of current GHG policy and emissions records Possible summer internship for 1 or 2 group project memebers