ARCHIVE: VIEW FROM THE WEST
 | From Risks to Opportunities: Carbon Management Shifts Focus Len Coad, Director, Western Office, Environment, Energy, and Technology Winter 2009 |
In uncertain economic conditions, can we protect the environment while creating jobs? Whether we are able to answer yes to this question will depend on whether we can anticipate emerging opportunities to manage carbon effectively. Some carbon management opportunities will arise from changing behaviour to reduce direct emissions. Others will materialize from encouraging supply chains to reduce their emissions. Still others will emerge as emissions rights are traded and new environmental markets are created. Firms in four sectors—retailing, insurance, information technology, and construction—are more focused on carbon management opportunities than on risks. The Carbon Disclosure Project (CDP) survey results—published in November 2008 amid global financial uncertainty—revealed that Canada’s largest publicly traded companies (by market capitalization) are managing their carbon emissions and footprint more closely than ever. Measuring greenhouse gas emissions, taking action to reduce emissions, and investing in cleaner technologies are some of the things corporations are doing to mitigate carbon emissions. Surprisingly, more companies see opportunities related to climate change and greenhouse gas emissions than perceive related risks. Of the 103 companies that responded to the CDP Survey, 78 indicated that they see opportunities and 66 said they face risks, including physical risks to facilities, and general business and business continuity risks. Similar results emerged in the responses to questions about opportunities and risks related to changes in the regulatory system. Seventy-four firms reported seeing regulatory opportunities, while 67 said they face regulatory risks. The small sample of companies surveyed means that the comparative results aren’t statistically valid, but the survey includes respondents from a broad range of economic sectors and companies across Canada. Some Sectors Identify Opportunities Firms in four sectors—retailing, insurance, information technology, and construction—are more focused on carbon management opportunities than on risks. Retailers see green branding as an opportunity to increase sales and build customer loyalty by offering environmentally friendly products. Insurance companies perceive new lines of business because of increased physical risks. The information technology industry sees an opportunity to replace travel with teleconferencing. Construction companies see opportunities in Leadership in Energy and Environmental Design (LEED) certification and new green standards. More broadly, there are some familiar carbon management opportunities, as well as some new issues. Greenhouse gas emissions result most often from our use of fossil fuels to heat buildings, provide transportation services, and generate heat for industrial processes. Some fuels emit more carbon than others in combustion. Predictably, improving energy efficiency and shifting to low-emission fuels are the two carbon management opportunities that top the list. Current costs make it prohibitive to switch to low-emission energy sources such as wind and solar. But tighter emissions regulations will place additional costs on energy consumption and increase the incentives to invest in energy efficiency, which has long been recognized as a cost advantage. A growing number of companies also see opportunities to improve process efficiency. Reducing the materials required in industrial processes helps companies curb their own direct emissions per unit of output. A handful of CDP respondents are focusing attention on their suppliers and taking measures to encourage emissions reductions in their supply chains. Canadian firms have only scratched the surface of the opportunities for innovation offered by climate change and greenhouse gas mitigation. Several CDP respondents reported that they see opportunities to invest in research and development in support of clean technologies, while the financial community is developing targeted programs to include carbon management in financing decisions. Clean technology proponents, however, continue to face challenges in accessing venture capital. Some companies reported that they need regulatory certainty before they can make the best and most efficient long-term technology investments. Respondents said they will be better able to allocate capital once the federal government finalizes the regulatory framework and sets emissions limits. Finally, respondents think opportunities will arise from the carbon market expected to emerge in North America, including opportunities to trade emissions, sell permits, provide offsets, and verify emissions reductions. A growing number of companies are looking for ways to turn the costs and risks of carbon management into opportunities. As regulatory uncertainty is removed and investments are made, a low-emission future becomes more achievable and the cost burden can be reduced.
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GHG Reduction Initiatives Forum
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