I took part in the Climate Leadership Conference in Washington, DC in late February. This brings together leading companies, researchers and decision-makers from around the world. The main emphasis was on innovation and new business solutions and partnership types (PPPs) that help prevent climate change.
Although we are in the middle of the important Paris Climate Talks, none of the people I met considered it likely that the US would sign an internationally binding climate agreement. Neither did these people pin their hopes on national policies, although the Clean Power Plan that President Obama launched last year was a step in the right direction, they said. But what is going on in the US right now and what are the actual climate leadership measures being taken?
A lot of work is being done at the grass-roots level: new operating models are being sought to make companies, cities and communities more resilient to the effects of climate change. Some good examples include the San Diego Regional Climate Collaborative, C2ES Community Engagement Tool and Four Twenty Seven Climate Solutions.
However, it is the State of California that is acting as the spearhead, being the US “laboratory” with the Global Warming Solutions Act passed in 2006, commonly known as AB 32. The state is committed to reducing its greenhouse gas emissions to their 1990 levels by 2020 (this translates to a reduction of about 15% from the business as usual development). The key mechanism is an emissions trade system introduced in 2013, covering about 85% of California’s greenhouse gas emissions. It is the only emissions trading system in the US that covers all key economy sectors, not just electricity production. The system has been considered a brave experiment from which others can learn.
In two years the experiment has shown that the emissions trading system is actually working – in the world’s eighth-largest economy. California has also shown that emissions and economic growth do not necessarily go hand in hand: in 2013, GNP increased by 2% while CO2 emissions decreased by 4%. These may be small figures, but California is heading in the right direction. Investments in clean forms of energy and in traffic and energy efficiency have been higher than anyone could have predicted. It was inspiring to listen to Californians talking about the system’s development and challenges. It was obvious that the decision-makers’ resolve and clear targets have been crucial for the system’s success. California is also in direct co-operation with Mexico and China, among others, in exchanging information and experiences to enable a transfer to a low-carbon economic system.
Climate change has been a harsh reality in many US states, especially in coastal areas. Since retreating from the coast is not a realistic prospect, cities are doing all they can to ensure that any realised risks do not become too costly. The Risky Business project by Michael Bloomberg and Co. has done a convincing job by presenting the effects of climate change to the US economy in real terms. The figures are stunning. For example, storms and hurricanes alone are estimated to account for 35 billion dollars a year over the next 35 years. Already 77% of businesses in the Standard & Poor’s Global 100 Index have integrated climate risks as part of their regular risk management. Climate change is also seen in these companies as a business opportunity (75%), while a mere 27% recognised new business opportunities through climate change. This is also pretty much in line with a recent survey the Finnish Innovation Fund Sitra commissioned from the market research company Taloustutkimus.
But what about the climate leadership? This was revealed at the end of the conference as a group of companies, cities and individuals were awarded for exemplary climate work. What I remember best is a Californian representative who said that a large amount of Americans are only waiting for them to fail and that new, bold initiatives will not be economically viable. However, Californians have decided to prove them wrong, regardless of who is in the White House.