In major corners of corporate America, it's suddenly becoming cool to fight global warming.
Facing significant shifts in the politics and science of global warming, some of the nation's biggest companies are starting to count greenhouse gases and change business practices to achieve real cuts in emissions. Many of them are finding the exercise is green in more ways than one: Reducing global warming can lead to energy-cost savings.
Not since the days of bell-bottoms, disco and oil embargoes have so many big companies been so concerned with energy. Engineers at United Technologies Corp.'s Pratt & Whitney unit now use computers to simulate some tests of jet engines instead of running the turbines. For the first time this year, managers at BP Amoco PLC will be evaluated on how well they cut emissions, alongside their financial results. And executives at American Electric Power Co., the nation's second-biggest producer of coal-powered electricity, have decided to spend $5.5 million on a Bolivian reforestation project -- an attempt to offset the carbon dioxide it releases in the U.S.
The changes, though gradual, are coming as more and larger companies are accepting the hotly debated scientific theory that man-made carbon-dioxide emissions are warming the earth. And even when they question the science, companies like General Motors Corp. say there is enough cause for concern to warrant actions now.
"More and more companies have realized that they can't sit on their hands and have no strategy to respond to what may be the biggest environmental issue of the next century," says Joseph J. Romm, a former U.S. Energy Department official and author of "Cool Companies," a book about corporate efforts to cut emissions. Mr. Romm estimates half of the nation's 50 largest companies are in some phase of assessing or reducing their greenhouse gases.
One reason for the change: Many U.S. multinationals trying to keep pace with Europe's faster approach simply don't want to be on the extreme end of the political spectrum, especially if they want a seat at the table where regulations are being crafted. Some hope to forestall or dilute legislation by reducing emissions voluntarily.
The weather has something to do with it, too. Last year beat 1997 as the hottest on record, according to the National Climatic Data Center (www.ncdc.noaa.gov). And the agony of this summer's heat waves and droughts is still a fresh memory in the nation's boardrooms.
Unpopular Moves
The moves aren't always popular. American Electric Power heard cries of treason when it broke ranks with other utilities last year to join a business group with a moderate position on global warming. Competitors "viewed it as selling out, capitulation," said Dale Heydlauff, AEP vice president of environmental affairs. The Columbus, Ohio, utility acknowledges that it changed its position in part to have a say in setting future standards. "Once you realize that you can't kill this thing, then it's incumbent upon you to try to be a player in the process of shaping policies," Mr. Heydlauff says.
Some large companies -- notably Exxon Corp. and others whose businesses depend upon fossil fuels -- continue to publicly question the science and insist on a go-slow approach. Findings that the Earth has warmed by more than one degree Fahrenheit over the past century, they contend, are well within normal variations. Western Fuels Association Inc., a Denver cooperative of Western and Midwestern utilities that mines and sells coal to its members, goes so far as to call for higher levels of atmospheric carbon dioxide: Higher CO2 levels will help assure economic growth and adequate food supplies, according to the Web site of an organization Western Fuels launched two years ago (www.greeningearthsociety.org).
But for many other companies, the global-warming debate now centers on how much emissions cutting is enough and how to regulate the process. Dirk Forrister, a former White House official now working for the Environmental Defense Fund, sees in the shift "a stunning disconnect" between business executives and politicians. Since the Kyoto Protocol, the global treaty to reduce greenhouse gases negotiated in 1997, "the business community has been coming to the middle and the Congress has been swinging way to the right," he says.
No Consensus
What really counts when companies try to reduce emissions? There's no consensus. AEP, for example, plans to cut the carbon-belching output from its coal-fired plants by producing more nuclear-powered electricity. The strategy doesn't sit well with environmentalists opposed to nuclear power. But it is acceptable under the U.S. government's voluntary greenhouse-gas emissions program.
The program includes a national database, run by the Department of Energy, where companies can report annual emissions cuts. The number of reporting companies has grown to 188 this year from 108 in 1998. In 1997, the latest year for which data are available, the companies reduced emissions by 165.6 million tons, up from 73.5 million tons in 1994.
AEP emits 120 million tons of greenhouse gases annually, and about half its 9.5 million tons in planned reductions will come from increased nuclear-power production. Counting emissions cuts is "enormously controversial," says AEP's Mr. Heydlauff.
As part of its reforestation program, AEP in 1998 joined with BP Amoco, of London, and PacifiCorp, a Portland, Ore., utility, to purchase logging rights from forest companies for 2.2 million acres of Bolivian rainforest and leave them untouched. The companies, together with the Bolivian government, will divide claims for an estimated 14.5 million metric tons in carbon-dioxide reductions over 30 years. In addition, AEP began planting 15 million trees on company-owned land in the U.S. in 1996.
The utility, whose pollution record and fight against clean-air standards have drawn criticism from environmentalists, recently installed computer-controlled electronic "valves" on a major power line in Kentucky. The valves limit electricity lost over long-distance transmissions, help reduce AEP's power-production requirements by 24 megawatts and save $22 million in new production-capacity spending.
Still, like many U.S. companies, AEP opposes in its present form the Kyoto Protocol. The treaty calls for the U.S. to reduce greenhouse emissions by 7% from their 1990 level, beginning in 2008. The European Union faces an 8% cut, and Japan must reduce its emissions by 6%. Significantly, critics point out, the treaty doesn't impose reductions on developing nations.
Cut Growth?
Opponents argue that by limiting fossil-fuel use, the treaty will cut growth and lead to widespread unemployment in the U.S.: After the U.S. signed it, Exxon put out a brochure titled "Kyoto and $2 Gasoline." Still, the Global Climate Coalition, Washington's major business lobby battling Kyoto and related legislation, counts around 60 corporate and trade-group members -- down from 65 in 1997. And many current members support voluntary reductions even as they question the global-warming theory and oppose Kyoto.
This year and last, 21 companies with combined revenue of $550 billion, joined the moderate Business Environmental Leadership Council, part of the Pew Center for Climate Change. The global-warming think tank is sponsored by the Pew Charitable Trusts. Members, including Royal Dutch/Shell Group, DuPont Co., Boeing Co., AEP, BP Amoco and United Technologies view Kyoto as a possible first step to a global regulatory system.
Eileen Claussen, the group's executive director, says the business community's center is closer to accepting scientific theories of global warming. "We are almost at the stage where people are starting to figure out what the solutions are," she says.
Solutions can be as simple as new lighting fixtures or as complicated as BP Amoco's internal system of trading emissions among business units. The oil giant is considered to be at the forefront among multinationals in reducing global warming, both in the U.S. and abroad. This year, the company mandated that business unit managers cut their greenhouse gases by 1% and will include the goal in their performance reviews.
At first, one natural-gas pipeline manager grumbled that he shouldn't be responsible for cutting greenhouse gases because he didn't believe his operations produced any, recalls Michael McAdams, associate group policy adviser for BP in Washington. Pressing his lieutenants, however, the manager found that pipeline valves leaked methane gas, a major global-warming contributor. Installing new valves will cost $2 million, but the investment will reap a 60% return in the form of increased methane available for sale to customers. In addition, the valves will remove 450,000 tons of carbon emissions from the air, far beyond the manager's 1% goal.
In BP's pioneering system, the pipeline manager can now trade his carbon reductions with other units. A unit that can't meet its goal through actual reductions, or that finds the cuts too expensive, can buy credits from overachievers in an open trading system within BP. In a recent trade, a BP chemical facility in the United Kingdom purchased 20,000 metric tons from a BP pipeline system in the North Sea at $19 a ton.
BP hopes the system is a precursor to a international trading system in which countries and companies could purchase carbon-reduction credits to meet goals. BP and others are pushing Congress to pass legislation that would reward companies cutting emissions voluntarily with early credits. The Global Climate Coalition says it opposes such legislation because it could be read to mandate the adoption of the Kyoto Protocol.
United Technologies found its investments in energy efficiency were paid back in 1.2 years. Its Pratt & Whitney unit last year posted 10,000 decals on computer monitors at a facility in Florida to remind employees to shut them off at night. The $3,600 investment in decals and an audit to measure results is expected to save $203,000 in annual electricity costs and $31,000 in cooling costs. The compliance rate among employees was 97%.
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