By: Peter Daou on February 20, 2005 Miami Herald: Kyoto treaty offers opportunities BY TIMOTHY E. WIRTH The Kyoto Protocol took effect this week, beginning the worldwide process of reducing the emissions that are causing global warming. As one of the negotiators of that international accord, I know how big the climate change challenge is — but where there is challenge, there is also opportunity. Businesses increasingly are grasping the fact that a transition to cleaner, more sustainable energy systems presents enormous opportunities for innovation and change — opportunities to offer consumers worldwide products and services that reduce carbon emissions and boost energy-usage efficiencies. Past cycles of innovation tell us that the pioneers — not the laggards — take home the jobs and economic benefits.Competitiveness and profits While facilities operating within the United States aren’t bound to carbon-emission limits because we haven’t ratified Kyoto, companies must abide by these caps in those countries that have. The need to cut emissions can’t be ignored by multinational companies in a global economy. Companies that reduce their carbon pollution are finding tremendous opportunities to improve productivity, competitiveness, and profits. The Climate Group’s analysis of the efforts of 22 companies in seven countries illustrates the potential for cost savings. Eleven of those companies reported reductions in expenditures that together exceeded $5.5 billion. Of those 11, five companies reduced their carbon emissions by 60 percent or greater (DuPont, Alcan, British Telecom, IBM and Norske Canada), achieving combined savings of $3 billion. We will see a rapid increase in demand for carbon-reducing solutions over the next decade — not only in countries participating in Kyoto, but also in rapidly growing nations like China and India. U.S. companies have been slow to exploit the opportunities and are already behind their competitors in some key sectors. The hybrid car, which runs on gas and electricity generated by braking, illustrates this point. Toyota’s Prius sedan already has 63 percent of the U.S. hybrid market. Analysts forecast hybrid sales reaching 500,000 by 2009, or 3 percent of U.S. car and truck purchases. Compare that to last year, when hybrid sales represented only 0.5 percent of the 16.9-million vehicles sold. While Japan’s automakers are well into perfecting their second generation of hybrids, Detroit is licensing Toyota’s technology while it refines prototypes. So, how do we help U.S.-based companies understand and tap into the opportunities that will drive tomorrow’s economy? * Seed money from the federal government is one step. A study from the Apollo Alliance shows that a $300-billion investment over 10 years would add more than two million new jobs each year, stimulate $1.4 trillion in economic growth, and produce $284 billion in net energy cost savings. The government’s investment could be repaid in 10 years through higher tax revenues that Washington would collect on the increase in corporate earnings from lower utility bills and higher profits. * Policy predictability is also key. If U.S. companies know the goals that they must reach within the United States, they will figure out the solutions. As one utility chairman told Business Week: “Give us a date, tell us how much we need to cut, give us the flexibility to meet the goals, and we’ll get it done.” * Goals are needed to compel American companies to reach beyond their grasp. Policymakers should consider establishing a nationwide portfolio standard for renewable energy, as 17 states and the District of Columbia have already done. One possible U.S. goal: deriving 25 percent of electricity needs from renewable energy sources by 2025. This will ignite development of biofuels, which use plant materials to create carbon-neutral liquid transportation fuels. With effort, ingenuity and commitment, ”25 by 25” is possible. * Energy efficiency must be promoted. Energy efficiency remains the cheapest, cleanest way to meet our ever-growing needs while cutting carbon emissions. Substantial savings can be achieved by modernizing the ”grid” — the vast network that distributes electricity. We can do more by expanding state and utility energy-efficiency programs with federal co-funding. The federal Energy Star program, which helps consumers choose the most efficient appliances, should be expanded and tax credits brought to bear. Again, simple steps that can have a big impact over time. U.S. companies can fill the Washington leadership vacuum. Investing now in solutions will mean a more-secure future for U.S. companies, higher economic growth, and more jobs for Americans. The start of the Kyoto Protocol is the opening bell. Let’s get started now. Timothy E. Wirth is president of the United Nations Foundation and a founder and steering-committee member of the Energy Future Coalition. He served in the U.S. Senate, representing Colorado, and as undersecretary of state.