Turning Green Into Gold

This is the second in a two-part series on the efforts in the United States to address climate change issues. Part one, which appeared in our June 2001 issues (see www.eponline.com under Archives), described programs being implemented by local and state governments and corporations to cut back on carbon dioxide, methane and other air pollutants. Part two covers how many U.S. cites and states are finding that promoting environmental quality translates into improving economic competitiveness.





Cumulative Co-Benefits

The fact that pro-active steps to address climate change and other environmental problems provide numerous collateral benefits (co-benefits) is a crucial element that - while lying at the very heart of climate policy - has often been overlooked in the heat of climate debate. Improved air quality is one major co-benefit. Carbon dioxide (CO2) is not a pollutant in the traditional sense; it is not emitted as a result of dirty fuel, poor combustion or inadequate emissions controls. CO2 is emitted as a predictable by-product of the carbon present in fossil fuels and the oxidation that occurs when they are burned. As a result, the most effective way to reduce CO2 emissions is to diminish the amount of fossil fuel burned. We can do this by burning fuel more efficiently or by utilizing efficient appliances that do not require as much fuel in the first place.

When we do so, however, we also eliminate emissions of all the other traditional pollutants that accompany carbon in fossil fuels - the pollutants that do result from dirty fuels, poor combustion or inadequate controls. This is the reason that the same International Council of Local Environmental Initiatives (ICLEI) measures that are reducing 7.5 million tons of GHGs are also reducing nearly 24,000 tons of sulfur dioxide emissions (which cause acid rain and fine, airborne soot), almost 3,000 tons of nitrogen oxides (which cause ozone smog), more than 1,500 tons of poisonous carbon monoxide, more than 300 tons of volatile organic compounds, and more than 100 tons of other harmful pollutants.


CCP communities expect to save $70 million in reduced energy and fuel use.

The air quality co-benefits that accompany climate actions are well documented. A year ago, for example, the State and Territorial Air Pollution Program Administrators (STAPPA) and the Association of Local Air Pollution Control Officials (ALAPCO) modeled the air quality improvements that would result from certain climate actions. A set of reasonable CO2-reducing measures was defined for four distinct areas of the country: New Hampshire; Atlanta, Georgia; Louisville, Kentucky; and Ventura County, Calif. Each set of measures was different - tailored to the particular electric generation, transportation and industrial profile of each area. In each case, however, the same steps that reduced CO2 emissions by seven to 15 percent also reduced sulfur dioxide emissions by two to 41 percent, nitrogen oxides by four to 17 percent, particulate matter by one to 12 percent, volatile organics by three to four percent, and carbon monoxide by approximately four percent.

Co-benefits aren't limited to air quality, however. They are apt to have substantial ancillary benefits in terms of lower public health costs, less need for costly alternative air pollution controls, and less regulatory burden associated with nonattainment of air quality standards. Moreover, fuel that isn't burned doesn't have to be bought and electricity that isn't used doesn't have to be purchased. As a result, the Cities for Climate Protection (CCP) communities expect to save $70 million in reduced energy and fuel use as noted above. Such savings reduce operating costs for governments, businesses and citizens - reducing tax burdens, increasing profit opportunity and putting more money back in the wallet. Moreover, this money is more apt to circulate in the local economy - purchasing goods and services from area merchants - rather than going to energy suppliers outside the community or state. Local purchases help create local jobs and build the local economy. Simply put, communities with stronger local e conomies, less pollution, lower tax burdens, less vehicle congestion, better public health and more recreational opportunities are more desirable places to live.

The Ultimate Innovative Solution: Climate Action as a Quality of Life Strategy

Quality of life could be characterized as a combination of a healthy citizenry, a healthy environment and a healthy economy. The direct and indirect benefits enumerated above suggest that climate action might reasonably be considered a public health strategy, an environmental protection strategy and an economic development strategy. Collectively, then, climate action could be thought of as a "quality of life strategy."

In terms of public health, tens of thousands of premature deaths across the country -dozens in New Hampshire alone - have been linked to fine particulate matter caused by sulfur dioxide emissions from coal-fired power plants that were grandfathered under the federal Clean Air Act. The mercury emitted from these and other sources has led to fish consumption warnings in a majority of the states. The ground-level ozone (smog) created by nitrogen oxide emissions from power plants and motor vehicles is a potent oxidant - one of the reasons that many of us take antioxidant dietary supplements like vitamin E. Transportation emissions are also the principal cause of most of the toxic compounds that exceed health risk screening levels in New Hampshire and across the country. Finally, many pollution problems are associated with chemical reactions in the atmosphere. The warming created by increasing atmospheric carbon dioxide concentrations will exacerbate these problems by increasing the rate at which the underlying chemical reactions occur.


Quality of life could be characterized as a combination of a healthy citizenry, a healthy environment and a healthy economy.

Regarding environmental quality, these same sulfur dioxide and nitrogen oxide emissions have also acidified our lakes, leached essential nutrients from our forest soils, and mobilized compounds that are toxic to fish. Atmospheric deposition also impacts water quality and contributes to the eutrophication of our coastal estuaries. Ground-level ozone interferes with the ability of all plants - including agricultural crops and forest stands - to make and store food, reducing their yield. Climate change created by human activities will induce species to migrate to friendlier habitats, putting such cultural icons as sugar maples - the backbone of New England's maple syrup industry - and rainbow trout at risk.

The economic opportunities connected to climate action are perhaps most enticing. Some economic gains are obvious, like saving money on energy and fuel costs, or the prospect of improved forest and agricultural productivity with less air pollution and new cultivation techniques. More important, however, are many less obvious effects. In New Hampshire, for example, tourism and recreational activities comprise our second largest industry after manufacturing. New Hampshire's White Mountain National Forest attracts millions of visitors each year, on a par with Yellowstone and Yosemite National Parks. This is not surprising because about one-quarter of the U.S. population lives within one day's drive of the White Mountains. Spending by the approximately 25 million tourists who visit New Hampshire each year creates over $3.4 billion dollars in our state's economy.

Boating, hiking, fishing, hunting, snowmobiling, skiing - they all hinge on the environment in one or more crucial respects. Our fall foliage season, the ability of our ski areas to make and retain snow, the vistas from Mt. Washington (the highest summit in the Northeast), even our native lobster population, all depend on arresting the warming effects of climate change and diminishing the collateral air pollution that accompanies carbon dioxide emissions.

As important as these economic effects are, they are arguably the tip of the iceberg regarding New Hampshire's economic future. Increasingly in the new, knowledge-based economy, companies are locating where the skilled, mobile employees they need want to live. As a result, New Hampshire's quality of life - the public health, environment and economy so well-served by concerted climate action - is largely responsible for the state's having achieved the second-highest per-capita proportion of high technology workers in the nation.


The new reality, however, suggests that environmental quality is better correlated with economic growth than energy use is.

The potential for climate action to enhance quality of life is a good paradigm to supplant some of the crumbling conceptual cornerstones of the old economy. For instance, conventional wisdom has held that energy use - the principal cause of carbon dioxide emissions - is such a critical pillar of the economy that economic growth must occur in lockstep with energy growth. It then follows that environmental controls on energy are, at best, necessary evils whose costs - by making energy more expensive - detract from economic growth. The new reality, however, suggests that environmental quality is better correlated with economic growth than energy use is. In fact, at this point, energy use appears to be negatively correlated with economic growth. Consider the following.

  • The U.S. economy grew approximately four percent last year, but energy use increased only about one percent. Last year was not an exception; the American Council for an Energy Efficient Economy (ACEEE) has calculated that national energy intensity (energy per dollar of gross domestic product) has fallen 42 percent during the last three decades.
  • New Hampshire's experience provides a direct indication that the old conventional wisdom is obsolete. In September 2000, ACEEE ranked New Hampshire fourth best overall in the United States at reducing its energy intensity and carbon emissions. Simultaneous with this achievement, however, the state was seventh highest in per capita income, had the fourth lowest unemployment rate, the lowest poverty rate, and high growth rates in jobs, businesses and per capita income.
  • The "Green & Gold" index published by the Institute for Southern Studies illustrates the same point more broadly: "Green states" are more likely to be "Gold states."
  • In today's new electronic and high technology economy, this positive correlation between green and gold is not surprising. Whereas old industries were wedded to specific geographic locations due to the availability of vital natural resources or transportation links, competitive advantage in the new economy hinges on an educated, innovative and mobile workforce. Increasingly, competitive companies are finding that they have to locate in places where their employees want to live. A key component of the quality of life that today's professionals seek is an enjoyable natural environment. NetworkNH, a business group in New Hampshire, has captured this issue succinctly: "In an economy where physical assets are not as important as they used to be, where intellectual assets dominate, where business can be conducted from anywhere to anywhere, it would seem that place should not matter; in fact, it matters more."
  • The need for power quality and reliability is becoming ever more important. Perhaps surprisingly, steps to enhance quality and reliability are often consistent with climate action. The Bank of Omaha needed more reliable power than the grid could provide for its credit card transaction processing operations, so it turned to fuel cells as a precaution. Fuel cells have among the fewest environmental impacts of any electric energy source. Climate-friendly steps like fuel cell installations and combined heat and power (CHP) applications also reduce companies' vulnerability to price shocks and supply disruptions, such as those experienced in California in 2001.
  • Recent work done by the Worldwatch Institute demonstrates how significant job creation also follows from energy efficiency measures that benefit the environment. At $300-500 million each, today's power plants represent an extraordinary investment of society's capital resources. Yet, they typically require very few workers to operate, so this commitment of capital provides comparatively few jobs. Investing those capital resources in energy efficiency products and services or renewable energy - like manufacturers of compact florescent light bulbs or wind turbines - would employ (and in several cases, are employing) many more people than constructing an additional power plant to illuminate less efficient incandescent bulbs. Note that many of the largest, state-sponsored renewable energy or technology venture funds (paid for by ratepayers through systems benefits charges) are only 10 to 25 percent as expensive as a new power plant, but they promise much greater job growth and environmental benefits. They are also more likely to serve us better in the future, binding us to tomorrow's energy technologies and innovations, instead of wedding us to yesterday's obsolete approaches.
  • The very foundations of corporate performance ranking and global competitiveness are changing. Companies are increasingly being judged against a "triple bottom line" which assesses their financial, social and environmental performance. Dow Jones, for example, has created a "Sustainability Group Index" which indicates that companies generate added value by integrating economic, environmental and social growth potentials into their business strategies. Such strategies are becoming more important too; professionally managed assets in socially and environmentally responsible funds have increased 82 percent since 1997, to $2.16 trillion (13 percent of the total).

Increasingly, competitive companies are finding that they have to locate in places where their employees want to live.

The ramifications of this sea change for policy-makers is clear. Whereas it may have once been possible to conceive of a healthy economy and a healthy environment as mutually exclusive goals, it appears today that one can't exist without the other. Proactive, aggressive steps to address climate change and air pollution through the more intelligent, efficient production and use of energy may indeed be the best public health protection, environmental preservation and economic development - i.e., quality of life - strategy possible.

Conclusion

From corporations contemplating their raw materials purchases or production processes to communities considering their transportation systems or electricity grids, forward-thinking entities are discovering that reducing emissions can translate into less waste, that less waste translates into less cost, that less cost translates into higher margins or lower taxes, and that higher margins, lower taxes, and better environmental quality translate into competitive advantage. The field of play of economic competitiveness has shifted dramatically.

Concerted climate action is consistent with the challenge posed by this shift. "Green" and "Gold" are mutually reinforcing attributes. Policy-makers' choices essentially boil down to ignoring and injuring the environment-economy linkage - generating a vicious cycle characterized by environmental and economic decline, or embracing and enhancing the environment-economy linkage - creating a virtuous cycle that elevates and sustains both. Advantage will accrue to the best virtuous cycle engineers, whether they embody a corporation within an industry, a community within a state, a state within a country or a nation within the global community of nations.

Our response as a nation to the intensifying threat of climate change will either help protect and preserve life as we know it, or it will merely provide us with greater competitive advantage long into the future. Either way, we can't afford to dawdle.

Too Late?

Some may wonder concerning climate action, "Is it already too late?" There is an odd ambiguity in this question, because it contains two possibilities, "too late for the climate?" or "too late for action?" The latter accurately suggests that the opportunity to secure the competitive advantages bestowed upon early climate actors may already be evaporating. The U.S. has already lost its market share leadership in wind power manufacturing to Germany, for instance. Most technologically advanced nations are actively investigating and testing innovative solutions to climate concerns, rather than balking at the starting gate. It is not difficult to deduce who is more likely to own the patents of the future.

Regarding the question - "too late for the climate?" - science remains unclear regarding what specific challenges the climate future that we have created will hold for us. One thing is clear, however. The sooner we pursue climate action in earnest, the less profound climate impacts will be, and the more likely we will be able to manage them.




This article originally appeared in the July 2001 issue of Environmental Protection, Vol. 12, No. 7, p. 34.

This article originally appeared in the 07/01/2001 issue of Environmental Protection.

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