On Nov. 21, power company executives from all over the country gathered in the Pit, a spacious General Electric auditorium in Crotonville, N. Y. , to meet with GE CEO Jeffrey R. Immelt and his team. The day was overcast and cold, but the discussion was about the warming climate. At one point in the meeting, David J. Slump, GE Energy's chief marketing executive, asked for an informal vote. How many of the 30 or so utility and GE business executives thought that, once President George W. Bush was no longer in office, the U. S. would impose mandatory curbs on the emissions of carbon dioxide and other greenhouse gases linked to global warming？ Four out of five of them agreed. "Forget the science debate," says Cinergy Corp. CEO James E. Rogers, who was at the meeting. "The regulations will change someday. And if we're not ready, we're in trouble."
The world is changing faster than anyone expected. Not only is the earth warming, bringing more intense storms and causing Arctic ice to vanish, but the political and policy landscape is being transformed even more dramatically. Already, certain industries are facing mandatory limits emissions of carbon dioxide and other greenhouse gases in some of the 129 countries that have signed the Kyoto Protocol. This month representatives of those nations are gathering in Montreal to develop post-Kyoto plans. Meanwhile, U. S. cities and states are rushing to impose their own regulations.
A surprising number of companies in old industries such as oil and materials as well as high tech are preparing for this profoundly altered world. They are moving swiftly to measure and slash their greenhouse gas emissions. And they are doing it despite the Bush Administration's opposition to mandatory curbs.
This change isn't being driven by any sudden boardroom conversion to environmentalism. It's all about hard-nosed business calculations. "If we stonewall this thing to five years out, all of a sudden the cost to us and ultimately to our consumers can be gigantic," warns Rogers, who will manage 20 coal-fired power plants if Cinergy's pending merger with Duke Energy is completed next year.
One new twist in the whole discussion of global warming is the arrival of a corps of sharp penciled financiers. Bankers, insurers, and institutional investors have begun to tally the trillions of dollars in financial risks that climate change poses. They are now demanding that companies in which they hold stakes (or insure) add up risks related to climate change and alter their business plans accordingly. For utilities like Cinergy that could mean switching billions in planned investments from the usual coal-fired power plants to new, cleaner facilities.
The pressure is forcing more players to wrestle with environmental risks, even if the coming regulations aren't right around the corner. As the debate over climate change shifts from scientific data t6 business-speak such as "efficiency investment" and "material risk," CEOs are suddenly understanding why climate change is important. "It doesn't matter whether carbon emission reductions are mandated or not," explains David Struhs, vice-president of environmental affairs at International Paper Co. "Everything we' re doing makes sense to our shareholders and to our board, regardless of what direction the government takes." The nation's biggest paper company, with $25.5 billion in sales, IP has upped its use of wood waste to 20% of its fuel mix, from 13% in 2002. That's cut both net CO2 output and energy costs.
What was the conclusion of the meeting of power company executives on Nov. 21？