Climate variation is a natural phenomenon, and has presented periods of intense change in some stages of the planet history. But the speed of climate change in the past few decades is considered an unusual phenomenon by scientists. Several studies confirm the average temperature rise on Earth and sea level rise due to glaciers melting are evidence of greenhouse effect intensification.
Greenhouse effect is a natural phenomenon in our planet in which certain gases present in the atmosphere prevent part of the heat absorbed from the sun from radiating back to the universe. However, from the period of the Industrial Revolution on, some greenhouse gases (GHG), particularly carbon dioxide, started to be released in greater amounts by human activities, especially the ones that make use of fossil fuels and the ones that promote forest destruction. The greenhouse effect became increasingly more intense, leading to global warming, which has been causing changes in the climate characteristics, such as rainfall, duration of dry seasons, dynamics of air currents and masses, and occurrence of abrupt phenomena such as cyclones, storms, and hurricanes.
According to the Intergovernmental Panel on Climate Change (IPCC), greenhouse gas (GHG) emissions from human activities increased 70% between 1970 and 2004. Out of the total anthropogenic emissions, 77% accounted for carbon dioxide, which, in the same period, increased from 21 to 38 gigatons (Gt). Just for your reference, 1 ton of carbon is approximately what a popular automobile model releases per year, using gasoline. Carbon dioxide equivalent emissions were much higher in the 1995-2004 period than in the 1970-1994 period. The areas that most contributed to increase emissions were energy, transport and industries, and, in a much slower pace, commercial and residential buildings, forestry and agriculture. Currently, studies suggest the planet is close to 50 Gt CO2e, and it may reach 61 Gt in 2020, and 70 Gt in 2030. There are discussions about the Earth capacity to absorb those emissions, and scientific figures indicate emissions on Earth are currently about four times higher than this capacity (between 6 and 9 Gt CO2e), in a process initiated during the mid-19th century, with the Industrial Revolution.
In IPCC report published in 2007, the estimate was that a 500-550 ppm CO2 concentration (part per million) in the atmosphere will probably raise the temperature in 3ºC, which is sufficient to extinguish species of plants (among them, agricultural crops), melt glaciers on mountains, and affect water supply for millions of people, compromising human survival. At that time, scientists suggested it would be better to restrain such elevation to at most 2ºC compared to pre-industrial levels - a little more than 1ºC above the current average temperature. In March 2009, during the UN Climate Change Conference in Copenhagen, researchers stated the planet carrying capacity could be lower than those 2ºC.
Published by the British government on October 30th, 2006, the Stern Review is considered the most comprehensive study that has ever been published on economic aspects involving climate change in the world. The Review estimates out of control climate change risks can threaten 20% or more of the world GDP. By contrast, the costs of actions to reduce greenhouse gas emissions may be limited to 1% of global GDP per year. People would pay slightly more for carbon-intensive products, but world economies could keep growing at fast pace.
If we do not take any action to control emissions, each CO2 ton we have been currently releasing will be causing damages of about 85 dollars - although those costs are not included when investors and consumers make decisions about how to spend the money. Carbon equivalent reduction trading schemes show there are many opportunities to cut emissions for less than 25 dollars per ton. In other words, reducing emissions will benefit us most. The benefits of global economy changing to a low carbon path may sum up 2.5 trillion dollars per year throughout time.
This change could also offer great opportunities. Low-carbon technology markets will be worth at least 500 billion dollars and possibly a lot more, around 2050, if the world acts in the scale demanded. Fighting climate change is a pro-development strategy; ignoring it will definitely hinder economic growth.
Corporate Strategy for a Low-Carbon Economy
To meet the goal of not raising the average planet temperature above the safe threshold of 2oC, as established by IPCC, greenhouse gas (GHG) concentration in the atmosphere should be stabilized around 450 ppm. In order for this to be likely to happen, GHG emissions should follow a descending curve from 2015 on. This requires great effort, both from private and public institutions.
Transition to a low-carbon economy is a challenge that will require great changes in current models of production, management, uses of energy/material, and consumption. However, the transition process provides opportunities for investments on technological innovation, development of more efficient production processes, and creation of new products.
Thus, controlling greenhouse gas emissions is not just an environmental issue imposed by regulatory acts or social pressure, it is also an issue imposed by market pressures that requires redefining medium- and long-term corporate strategies.
The climate change topic was included in corporate agendas to become one of the most important factors that affect their operation environment. In Brazil, this can be observed by the intensification of public policies, at the local level, demanding actions related to GHG emission restriction such as the elaboration of Brazil´s National Plan on Climate Change (PNMC) aiming mainly at the reduction of GHG anthropic emissions from different sources.
Similarly, global organizations have been greatly affected by consequences of climate change, both on the supply/demand of their products in the international trade and on the geographic expansion of their business.
Bibliographic references for the content of this page:
Cartilha CNI - Confederação Nacional da Indústria. Estratégias Corporativas de Baixo Carbono: Gestão de Riscos e Oportunidades / Confederação Nacional da Indústria. (CNI Handbook – Low-Carbon Corporate Strategies: Risk and Opportunity Management / Brazilian National Confederation of Industries) – Brasilia, 2011