The maneuvers of eight mostly Democratic AGs could be seen as a political attack. But their suit is only one tiny trumpet note in a growing bipartisan call to arms. "The facts are there," says Senator John McCain (R-Ariz.). "We have to educate our fellow citizens about climate change and the danger it poses to the world." In January, the European Union will impose mandatory caps on carbon dioxide and other gases that act like a greenhouse over the earth, and will begin a market-based system for buying and selling the right to emit carbon. By the end of the year,
There are naysayers. The Bush Administration flatly rejects
But the growing consensus among scientists and governments is that we can -- and must -- do something. Researchers under the auspices of the National Academy of Sciences and the Intergovernmental Panel on Climate Change (IPCC) have pondered the evidence and concluded that the earth is warming, that humans are probably the cause, and that the threat is real enough to warrant an immediate response. "There is no dispute that the temperature will rise. It will," says Donald Kennedy, editor-in-chief of Science. "The disagreement is how much." Indeed, "there is a real potential for sudden and perhaps catastrophic change," says Eileen Claussen, president of the
Plus, taking action brings a host of ancillary benefits. The main way to cut greenhouse-gas emissions is simply to burn less fossil fuel. Making cars and factories more energy-efficient and using alternative sources would make
That's why there has been a rush to fill the leadership vacuum left by
Remarkably, business is far ahead of Congress and the White House. Some CEOs are already calling for once-unthinkable steps. "We accept that the science on global warming is overwhelming," says John W. Rowe, chairman and CEO of Exelon Corp. (EXC ) "There should be mandatory carbon constraints."
Exelon, of course, would likely benefit as the nation's largest operator of commercial nuclear power plants. But many other companies also are planning for that future. American Electric Power Co. (AEP ) once fought the idea of combating climate change. But in the late 1990s, then-CEO E. Linn Draper Jr. pushed for a strategy shift at the No. 1 coal-burning utility -- preparing for limits instead of denying that global warming existed. It was a tough sell to management. Limits on carbon emissions threaten the whole idea of burning coal. But Draper prevailed. Why? "We felt it was inevitable that we were going to live in a carbon-constrained world," says Dale E. Heydlauff, AEP's senior vice-president for environmental affairs.
Now, AEP is trying to accumulate credits for cutting CO2. It's investing in renewable energy projects in
Global warming could change other industries, too. Even if the world manages to make big cuts in emissions soon, the earth will still warm several more degrees in coming decades, most climate scientists believe. That could slash agricultural yields, raise sea levels, and bring more extreme weather.
For businesses, this presents threats -- and opportunities. Insurers may face more floods, storms, and other disasters. Farmers must adjust crops to changing climates. Companies that pioneer low-emission cars, clean coal-burning technology, and hardier crop plants -- or find cheap ways to slash emissions -- will take over from those that can't move as fast. "There is no silver bullet," says Chris Mottershead, distinguished adviser at BP PLC (BP ): "There is a suite of technologies that are required, and we need to unleash the talent inside business" to develop them.
Are we ready for this carbon-constrained, warming world? In some ways, yes. "There is a case to be made for cautious optimism, that we are making small steps," says BP's Mottershead.
Indeed, there is surprising consensus about the policies needed to spur innovation and fight global warming. The basic idea: mandatory reductions or taxes on carbon emissions, combined with a worldwide emissions-trading program. Here's how it could work: Imagine that each company in a particular sector is required to cut emissions by 20%. The company could meet the target on its own by becoming more energy efficient or by switching from fossil fuels to alternatives. But it could also simply buy the needed reductions on the open market from others who have already cut emissions more than required, and who thus have excess emissions to sell. Under a sophisticated worldwide carbon-trading system, governments and companies could also get sellable credits for planting trees to soak up carbon or for investing in, say, energy efficient and low-carbon technologies in the developing world. As a result, there is a powerful incentive for everyone to find the lowest-cost and most effective cuts -- and to move to lower-carbon technologies.
A key element is long-term predictability. If the world sets goals for the next 50 years, as
Such clear policy signals should bring major efficiency gains. Even 30% to 40% reductions in emissions by 2020 are possible, says Northrop. After that, he suggests, shifts to new energy technologies "can get the other 35% to 40% that we need to get to the low-carbon emission future."
The good news is that the world sees the threat and has begun to respond. The bad news is the magnitude of the task. Rising CO2 levels in the atmosphere can't be slowed or reduced if only a few countries -- or even all the industrialized nations -- take action. The world must also figure out a way to permit growth in
Developing countries are responsible for just over one-third of the world's greenhouse-gas emissions. But they emit less than one-fifth as much per person as do the industrialized nations. That will increase as their citizens buy more cars and consume more energy. By 2100, these countries will emit two or three times as much as the developed world, experts predict.
The Bush Administration and Congress have seized upon this issue as one reason for rejecting the Kyoto Protocol, which doesn't include the developing world. But international negotiators are beginning to talk about a plan that would go beyond
The next step is to help the developing world adopt new technologies.
Still, even if the developing world comes on board, staggering reductions in emissions are needed. Consider the math. For the past 450,000 years, the amount of carbon dioxide in the atmosphere has stayed below 290 parts per million (ppm). Now, we are spewing out more than 7 gigatons of carbon a year and large amounts of other greenhouse gases such as methane. As a result, the CO2 levels in the air have climbed past 370 ppm. With no action, those levels could jump to 800 to 1,000 ppm by the end of the century. "We are already in dire straits," warns
Can serious consequences be prevented? The British government, many scientists, and some executives are urging an all-out effort to keep the earth from warming more than two degrees Celsius. "The consequences of changes above two degrees are so dreadful that we need to avoid it," says BP's Mottershead. To hit that target, scientists calculate that CO2 concentrations in the atmosphere must be kept from reaching 550 ppm -- twice the preindustrial level. Getting there may require cutting the world's per capita emissions in half by 2100.
Of course, there is great uncertainty surrounding the science of global warming. No one can really know the size and consequences of climate change. "Without a doubt, it will be a very different world -- a much warmer world," says David S. Battisti, atmospheric scientist at the
What scientists do know is that carbon dioxide and a number of other gases act like the roof of a greenhouse. Energy from the sun passes through easily. Some of the warmth that normally would be radiated back out to space is trapped, however, warming the planet. With no greenhouse gases at all in the atmosphere, we would freeze. The earth's average temperature would be a cold
But the atmosphere is fiendishly complicated. If an increase in greenhouse gases also makes the sky cloudier, the added clouds may cool the surface enough to offset warming from CO2. Tiny particles from pollution also exert warming or cooling effects, depending on where they are in the atmosphere. Naysayers argue that it's just too soon to tell if greenhouse gases will significantly change the climate.
Yet the climate is changing. In the past 100 years, global temperatures are up 0.6 degrees Celsius. The past few decades are the warmest since people began keeping temperature records -- altering the face of the planet.
For instance, the Qori Kalis glacier in
More worrisome, scientists have learned from the past that seemingly small perturbations can cause the climate to swing rapidly and dramatically. Data from ice cores taken from
The earth's history is full of such abrupt climate changes. Now many scientists fear that the current buildup of greenhouse gases could also flip a global switch. "To take a chance and say these abrupt changes won't occur in the future is sheer madness," says Wallace S. Broecker, earth scientist at Lamont-Doherty. "That's why it is absolutely foolhardy to let CO2 go up to 600 or 800 ppm."
Indeed, Broecker has helped pinpoint one switch involving ocean currents that circulate heat and cold. If this so-called conveyor shuts down, the Gulf Stream stops bringing heat to
Can it happen again? Maybe. A recent Pentagon report tells of a "plausible...though not the most likely" scenario, in which the conveyor shuts off. "Such abrupt climate change...could potentially destabilize the geopolitical environment, leading to skirmishes, battles, and even war," it warns.
There are already worrisome signs. The global conveyor is driven by cold, salty water in the
If the global switch does flip, an Ice Age won't descend upon
In some scenarios, the ice on
Prevent or Adapt?
Perhaps the central debate in global warming now is not about the underlying science, but whether it's better -- and cheaper -- to take steps to prepare for or prevent climate change now, or to simply roll with the punches if and when it happens. Opponents of greenhouse-gas curbs say we should be able to adapt to a warmer world or even cool it back down. "I'm convinced there will be engineering schemes that will allow our children's children to have whatever climate they want," says Robert C. Balling Jr., a climatologist at
Yes, human beings can adapt, advocates of immediate action retort. But why run even the small risk of catastrophic changes, when important steps can be taken at a modest cost now? A British government panel, for instance, concluded that the cost of its share of the task of limiting the level of CO2 to 550 ppm would be about 1% of
Compare that, says Sir David King, with the cost of a single flood breaking through the barrier in the
The Business Response
When CEOs contemplate global warming, they see something they dread: uncertainty. There's uncertainty about what regulations they will have to meet and about how much the climate will change -- and uncertainty itself poses challenges. Insurance giant Swiss Re sees a threat to its entire industry. The reason: Insurers know how to write policies for every conceivable hazard based on exhaustive study of the past. If floods typically occur in a city every 20 years or so, then it's a good bet the trend will continue into the future. Global warming throws all that historical data out the window.
One of the predicted consequences of higher greenhouse-gas levels, for instance, is more variable weather. Even a heat wave like the one that gripped
That's why Swiss Re has been pressing companies to plan for possible effects of warming. Lenders may require beefed-up flood insurance before issuing mortgages. Chipmakers must find replacements for greenhouse-gas solvents. Utilities need to prepare grids to handle bigger loads and to boost power from renewable sources. Oil companies need to think about a future where cars use less gas -- or switch to hydrogen.
Swiss Re says the word is getting out, but not fast enough. In a recent survey, "80% of CEOs said that climate change was a potential risk, but only 40% were doing something about it," says
Shareholders are also demanding that companies assess the risks of global warming and devise coping strategies. Moreover, multinationals have no choice but to plan for emissions cuts because of the coming EU carbon limits and possible restrictions on other greenhouse gases.
Intel Corp. (INTC ), for example, is worried the EU could ban the use of perfluorocarbons (PCF), chemicals used in chipmaking that are potent greenhouse gases. "We are looking for substitutes but don't have any yet," says Intel's Stephen Harper. "We decided to craft a worldwide agreement to reduce PFC emissions 10% by 2010 -- upwards of a 90% reduction per chip. We wanted to show leadership and not have the EU regulate us."
Utilities face the greatest threat since the bulk of the power they generate comes from climate-changing fossil fuels. That's why AEP, Cinergy Corp. (CIN ), and others are probing new technologies that would enable them to capture the carbon as coal is burned. That carbon could then be pumped deep into the ground to be stored for thousands of years. AEP has helped drill a test well in
Who Will Lead?
Even without mandates, scores of companies are taking concrete actions. "The science debate goes on, but we know enough to move now," explains AEP Chief Executive Michael G. Morris. It helps that thwarting global warming often brings cost savings and business benefits. Indeed, one goal of the newly formed Climate Group is to share tales of how climate strategies helped the bottom line. "The ones who have been at it for a while are finding they can do more than is asked for in
Climate-savvy execs are hoping that when carbon limits are imposed, they'll get credit for actions already taken. But they're also anticipating big future opportunities. GE bought Enron Corp.'s wind business and a solar energy company in addition to doing research on hydrogen and lower-emission jet engines and locomotives. "We can help our customers meet the challenges they are going to face," says Stephen D. Ramsey, GE's environmental chief. In
Given this progress, many scientists wonder why the world -- and especially the
The Bush Administration counters that taking steps is simply too costly. Imposing limits on the
But most experts believe that mandatory curbs are essential and that they can be implemented at reasonable cost. Indeed, as states jump in with their own patchwork of rules, execs are beginning to say that it may be time to push for uniform national limits. That's what happened in 1990 with pollution rules. Faced with the prospect of dozens of state regulations, companies helped push for federal Clean Air Act amendments that reduced sulfur dioxide emissions through a market-based trading system. The law was a huge success. "We reduced emissions ahead of schedule and at lower cost," says Xcel Energy CEO Brunetti. "It's a great example of what can be done."
The same sort of trading scheme would bring similarly inexpensive greenhouse-gas reductions, many economists, politicians, and execs believe. The EU plan puts a cap on emissions for each country and allows emitters to buy and sell permits to release certain amounts of emissions. In the
These steps are just the beginning, though. Even drastic measures -- such as implementing revolutionary energy technologies or grabbing carbon from the air -- won't stop this great global experiment from being conducted. "We won't cure this problem," cautions Henry Jacoby, co-director of Massachusetts Institute of Technology's Joint Program on the Science & Policy of Global Change. "The hope is that we can lower the risk of some of the more possible damaging outcomes." Companies and nations have begun to respond, but there is a long way to go, and only two choices: Get serious about global warming -- or be prepared for the consequences.