Climate Change and Major Storms: The Long-Term Corporate Challenge

Public officials, private citizens, relief organizations, and others are now trying to tease out the lessons of Hurricane Katrina.  One conclusion has been inescapable:  we can and must be much better prepared when the next weather disaster strikes.  Yet preparation means more than just having a better evacuation plan or a better economic recovery scheme.  Perhaps the best form of long-term preparation is to reduce the degree to which everyday commerce contributes to climate change.

For years, climate scientists have been saying that extreme weather incidents would increase as a result of climate change.   In the case of hurricanes, the reasoning behind this is simple.  Hurricanes are simply engines that transfer heat and energy from the tropics to higher latitudes:  they draw their energy from warm sea waters.  As ocean temperatures increase, the amount of energy available to hurricanes also increases.  And one of the results of global warming is higher sea surface temperatures.

Reconstruction following Hurricane Katrina is likely to cost hundreds of billions of dollars.  The Association of British Insurers recently warned that major storms could cause annual losses to almost double, with wind-related insurance losses from US hurricanes increasing by as much as 75 percent during this century, all as a result of climate change.

While the United States has not yet ratified the Kyoto Protocol, it went into effect this year in the 141 nations that ratified it, meaning that companies operating in the European Union, Canada, and Japan, among other countries, must abide by its requirements to reduce greenhouse gas emissions.  This change in international commerce may have its costs, but more exciting are the opportunities to innovate by developing new low-emissions products and processes.

One innovative example is Denbury Resources (DNR), a Texas-based oil and gas exploration and production company with operations in the affected areas of Mississippi and Louisiana.  Denbury has been using CO2 injection as an alternative method of extracting oil.  This alternative to conventional technology not only allows the company to recycle the used CO2 multiple times, it also has great potential as a means to capture and store carbon, curbing greenhouse gas emissions in the process.  The process of CO2 tertiary oil extraction may allow large quantities of CO2 to be stored safely in the ground.   While Denbury did not adopt this model primarily to address climate change, it is a good example of how mechanisms to address climate change can be integrated into everyday commerce.  Many experts now believe that geological sequestration-underground storage of carbon dioxide-may be a crucial strategy in combating global warming.

Semiconductor manufacturer Intel (INTC) has also tried to turn the challenge of climate change into an opportunity.   The company's climate change programs permeate the organization.  Key departments are charged with exploring external opportunities for partnering on climate change programs, and strive to incorporate energy efficiency into new products.  For example, Intel's Instantly Available PC (IAPC) technology allows a computer to go into "sleep" mode, for example, greatly reducing the amount of power the machine needs to stay on, yet making it available as soon as the user requires it.  The company tracks and reports data from its GHG emissions worldwide, and hopes to reduce GHG emissions by 30 percent by 2010. 

In 1999, Motorola (MOT) established a goal to reduce emissions of PFCs by 50 percent worldwide by 2010.  The company's 2003 EHS Performance Goals also included reducing emissions of volatile organic material and hazardous air pollutants by 10 percent per year.  The target for carbon dioxide emissions is a 25 percent reduction in energy use by 2010 to a 2000 baseline.

The aftermath of Hurricane Katrina has shown us all too vividly that the effects of climate change do not end with environmental problems.  We now know without a doubt that climate change can be a human rights and community problem that permeates every aspect of society.  The poorest among us will suffer the most, creating deeper and deeper divisions in our society.  However, we can create jobs and long-term economic growth if we are willing to confront the challenges of climate change head-on, using our ingenuity and resources to develop and market solutions for the future.