Green – the Color of Growth: The Business Case for Climate Action
Thank you. Distinguished guests, friends, welcome. Thank you for joining us here today. Please also join me in thanking CII for hosting us and for its continuing strong support and interest in climate change issues.
Climate change has been called the most complicated challenge of our time. It is a challenge with multiple causes and impacts, and one that crosses all international boundaries. And its fundamental connection to development and growth sometimes make it politically difficult to accept that sweeping changes are necessary.
But these complexities are no excuse for inaction. Many of the causes of climate change were created by humanity and they can be addressed by humanity. Rather than avoiding this tough issue, climate change’s immense challenges are a call for the best and brightest from all parts of the world to lead. They are a call for all sectors to work together to create and utilize the policies, technologies, and services that can steer our world in a better direction. A direction where humanity’s growing needs have less of an impact on our planet’s limited resources.
To get to this place we need leadership from every sector. Government, science, civil society, and, perhaps most importantly, business. While climate change is blamed for natural disasters that wreak extreme destruction, its economic impacts are much broader. Ultimately, enterprise must play a leading role in addressing climate change, or it will be among its many casualties. That is why we’ve asked you here today.
Today, the Embassy is kicking off a discussion on climate change issues that will last throughout 2015. In December, the Conference of Parties to the United Nations Framework Convention on Climate Change – the UNFCCC – will reconvene with the aim of concluding a new global climate agreement. This new climate agreement will be based on contributions that each country will determine for themselves. I’ll come back to the details about the Conference in a few minutes, but the bottom line is that the benefits of a successful agreement will be tremendous. They will include better public health, energy security, resilience, climate security, food security, ecosystem health, and sustainable economic growth.
So we will be talking about climate change a lot this year. However, you’ll notice we decided to kick off our “Climate Partners” program by reaching out on the subject to business leaders. We did this because we’ve seen many instances in the short time that we’ve been working on addressing climate change that it is business and innovation that will lead the way to the changes we need to see.
With that in mind, we decided to kick off our year-long climate change engagement by meeting you to talk about the many leadership opportunities and challenges climate change presents for the business community. To begin, I’d like to start with a quick overview of where we are on climate change. Then we’ll turn to where we hope to go, including in Paris later this year. After that, I’ll conclude with some thoughts about how businesses can lead the way. I’ll then open it up for questions.
Climate Change Now
Talking about where we are now can take us in many directions, but I have two main points I’d like to make.
The first is that I recognize there are still a variety of opinions about climate change, its causes, and how best to address it. However, there are three undeniable facts that I keep in mind when I think about climate change. The first and second facts are that we live in a world of limited resources and growing populations. Indeed, India is expected to grow by an additional 500 million people over the next 35 years. These people will need heat, refrigeration, communications, transportation, just like we all do. As our numbers on this small planet grow, we need to find better ways to manage our finite resources. The third fact is that temperatures are rising. 14 of the last 15 years have been the warmest on record. These rising temperatures have a variety of impacts, including affecting available water resources and playing a role in major weather events, some of which have tremendous human and economic costs.
So before I talk briefly about the science, I hope you will agree with me that we are at a point in history where humanity needs to find ways to reduce our impact on the Earth and its ecosystems. And I say that based as much on the science, facts, and policy, as I do as a father concerned about future generations.
In addition to the undisputable facts I listed, the global scientific consensus confirms that we need to act now to address climate change. In 2013 the UN’s Intergovernmental Panel on Climate Change issued its 5th assessment report. This report, which was based on thousands of peer-reviewed scientific studies from participants around the world, concluded that the warming of the Earth’s climate system caused by humans was unequivocal, and that the observed changes from that warming is unprecedented from “decades to millennia.” The outcomes of that reality are a warmer atmosphere and oceans, diminishing snow and ice, and rising sea levels. The IPCC concluded that “limiting climate change will require substantial and sustained reductions of greenhouse gas emissions.” So that is where we are now, according to the world’s leading scientists. We either reduce greenhouse gas emissions, or we and future generations face their growing effect on the planet.
The second point I want to make about where we are now is that the United States fully recognizes that we share responsibility for the current climate change situation. We are a major industrialized country that has been emitting large amounts of greenhouse gases for many decades. There is absolutely no denial of that reality by President Obama, and certainly not from me personally.
This recognition brings me to the second main area of my remarks, which is to talk about where we hope to go from here.
Because the United States recognizes our role in creating the present situation, we are working hard to address it, both domestically and in the international community.
U.S. Domestic efforts
Domestically, President Obama has built on decades of efforts to dramatically transform the United States’ energy future. I’ll get into a little more detail on these efforts, but let me start with the bottom line. The U.S. experience demonstrates that we can tackle pollution and emissions without damaging our economy. The U.S. economy is 60 percent bigger than it was 20 years ago while our carbon emissions have returned to roughly where they were 20 years ago. We have even bigger goals to reduce our emissions in the years ahead.
There are a number of factors that contributed to our successful curbs on carbon emissions. Perhaps the biggest factor is our sustained efforts to combat pollution. The Clean Air Act passed in 1970 reduced toxic air pollution in many urban areas. Among these urban areas were Los Angeles and Pittsburgh, a city in my home state of Pennsylvania. As a child, I remember hearing stories about how there were days in Pittsburgh where you couldn’t see to the end of the block because of the heavy smog that would settle over the city. Los Angeles had similar problems.
Problems that were not unlike what New Delhi is dealing with today. However, civic and business leaders worked together to meet the requirements of the Clean Air Act and other regulations, improving the pollution situation in both cities immensely. The economic benefits these changes brought to both these cities were tremendous. Cleaner air made the cities more livable and attractive, bringing in more investment and workers. It also paid extreme benefits in terms of public health. Indeed, the Clean Air Act’s public health benefits outnumber the costs of its implementation by an astounding 30 to 1 ratio.
We’re continuing our work by building on this record of progress. Utilizing the provisions of the Clean Air Act, the Obama Administration is targeting reducing emissions from transportation and power plants, which together account for more than 60 percent of the greenhouse gases emitted in the United States. Our Environmental Protection Agency released a Clean Power Plan last June that put us on track to reduce carbon emissions from the power sector by the year 2030 to 30 percent below the levels we saw in 2005.
In the transportation sector, new fuel-economy standards for cars and light trucks are expected to reduce U.S. oil consumption by 2.2 million barrels per day by 2025. Meeting these requirements will spur innovation in the auto industry. Innovation which will be available to a market of consumers with 1.7 trillion more dollars to spend because of the savings they will realize at the gas pump in their more efficient vehicles.
Today, we are using these models to be a leader in the international effort to address climate change. This is why, on March 31, we were one of the first countries to submit our “intended nationally determined contribution” – the technical term for our new emission reduction goal – to the UN in advance of the December meeting in Paris. Our plan formalized a commitment we made last November to reduce U.S. carbon pollution by 26-28 percent below 2005 levels by 2025, making our best efforts to reduce emissions by 28 percent. This target roughly doubles the pace of carbon pollution reduction during the five years from 2020 to 2025 as compared to what we are currently on track to achieve from 2005 to 2020.
So this is a very brief synopsis of the U.S. plan, which you can also find online. We’ve also brought with us some fact sheets about the Paris convention and climate change, generally. The fact sheets tell you more about the important goals of the Paris convention.
In addition to the fact sheets, let me add that there is much to do between now and Paris, but we are off to a very good start. We have post-2020 emissions targets on the table from the three largest emitters, the United States, China, and the EU. We also have plans from a number of other parties, including Switzerland, Mexico, Russia, Gabon and Norway.
We welcome India’s recent proposal for the phasedown of hydrofluorocarbons or HFCs, very potent greenhouse gases currently used in a number of different applications, including air conditioning. As our top climate official Todd Stern said, “It will build critical momentum for a successful outcome in Paris for the climate negotiations in December, and complement what is expected to be an agreement where all countries participate by pledging to attack climate pollutants at their own pace.”
The U.S. – India partnership
This brings me to India and the U.S. – India partnership. We know that India is working hard on its proposed nationally determined contribution, and we very much look forward to seeing it when it is ready. We’re not the only ones that are interested. India’s size, economic growth projections, and already significant greenhouse gas emissions means there is tremendous interest around the world regarding what India will do.
More importantly, we’re interested in what India will do because, as President Obama said when he was here in January, we’re interested in being India’s “best partner.” And we think this partnership doesn’t just mean growing trade or defense ties, but it also means engaging to discuss and tackle the toughest issues on the planet. Issues like climate change. So in addition to our traditional areas of cooperation, we’re working closely with India to find ways to promote the transition to a low carbon, clean energy future. For instance:
- In 2009, President Obama and then-Prime Minister Singh launched the U.S.-India Partnership to Advance Clean Energy. This past September, Prime Minister Modi and President Obama committed to strengthen and expand the initiative, which has mobilized $2.4 billion in public and private investment from the United States for clean energy projects in India.
- In February, the Embassy and the Ministry of New and Renewable Energy launched the India Clean Energy Finance Forum and the U.S.-India Task Force on Clean Energy Finance. The India Clean Energy Finance Forum is a high level policy discussion between the finance community and the government of India. The Forum’s goal is simple, to identify innovative ways to raise the $200 billion needed to meet India’s ambitious clean energy goals. The Task Force is a government-to-government collaboration, sharing best practices on ways we can accelerate market acceptance of “green” financing.
- We have a $125 million Joint Clean Energy Research and Development Center connecting dozens of public and private institutions in our countries. This center supports cutting-edge research in solar energy, advanced biofuels, and energy efficient buildings. During the President’s January visit, we agreed to extend this initiative for another five years and launch a new track on smart grid and grid storage technology.
- Through our Promoting Energy Access through Clean Energy (PEACE) program, we are partnering to greatly accelerate the deployment of off-grid clean energy. This program supports the Indian government’s commitment to provide energy access to all Indians.
We hope our recent breakthrough understandings in the civil nuclear sector will ultimately allow us to build low-carbon base-load nuclear power plants together.
- Perhaps most importantly to those of us living in India’s cities, the President and Prime Minister agreed to launch an important new initiative on air quality. Just last month experts from the U.S. Environmental Protection Agency visited India to discuss opportunities for joint collaboration with their Indian counterparts.
Business case for change
This growing record of cooperation and partnership brings me to my final theme: why business must lead the way on climate change. As was true in the areas of high-tech, space cooperation, and other scientific endeavors, the programs I just mentioned are not only policy programs, but ones that will have tremendous impacts on innovation and growth in India. The economic benefits of action and moving to a low-carbon future are enormous. In addition to creating more jobs, reducing energy costs, and maximizing profits in the near-term, businesses will realize gains through reduced healthcare costs and increased productivity in the long-term.
Over the next twenty years global investment in the energy sector is expected to reach nearly $17 trillion. That’s more than the entire GDP of China and India combined. As Prime Minister Modi seeks to implement Smart Cities, Make in India, the Clean India/Swachh Bharat campaign, and works to deploy his goal of 175 Gigawatts (Gw) of clean, renewable energy by 2022 (Note:100 Gw of Solar, 60 Gw of Wind and 15 Gw of Biomass), there will be countless opportunities to utilize cleaner technologies that are more energy and cost efficient. Designing and producing these technologies will take vision and innovation. But they can have a profound impact on the overall goals of upgrading India’s infrastructure and improving the quality of life for hundreds of millions of Indians all around the country.
And beyond meeting India’s own needs, the world market is increasingly searching for cleaner, more efficient, and more advanced technologies to address climate change. The innovations that India can use to become smarter, cleaner, more productive, and more profitable, should be attractive to a global community concerned about this issue. Just as in any sector, the most successful companies will be those that constantly innovate rather than those that fight for diminishing market shares for older, less-desirable technologies.
In closing, let me ask you to imagine the opportunities for clean energy innovation. Imagine the opportunities presented by Smart Cities, Swachh Bharat, here in India, and the opportunities in the U.S. market that will be created because of our ambitions goals.
And beyond imagining, I’d encourage you to do some quick calculations when you get back to your offices today. Take a look at how much your profits would increase if you lower your energy costs through more energy efficient processes. Think about the opportunities your companies might have to partner with governments or NGOs or others to develop innovative solutions to the challenges we face. Think about the CSR possibilities and benefits that are increasingly available. Think about the positive impact to the lives of tens of millions of people in India and beyond.
And beyond thinking about the realities of today’s bottom lines, imagine two possibilities for the future. Imagine a future where businesses, nations, and future generations increasingly must confront the myriad challenges of living in a world with unchecked emissions of greenhouse gases. And imagine an alternative, where each of us takes a leadership role to help address climate change through innovation, partnership, and a commitment to a cleaner future.
Thank you. I’m happy to answer your questions.
Link to Secretary John Kerry’s special video message, played before the Ambassador’s above speech: https://www.youtube.com/watch?v=0dnLL3WPY-c&feature=youtu.be