How Companies Can Bridge the ‘Gigaton Gap’ and Make Money

Environment & Energy (06/19/13) Cusick, Daniel

A new study estimates that U.S. businesses that strive to curb carbon emissions by 3 percent annually through 2020 could gain as much as $190 billion from reduced energy bills. However, failure to curtail greenhouse gas emissions by the end of this decade could make it more difficult to meet carbon reduction goals over the long term, according to the report from the World Wildlife Fund and CDP based on an analysis by McKinsey & Co. Such failure could also increase the risk of business disruptions caused by extreme weather events such as droughts, floods and severe storms, the report states. Climate activists say U.S. businesses will need to close the “gigaton gap,” referring to the amount of CO2 expected to be emitted by the U.S. corporate sector by 2020 and the level of emissions necessary to prevent the planet from warming by 2 degrees Celsius from preindustrial levels. To achieve this, U.S. businesses must slash 1.2 billion tons (1.2 gigatons), or 25 percent, from their current annual emissions levels of 4.2 billion tons of CO2 equivalent by 2020, requiring a roughly 3 percent reduction in the U.S. business sector’s CO2 emissions every year for the next six years. Hundreds of U.S. companies have already started investing in carbon reduction programs while enhancing their profit margins, according to McKinsey’s Steve Swartz, the report’s lead author. Paul Simpson, chief executive officer of CDP, formerly the Carbon Disclosure Project, says the report shows that companies’ senior management must direct more financial capital toward programs and technologies to reduce the nation’s reliance on fossil fuels and other carbon-intensive processes. “Investing in energy efficiency and renewable energy saves cost, stimulates innovation, creates jobs, and builds energy independence and security,” he says.

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