Cap-and-Trade to Impact Costs of Carbon EmissionsSeptember 3rd, 2009 | Category: Industry News
Carbon emissions from large corporations have always cost the environment. But the tables are turning amidst planned and upcoming cap-and-trade programs introduced by the current administration and many U.S. companies will soon be required to pay for greenhouse gas emissions. Planned programs aim to control pollution by providing economic incentives to companies achieving reductions, but these same companies will also seek to minimize emissions through energy savings.
“Climate change represents serious challenges to the environment, as well as risks and opportunities to U.S. corporations,” says Malcolm Fox, vice president of Corporate Services for Trucost Plc, an environmental research organization. “The first step in mitigating those risks is to calculate carbon emissions and their potential costs from direct operations and supply chains.”
Fox’s company partners with NSF International, an independent, not-for-profit organization. The two recently announced the availability of a new report entitled, Carbon Emissions – Measuring the Risks, examining the greenhouse gas emissions of S&P 500 companies in several different sectors.
“Industry by industry, this report presents those impacts and identifies critical strategies to prepare for upcoming legislation and turns risks into a competitive advantage,” Fox says. “For example, the average industrial service firm needs to prepare for the fact that more than 70 percent of their carbon emissions are embedded in their supply chain, representing a significant financial risk.”
“Carbon-intensive companies will be most exposed to carbon costs under the cap-and-trade program to be introduced in 2012 under the draft American Clean Energy and Security Act of 2009 (Waxman-Markey Bill),” says Koen Bontinck, vice president of NSF Sustainability Services. “The goal of this report is to not only provide companies with an affordable analysis of their current operations and exposure to carbon costs, but also to help them implement sustainable business practices and verify their GHG emissions data in preparation for the new regulations.”
In March of this year, representatives Henry A. Waxman of California (D) and Edward J. Markey of Massachusetts (D) introduced a draft proposal in the U.S. House Committee on Energy and Commerce as a variant of such a cap-and-trade plan. The proposed variant called for a reduction in energy use producing greenhouse gasses in an effort to address climate change.
The American Clean Energy and Security Act of 2009 (ACES), also known as the Waxman-Markey Bill, includes a number of provisions, many of which are aimed at creating more energy-efficient buildings. If signed into law, requirements would move commercial and residential buildings towards net-zero designs.
Trucost’s key findings among the industrial goods and services sector indicate the cost of carbon may reach as high as 18 percent of earnings for some firms, as measured by earnings before interest, taxes, depreciation and amortization (EBITDA). The time may be now for providers of solar-controlling, commercial window film products to step in and stake their claim in the equation.