Confused by the news? Understanding all this climate change talk

The science is central to any discussion of these issues. Is global warming happening? And, more importantly, are we having a significant influence on climate change? Much of the current research points to carbon-based emissions, such as the CO2 released when burning any fossil fuels, including coal or natural gas, as causing the temperature on earth to increase. The resulting climate change can have negative impacts on humans and the environment.

According to popular belief, the answer to both science questions is, yes. However, the recent hacking into the British climate research center e-mails raises doubts as to whether or not data has been manipulated and contrary research suppressed.

The United Nations hosted its first convention on climate change in 1997 and issued the Kyoto Protocol aimed at combating global warming. Under the protocol, 37 industrialized countries committed to a reduction in greenhouse gases. The United States did not sign this agreement. The UN convention in Copenhagen went much further with attempts to limit greenhouse gases and to add provisions to have industrialized countries provide up to $100 billion to developing countries to aid their emissions control efforts.

It is expected that President Obama will propose a plan for the U.S. to reduce greenhouse gas emissions by 17% by 2020 compared to 2005 and by as much as 83% by 2050 and to provide funding.

• Making the commitments may be the easy part, but some of the difficult questions are:
• Do we have a good measure of emissions in the U.S. and around the world?
  Can we achieve these goals? 
• What agency will monitor all of the countries to make sure they also will comply with any U.N. agreement?

The U.S. House passed “Cap and Trade” legislation last summer. The legislation sets a limit or cap on the amount of CO2 that can be emitted in aggregate in the U.S. Companies are then allocated units of CO2 that can be released into the atmosphere. For example, a utility company may be granted 1,000 units of carbon emission. Based on the pollution control equipment in place, they may only be emitting 800 units. The company is then free to sell or trade the additional unused credits. Companies that pollute more than allowed may buy the units from the utility company. The bill passed in the house requires a 17% reduction in carbon emissions by 2020 compared to 2005 and 80% by 2050.

There are again questions about the availability of technology to accurately measure carbon emissions. There are definitely issues concerning how the carbon credits will be allocated to all sectors of the economy. It is interesting to note that a British steel company recently shut down operations because they found they would be more profitable selling their carbon units in the market (in Britain cap and trade is operating) than producing and selling steel.

In early December, the Environmental Protection Agency declared CO2 emissions harmful to human health. As a result, the agency is in a position to regulate the amount of CO2 companies can emit. Is this an attempt to force Congress to pass Cap and Trade legislation or will the EPA indirectly force companies to limit emissions regardless of legislation?

There is a great deal of uncertainty regarding all of these issues. However, there are certainly indications of what the impact will be on business.

• Companies will be pressured, if not forced, to limit carbon emissions.
• There will be industry disruptions. The House Cap and Trade legislation provides for up to 156 weeks of income supplement for workers displaced as a result of this legislation. 
• There will be tax incentives to conserve energy.
• There will be tax incentives for “green energy” technology development.
• The EPA will set new energy efficiency standards and may set emission standards.
• There will be continuing pressures to develop renewable energy sources.

The question is not if greenhouse gas emission controls will be established, it is a question of when and how stringent. If we start with the basic premise that global warming is occurring and that we must reverse that trend, then I ask you to consider: If the earth is too warm now, what is the right temperature?

David Mielke is dean of Eastern Michigan University’s College of Business and a leader of SPARK East, a start-up business incubator in downtown Ypsilanti. He can be reached at dmielke@emich.edu.