WASHINGTON (November 29, 2007) – A sweeping new report released today by McKinsey & Company, one of the world’s leading management consulting firms, offers the most comprehensive assessment to date of the options and opportunities for cutting U.S. global warming emissions to levels that experts say are needed to avert costly and dangerous environmental damages. Using detailed pricing and technological analyses for more than 250 different measures, the study concludes that the needed results are achievable at little or no net cost to the economy, provided we act now.
The Natural Resources Defense Council (NRDC) was one of seven cosponsors of the year-long study, which arrives at a crucial juncture in the global warming debate, as businesses and political leaders buckle down to start shaping solutions. The report strongly emphasizes that policy, rather than technology itself, is the key to moving cleaner, more efficient solutions off the shelves, out of the labs, and into the marketplace.
“Global warming is becoming a core driver for business and the American economy. Smart companies know that action is coming, and they are moving to get ahead of the game,” said NRDC President Frances Beinecke. “Strategies to cut emissions and reduce energy demand create both a challenge and an opportunity. With the right measures now, we can unlock tremendous savings throughout the economy.”
Several developments have made 2007 a central turning point. This year saw competitive global warming strategy emerge at the heart of one of the largest business deals in history: the $44 billion buyout of the utility giant TXU, whose new owners rejected plans for eight coal-fired power plants in favor of a cleaner, more efficient generating portfolio. Meanwhile, a growing list of leading American companies known as the U.S. Climate Action Partnership has issued an unprecedented call for a federal limit on heat-trapping pollution, backed by a market system that rewards quick results and cuts overall costs to the economy.
Earlier this year the Supreme Court ruled that federal environmental officials must start addressing climate pollution. Twenty-five states are moving ahead with global warming pollution standards of their own, and momentum is quickly building for federal legislation, with a landmark bipartisan bill expected to be voted out of the Senate Environment Committee next week.
Three main steps are necessary to eliminate market barriers and ensure the fastest, most cost-effective results in time to make a difference, according to both NRDC and McKinsey.
Lawmakers first need to create a stable framework that provides investor certainty about required emissions reductions by setting a sensible set of pollution limits as soon as possible. Roadblocks and disincentives that artificially impede the profitability of energy and emissions savings also should be eliminated. Finally, innovation support such as R&D and commercialization tax credits are needed to move proven technologies into the market on a commercial scale.
“We believe that solving the challenge of global warming will spawn a new industrial revolution, with U.S. technology and innovation leading the way,” Beinecke said. “McKinsey has drawn up an excellent roadmap. But it’s up to Washington to get us out of the driveway. We have a chance to get this right, but the window of opportunity is very short.”
“Economists say there is no such thing as a free lunch, but the menu outlined here today is far more affordable and appetizing than many have been led to believe, so long as we place our order now,” she said.
In addition to NRDC, the McKinsey study was cosponsored by DTE Energy, Environmental Defense, Honeywell, National Grid, PG&E, and Shell.