The Challenges that Global Warming Presents to Governments and Businesses - Essay Example

?Running Head: Global Warming Global Warming [Institute’s Global Warming Global warming, or climate change as analysts now prefer to call it, has been a major source of discomfort for governments and businesses around the world. There is growing awareness among social and economic stakeholders that there is a need to counter climate change (Carey, 2004). Some businesses however are inclined to follow the scientists who believe that climate change is not yet a threat, which presents a dilemma in itself. The idea however is the fact that governments around the world need to adopt policies and regulations that will specifically help to curb or revolutionize businesses from where the problem of climate change stems. These businesses include those reliant on fossil fuels in production or others that produce products that are the source of carbon emissions themselves. However, since everything comes at a cost, businesses are reluctant to combat the challenges that are bringing climate change. Climate change in general has affected businesses in all the industries regardless of their size. The primary reason for this assertion is the fact that the world is largely dependent on fossil fuels, the burning of which results in CO2 emissions, for its energy needs. Chief science adviser to Tony Blair, Sir David King believed that climate change has even greater threats than those posed by terrorism (Carey, 2004). The immediate reaction, as to what should we do in this regard, would be to develop alternatives for fossil fuels. What those alternatives are is then the challenge for businesses and governments to address. John Carey in his cover story for Bloomberg Business Week believes that the idea is to cut down on usage of fossil fuels and to develop energy efficient vehicles and factories (Carey, 2004). The main contributor to greenhouse gas emissions however remains the energy sector. Surprisingly, and for the greater good, businesses adopting methods to address these concerns are thriving. Climate Group, an effort by companies and governments, helps to share stories of corporate success. Michael Northrop from the Climate Group says, "It's impossible to find a company that has acted and has not found benefits" (Carey, 2004). Although evidence exists of the energy sector benefitting from changes, the challenge exists in changing the dimensions of the industry to accommodate environmentally friendly substitutes to fossil fuels. Many companies are however reluctant to invest the appropriate amount of both time and money to find the most viable alternatives to fossil fuels. Oil companies have been primarily responsible for greenhouse gas emissions and have allegedly failed to restrict their contribution in the name of profit (Monteleone, pp. 144-154, 2007). Thus, it then poses a question to governments as to what should policy be aimed at. The answer is not that simple as even that comes at cost. Limits on pollution in the form tradable permits are being sought as a solution by the EU and the US in an attempt to curb greenhouse emissions. CEO of Xcel Energy Inc. Mr Wayne H. Brunetti says that one solution would be to give the companies the chance to figure out a solution and to allow them to set goals for 50 years down the road. He also stresses on the need for flexibility and the need for cooperation between institutions (Carey, 2004). The concerns of governments and environmental activists however are not restricted to the energy sector. Intel Corporation, the world’s largest chipmaker has been under scrutiny for its contribution to climate change. The challenge then again for businesses is to look for substitutes. Intel’s Stephen Harper says that the search for alternatives is still on and they are planning to find solutions to the growing concerns about climate change (Carey, 2004). Surprising enough is the contribution of animal farms to the greenhouse process. The contributions made by the animal agricultural sector to greenhouse gas emissions have exceeded those made by the transportation sector according to calculations made in the paper by Steinfeld et al. (2006) (Koneswaran and Nirenberg, pp. 578-582, 2008). The primary contributors to the greenhouse gases from animal farms are fertilizer production for feed crop, dairy products processing and transformation, energy needs and changes in the uses of land (Steinfeld et al. 2006). In particular, experts have indicated, “deforestation, land degradation, soil cultivation, and desertification are responsible for C02 emissions due to the use of land by the livestock sector” (Koneswaran and Nirenberg, pp. 578-582, 2008). There is therefore a need for reform in this part of the corporate world. Part of this effort would be to price the farms for their portion emissions and to induce accountability into the framework of these businesses. By appropriately pricing the usage of natural resources so as to restrict farms a lot could be avoided in terms of "overexploitation and pollution" (Steinfeld et al. 2006). As demand for dairy products grows, so will the emissions from the associated production units. It is an estimation that by 2050 production from animal farms would have doubled. It is therefore indeed necessary that governments, businesses individuals, and international organizations pay heed to the amount of contributions made by the dairy sector. Regulators need to impose and alter regulation to curb the harmful effects of climate change caused by the emission of greenhouse gases (Koneswaran and Nirenberg, pp. 578-582, 2008). Another not surprising contributor to the greenhouse gases is the transport industry. With the advent of leasing, hire purchase and cost cutting strategies by automobile manufacturers there has been an evident rise in the number of self-owned vehicles around the world. It is not only those who produce these vehicles that contribute to the climate change but also those who use these vehicles. However, with the rise in regulation and increasing awareness spread by environmental activists automobile manufacturers have been forced to consider and have succeeded to a certain extent in developing vehicles that are less reliant on fossil fuels. Fred Sciance, General Motors’ manager for climate issues team says that industry will experience large changes as cars become more environmentally friendly. General Motors is spending huge amounts to develop cars powered by hydrogen. Hydrogen powered cars will help to eliminate the level of greenhouse gas emission (Carey, 2004). Toyota over the years has developed its Hybrid line of cars that use hydrogen as fuel. However, the use of hydrogen powered vehicles has been largely restricted to the developed world with most of the developing countries still relying on means of transport that are reliant on fossil fuels. The need again is to induce responsibility in to businesses to develop hybrid engines and to place less reliance fossil fuels. This again requires investment which businesses in the third world on an individual level would be less willing to make. Experts believe that companies, in the developing world specially, need to be incentivized to invest in environmentally friendly technology. “Once an international carbon-trading system is put in place, suggests Elliot Diringer, director of international strategies at the Pew Center on Global Climate Change, "we can reduce our own costs in the U.S. by allowing our companies to get the benefit of low-cost emissions abroad" (Carey, 2004). The automobile industry is not the only in the transport sector contributing to the climate change. The aviation and the locomotive industry also play their parts. General Electric’s environmental chief says that General Electric is trying to help its customers to mitigate the problems they are going to face in the near future. “GE bought Enron Corp.'s wind business and a solar energy company in addition to doing research on hydrogen and lower-emission jet engines and locomotives” (Carey, 2004). Increasing reliance on electric trains in the developed world, unlike diesel and coal engines in the developing world, has been a welcome change. However, governments in the developing world are still concerned about countering the effects of global warming caused by diesel and coal engines. Investing in electric trains comes at a high cost and businesses in the private sector will be unwilling to invest in the third world owing to congestion and other associated problems. The aviation industry’s contribution to global warming primarily been linked with tourism. The tourism industry may well land up on the brink of collapse in the near future, as communities increasingly engage in battles against natural disasters, elevating seal levels, rising temperatures and other associated threats of global warming (Burns and Bibbings, pp. 31-51, 2009). The part that the tourism and specifically the aviation industry play in the warming of the earth has been closely examined by environmental activists and groups. These groups believe that deregulation, tax cuts on fuels and unneeded competition plays an integral role in fuelling the problems that cause global warming (Burns and Bibbings, pp. 31-51, 2009). The solution therefore is to regulate the industry by imposing emission charges on airlines and subsequently reducing competition to an optimum level. The idea is to persuade unnecessary flights by multiple airlines to the same location to close down thereby reducing both the expenditure on fuel and the greenhouse gas emissions. The main challenge to businesses in general is therefore the interest of the stakeholders. A profit maximising objective as some people believe comes in conflict with growing green. However, there is a strong realisation that the earth is indeed warming up and the glaciers are melting. The extent of the damage however is uncertain. The sagacity of the global warming phenomenon is still debated in scientific circles. Atmospheric scientist, David S. Battisti says that the world will change and it will be a lot warmer than it is now. However, the question of how much warmer it will be is still under debate. Scientists are also tackling the question of which regions of the world will feel the greatest punch from the change and how many more natural disasters the world will see (Carey, 2004). The punch then also comes to the insurance providers as they are forced to pay associated damages in the case of natural disasters. Swiss Re, an Insurance company asserts that customers are becoming increasingly vigilant about the policies they enter into. Their analysis is based on hazards that have occurred in the past (Carey, 2004). “If floods typically occur in a city every 20 years or so, then it is a good bet the trend will continue into the future. Global warming throws all that historical data out the window” (Carey, 2004). Thus, it is time that economists and policy makers figure out ways to promote growth without imposing costs on the environment. The third world indeed needs to develop but with reasonable attention to its contribution to climate change. Businesses need to be persuaded to face these challenges in the light of the society as a whole rather than in the light of profits. If the trend continues and the glaciers keep melting we may well run out of places to even carry out business. References Brooks, L. and Weatherston, J. 2000. The business environment: Challenges and Changes. Prentice Hall. Burns, Peter and Bibbings, Lyn. 2009. 'The end of tourism? Climate change and societal challenges.” Contemporary Social Science. Volume 4, Issue 1, pp. 31 - 51. Carey, John, 2004. Global Warming, Bloomberg Business Week. Retrieved on April 30, 2011: www.businessweek.com/magazine/content/04_33/b3896001_mz001.htm Jose, Anita, Lee, Shand-Mei. 2007. “Environmental Reporting of Global Corporations: A Content Analysis Based on Website Disclosures.” Journal of Business Ethics. Volume 72, Issue 4, pp. 307-321. Koneswaran, Gowri, and Neirenberg Danielle, 2008. “Global Farm Animal Production and Global Warming: Impacting and Mitigating Climate Change.” Environmental Health Perspectives. Volume 116, Issue 5, pp. 578-582. Monteleone, Joseph P. 2007. “Global Warming: Will There Be Exposure for Directors and Officers and Will It Be Covered?” Environmental Claims Journal. Volume 19, Issue 3, pp. 144 – 154. Newell, Peter and Paterson, Matthew. 1998. “A Climate for Business: Global Warming, the State and Capital”. Review of International Political Economy. Volume 5, Issue 4, pp. 679-703. Reay, David S., 2002 “Costing Climate Change.” Philosophical Transactions: Mathematical, Physical, and Engineering Sciences. 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