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Keynote Address - 6/18/96

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Keynote Address
John H. Gibbons

Climate Change, U.S. Business, and
The World Economy:
The Need for Environmental Technologies

Department of State
June 18, 1996

In 1945, Secretary of State James F. Byrnes returned from the conference in San Francisco that set up the United Nations and stated that: "The battle of peace has to be fought on two fronts. The first is the security front where victory spells freedom from fear. The second is the economic and social front where victory means freedom from want. Only victory on both fronts can assure the world of an enduring peace." Through the past nine Presidents and 22 Congresses, our primary emphasis has been the battle for global security, based on the uneasy politics of disarmament, nuclear deterrence and containment. During that time, the second front has grown continually in both size and complexity, shaped by the forces of globalization, technological advance, population growth, environmental degradation, and social change.

As the image of the Cold War recedes, it is the "second front" which advances. It is the plethora of human and environmental stresses which now commands our collective attention. It is the human wants -- for jobs, education, health, a sound environment -- and threats -- infectious disease, illiteracy, mass migration, terrorism, and global change -- which now define the second front of security policy. In a recent speech at Stanford University, Secretary of State Warren Christopher again drew our attention to that broader concept of security -- the "second front." He described how a lasting peace depends upon on our ability to deal effectively and equitably with the social, economic, and environmental needs of a growing global population while continuing to deter military threats.

Secretary Christopher articulated what many of us intuitively grasp. We face a set of regional and global challenges which transcend agency missions, disciplinary divides, and political boundaries. Our traditional notions of national security and the role of science and technology need to change. We must craft new policies and priorities which can both sustain our military deterrence capability and sustain environmentally-sound economic development. Last year, President Clinton took the first step in this direction by issuing the nation's first-ever National Security Science and Technology Strategy.

Our work increasingly involves building new linkages; sorting out the appropriate division of labor between the public and private sector, beginning new partnerships between old adversaries and forming new combinations of people, places, and ideas.

Global climate change is one of the new challenges we confront where we have made and continue to make tremendous gains in understanding. These gains in knowledge are significant in and of themselves: the business of science is the production and synthesis of new knowledge, and this process and its results are exciting in their own right to scientists. But the findings are significant in other ways as well, especially as they define future needs and future opportunities for society.

We have indeed learned a great deal about climate change since the phenomenon of CO2 caused global warming was first elucidated in the late 1800's. Over the past decade, the world's governments have undertaken unprecedented assessment efforts to determine and describe the state of our understanding through the Intergovernmental Panel on Climate Change (IPCC), which has just released its

Second Assessment Report. More than 2000 of the most prominent climate researchers from over 50 countries participated in this effort.

The bottom line is that there is -- the revisionist few not withstanding -- scientific consensus on the most salient issues.

We know that human activities are increasing the atmospheric concentrations of carbon dioxide and other greenhouse gases that affect atmospheric warming. Humans activities are also increasing the concentrations of sulfate aerosols that tend to the atmosphere by reflecting sunlight, but which also are the main component of acid rain, especially in the northern hemisphere. The atmospheric concentration of CO2 has increased nearly 30% since the industrial revolution due to human activities. Methane has more than doubled. Nitrous oxide has gone up by 15 percent.

To put it plainly, we now know that the Earth's climate has changed in the past due to a variety of "natural" phenomena but that it is changing now in new and comparatively sudden ways. A few examples will illustrate this latter point:

  • the global average surface temperature this century is as warm or warmer than any other century since at least 1400 AD;

  • that temperature has increased by 0.3 to 0.6 C (about 0.5 to 1oF) over the last century;

  • the last few decades have been the warmest this century;

  • sea level has risen 10 to 25 cm (about 4 to 10 inches) over the last century;

  • (thermal expansion)

  • mountain glaciers have retreated worldwide this century;

  • 1995 was the warmest year on record.

Incidentally, the U.S. emissions of greenhouse gases currently account for about 16% of the world total, but the preponderance of emissions comes from rapidly growing developing countries.

The latest IPCC report contains a statement of particular significance: "The balance of evidence suggests that there is a discernible human influence on global climate." In other words, the "signal" of global warming is beginning to emerge from the "noise" of normal variability. The long atmospheric lifetime of many greenhouse gases, which is on the order of decades to many centuries, coupled with the centuries-long lag time for the oceans to equilibrate to temperature and CO2 concentration change, means that the warming effect of anthropogenic emissions will be long-lived. Even after a hypothetical stabilization of the atmospheric concentrations of greenhouse gases, temperatures would continue to increase for several decades, and sea level would continue to rise for centuries. Reversing the effects therefore would also take centuries, and some impacts, such as species loss, are irreversible.

The broad outlines of a picture are beginning to emerge: Without specific policies that reduce the growth of greenhouse gas emissions, the Earth's average surface temperature is projected to increase by about 1 to 3.5 C (about 2 to 6.5 F) by 2100, a rate of warming that would apparently be greater than any comparable time interval over the last 10,000 years.

Sea level is projected to rise by 15-95 cm (6-38 inches) by 2100. Increased evaporation in a warmer world will lead to increased precipitation worldwide that will be less evenly distributed in space and time. Changed patterns in precipitation will lead to more floods and droughts.

Stabilization of the atmospheric concentration of CO2, even at up to three times the pre-industrial concentration, would eventually require world-wide emissions of greenhouse gases to be cut below today's levels. We know that climate change will be a significant new stress on ecological and social systems that are already affected by pollution, increasing resource extraction, massive population growth, and non-sustainable management practices. The effects will vary by region, and they may even be beneficial in some areas. Unfortunately, the mostly negative consequences of climate change are likely to affect the economy and the quality of life for this and future generations. Let me mention a few:

  • Human Health will be adversely affected. There will be increases in the incidence of heat waves with high humidity like the episode in Chicago last year that resulted in several hundred deaths. Vector-borne diseases such as malaria, and non-vector-borne diseases such as cholera, are likely to spread as conditions for their survival change. To give just one example, we could face an additional 50 million cases per year of malaria near the end of the next century.

  • Food Security will be threatened by changes in weather in some regions of the world, especially in the tropics and subtropics where many of the world's poorest people live.

  • Water Resources will be increasingly stressed, leading to substantial economic, social, and environmental costs, especially in regions that are already water-limited and where there is strong competition among users (we already know how contentious water rights are, even in parts of the U.S., and in other regions of the world, such as the Middle East).

  • Human Habitat Loss will occur in regions where small islands and coastal plain and river areas are particularly vulnerable to sea level rise. For example Bangladesh is in danger of losing 17% of its land, while the combination of sea-level rise and storm surges could create 50 million environmental refugees in China.

  • The composition, geographic distribution, and productivity of many ecosystems will shift as individual species respond to changes in climate. This may lead to loss of biological diversity and threaten the ability of ecosystems to provide the purification of air and water upon which we depend.

These are troubling and complex changes to confront, but fortunately, our research efforts have also shown us that there are a variety of approaches to adapt to and mitigate the impacts of climate change:

  • IPCC points out that gains in energy efficiency of 10-30% above present levels are feasible at little or no net economic cost in many parts of the world through technical conservation measures and improved management practices over the next 2 to 3 decades. The efficiency of energy use, e.g., in the U.S. and Japan, has already increased by over 30% since 1975.

  • Significant further reductions in greenhouse gas emissions can be economically achieved utilizing an extensive array of technologies, and policy measures that accelerate technology development, diffusion, and transfer in all sectors.

  • Flexible, cost-effective, and internationally-coordinated policies can considerably reduce mitigation and adaptation costs.

  • Successful adaptation will depend upon education, technological advances, positive public policies, institutional arrangements, availability of financing, technology transfer, information exchange, and incorporation of climate change concerns into resource-use and development decisions. There are equity issues involved as well: Potential adaptation options for many developing countries are extremely limited by the availability of technological, economic, and societal capabilities.

Thus, the science of climate change gives us cause for both concern and hope. We do face a serious challenge, but we are not without tools. One of the most important tools we possess is environmental technology.

Environmental Technology

The global market for environmental goods and services is presently over $400 billion and growing. The current global market for energy efficiency is estimated at about $40 billion per year, even though efficient lighting is presently used in less than 1 percent of potential applications, and efficient motors and controls in less than 3 percent of installed applications. Projections by Royal Dutch Shell's forecasting group indicate that annual sales in renewable energy technologies alone could reach $50 billion by the year 2020 and almost $400 billion by 2040.

Besides technologies needed to address global environmental problems such as climate change and stratospheric ozone depletion, there are significant opportunities to address what some call "the brown agenda" -- problems of pollution and environmental hazards in cities where more than 40 percent of the world population is concentrated. Presently, 90 percent of all sewage in the developing world is discharged directly into rivers, bays and the oceans. Indoor air pollution from burning of low-quality fuels in small stoves causes an estimated 4 million deaths annually among infants and children through acute respiratory illness.

Many of the technological solutions to these problems already exist. There is a growing demand for the engineering, managerial, and technical know-how which alone, or in combination with specific hardware, can be applied to local or regional environmental problems. For instance, with 70 percent of the freshwater resources worldwide being used for irrigation there is enormous opportunity for water- efficient irrigation approaches. The same is true for other solutions which combine both software and hardware, such as integrated pest management, efficient energy use, and environmental management systems. But a number of factors interfere with meeting this international need.

There is a funding gap for many environmental technologies: Innovations are often undercapitalized or countries lack the capital to purchase what they need. In Rio, in 1992, the UN Conference on Environment and Development estimated that more than $500 billion per year for the rest of the decade would be needed to achieve the goals set forth in Agenda 21. Much of this financial need is in the developing world. Even in the U.S. there is a significant shortage of venture capital for environmental technologies, partly due to uncertainties cause by the regulatory and permitting systems.

In addition, there is, in many paces, an ingenuity gap: Many countries facing severe environmental stresses do not have the knowledge infrastructure to assimilate and apply technologies, let alone develop their own. Sub-Saharan Africa has less than 45 scientists and engineers in research and development for each one million people, compared to more than 2900 for industrial nations. Transferring or developing environmentally-critical technologies in these areas will be extremely difficult, even if capital were made available and free markets function.

Finally, there is often an information gap: Even with good technologies, financing, know-how, and functioning markets, many technologies simply never get applied. People are often unaware of opportunities and how to pursue them. The environmental technology industry is dominated by small and medium-sized businesses which frequently do not have the capacity to exploit overseas markets effectively. As former Ohio governor Richard Celeste once noted: "You can always buy something in English: you can't always sell something in English."

National Environmental Technology Strategy - Over the past two years, we have worked with many of you to define and implement a National Environmental Technology Strategy to support the development, domestic use, and export of environmental technologies by U.S. business. We met and brainstormed with over 10,000 people -- from industry, academia, NGOs, and state and local governments -- at more than 25 workshops across the country. We believe this strategy is unique; it was created with all the key stakeholders, and it capitalizes on the resources of more than a half-dozen federal agencies including EPA, DOE, Commerce, and Defense, and it includes public-private partnerships and an integrated set of policies which operate from the initial stages of R&D through commercialization and export promotion. The strategy leverages important trends that are taking place in industry, where more and more companies pursue environmental excellence as a competitive strategy The strategy also looks beyond our borders and supports U.S. businesses seeking to capture rapidly expanding global markets for environmental technologies. We have:

  • Developed an Environmental Technology Export Strategy to provide strategic market analyses of large emerging environmental technology markets and support U.S. businesses interested in moving into these markets.

  • Developed an Initiative for Environmental Technologies (through USAID) to focus development assistance on critical environmental challenges in developing countries.

  • Established a new Environmental Directorate at the Export-Import Bank to assist U.S. businesses with loans for environmental projects overseas. Funding for environmental projects at Ex-Im now exceeds $1 billion.

  • Established the America's Desk (a State Department initiative) to help to solve problems for U.S. businesses overseas and bring business concerns to the forefront of the foreign policy process.

Budget Issues

Finally, I want to remind you that we have been fighting an uphill, and often counterproductive, battle with many in Congress over the role of government in supporting environmental technologies. Congress, despite industry support, reduced funding for the Environmental Technology Initiative (run by EPA) by over 80 percent in 1996, eliminating many programs designed to identify and reduce regulatory and other policy barriers to the development and use of innovative environmental technologies. Congress has recently cut development of renewable energy programs by 30 percent. Out-year funding cuts total almost 60 percent over the coming 7 years. Though there is broad recognition in the both the public and private sector of the importance of institution and capacity building in foreign countries, AID's budget has been under continual attack and been cut to less than half the level of the mid 1980's. But AID is not alone. The impacts are deep and cut across almost all agencies.

Mind you, these Congressional cuts are being made to the President's budget which is certified to balance in 2002. It's not a matter of balancing the budget - it's a matter of conflicting priorities. The President's protection of these investments to build our future security is sound policy. Congress' less discriminating cutting is not. All this comes at a time when many of our competitors are increasing their investment in environmental technologies and their commitment to the environmental technology industry. Japan recently committed $430 million to develop and demonstrate their environmental technologies. In China alone Program funds are slated to increase $186 million next year. The Netherlands now has a $500 million program to support the development of more sustainable technologies. We face the reality of global competition.

The Clinton-Gore Administration does not intend to turn our backs on a $170 billion sector of the U.S. economy which represents 60,000 businesses and over one million high skilled and high paying jobs for Americans. Nor will we walk away from the opportunity to join forces with industry and other stakeholders to develop a new paradigm of environmental management. I hope that you will join with us to support our efforts to implement the National Environmental Technology Strategy; to foster productive public-private partnerships such as the Partnership for a New Generation of Vehicles; and, to develop a more robust science and technology for sustainable development.

We owe it to ourselves, our neighbors, and our children!

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