Combo of reducing carbon pollution and supply chain efficiency remains in a tight spot

Somewhat lost in the logistics shuffle was the news last month that the United States and China jointly announced their respective targets for reducing greenhouse gas emissions that are driving climate change for post-2020.

In a November 12 White House blog posting by John Podesta, Counselor to President Barack Obama, and John Holdren, the President’s science advisor, made note of how over the last year, “a spate of scientific studies have laid out the scope and scale of the challenge we face in the starkest of terms,” when it comes to taking on climate changes action.

The White House pair quoted the Intergovernmental Panel on Climate Change as saying “without additional mitigation efforts…warming by the end of the 21st century will lead to high to very high risk of severe, widespread, and irreversible impacts globally.” They also cited the U.S. National Climate Assessment: “Climate change, once considered an issue for a distant future, has moved firmly into the present.”

Although it does not feel all that long ago, the United States at the 2009 Copenhagen Summit, whose objective was to ratify an international climate change agreement, with all the participating countries striving to reduce their greenhouse gas emissions (GHG) levels, pledged to reduce its greenhouse gas emissions in the range of 17 percent below 2005 levels by 2020 and an 83 percent reduction by 2050.

Podesta and Holdren maintain that the U.S. remains on pace to reach this goal thanks in large part to the country’s historic fuel economy standards, coupled with facets of the President’s Climate Action Plan, including measures to reduce carbon pollution, deploy more clean energy, and augment energy efficiency.

As for its forward-looking climate reduction goals, the U.S. said in November it intends to reduce its net greenhouse gas emissions to 26-28 percent below 2005 levels by 2025.

This goal, said Podesta and Holdren, is ambitious and achievable while being grounded in an intensive analysis of what actions can be taken under existing law, as well as double the pace of carbon pollution reduction in the U.S from the pre-2020 period.

As for China’s plans, its president Xi said in early November that he plans to peak Chinese CO2 emissions around 2030, along with a target to expand the share of zero-emission sources in primary energy, specifically renewables and nuclear, to 20 percent by 2030.

So, how exactly do these plans match up with the needs of the supply chain from an efficiency and energy perspective?

Kevin Smith, president and CEO of Sustainable Supply Chain Consulting, was blunt in his assessment.

“This is actually more of what we have seen before from the current administration,” he explained. “Instead of conforming to the established rules of legislation, they have decided to act unilaterally and attempt to use end-run plays to affect business policy. From a supply chain and logistics point of view, increased pressure from groups like the EPA to force businesses to comply with stricter rules will likely result in higher costs to consumers.”

As for the Chinese numbers, Smith said they are hard to understand because they are stated as percents of existing percents and also apparently depend on further reductions in the use of coal (although it does not say that explicitly) and coal remains the primary fuel for electricity production in the US. And to achieve that goal, China will have to deploy an additional 800-1,000 gigawatts of zero-emission generation capacity by 2030, which the White House said about the same as all their current coal-fired capacity and nearly as much as the total installed capacity in the U.S. energy sector today.

“Fantastic progress has been made over the past few decades in the reduction of carbon emissions in supply chains, as well as, most industries,” he added.

But he warned that forcing a rapid escalation of “improvement” of carbon emissions without regard for cost does not seem prudent. What is meant to be stern, and perhaps punishing, for business will end up as increased prices to consumers, he noted. 

What’s more, Smith pointed out that it is unclear what the U.S. is proving by establishing grand plans for U.S. reductions in carbon while allowing the world’s largest polluter to take longer term baby steps that they will probably ignore or falsify.

“Look at reports prior to the China visit (in November by the President) and see that businesses and home heating had to be essentially shut down in Beijing a week before this meeting in order to allow the smog to dissipate to the point where the sky became visible,” he said. “Grand-standing is not the way to address this issue long term. But it makes for great sound bites.”

That sentiment makes it clear that true progress may be a while off still.

Adrian Gonzalez, president at Adelante SCM & Founder/Host of Talking Logistics, told me that absent any new regulations, it will be business as usual.

“Almost everything that falls under “supply chain sustainability” is not driven by environmental concerns, but by economic considerations,” he said. “In other words, if a green initiative does not save a company money (or it’s not mandated by law or Walmart), it won’t get done.”

As nearly always, financial benefits and ramifications tend to make a major difference as to whether something gets done or not. While there are some ambitious goals laid out, it stands to reason that for shippers and providers buy in, there needs to be at least the specter of a financial end result. Things are not yet where they need to be on that front, but we may slowly be getting there.