Climate change situation remains elusive on the supply chain and logistics front
November 30, 2011 - SCMR Editorial
Even though the calendar says it is November 30, this atypical balmy weather in the Northeast is making me feel it is more like May 30. And given this unusual, but welcome, climate, it seems appropriate that the United Nations Framework Convention on Climate Change (UNFCC) is convening this week in Durban, South Africa to discuss a global response to climate change.
According to the UNFCC, the objective of this week’s meeting is to “bring together representatives of the world’s governments, international organizations and civil society. The discussions will seek to advance, in a balanced fashion, the implementation of the Convention and the Kyoto Protocol, as well as the Bali Action Plan, agreed at COP 13 in 2007, and the Cancun Agreements, reached at COP (Conference of the Parties) 16 last December.”
The UNFCC also noted that at the very heart of the response to climate change, however, lies the need to reduce emissions; in 2010, governments agreed that emissions need to be reduced so that global temperature increases are limited to below 2 degrees Celsius.
Climate change and reducing emissions have proven to be hot-button issues here in the U.S., as evidenced by failed “Cap and Trade” legislation proposed by the White House and some influential senators, including John Kerry (D-Mass.) and Joe Lieberman (I-Conn.).
This bill, which stalled out in Congress in the summer of 2010, focused on reducing greenhouse gas emissions (GHG) by 17 percent compared to 2005 levels by 2020 and 83 percent by 2050, matching am objective put forth by the White House in 2009.
From a supply chain and freight transportation perspective, one of the bill’s more notable takeaways was a goal to decrease the United States’ dependence on foreign oil. The Senators wanted to do this through myriad steps, including investing more than $6 billion per year in transportation infrastructure to increase efficiency and decrease oil consumption, with funding directed to the Highway Trust Fund, nearly $2 billion for state and local projects that reduce oil consumption, and GHG, and nearly $2 billion for TIGER grants.
But it was not meant to be, as Republicans and businesses viewed it as a tax on the cost of doing business. I am not one to be political at all here; both sides made their cases for or against this bill and it ultimately went nowhere, which is basically where we still reside when it comes to addressing climate change in a meaningful way.
It is worth noting that at the time that the Kerry-Lieberman bill was introduced, the price per gallon of diesel was regularly below the $3 mark, whereas now it is routinely at or near $4 on a regular basis.
So, something has got to give, right? If I were a gambling man (and thankfully I am not based on my weekly football picks), I would have to say don’t count on it.
In Durban this week, there will be cases made by the 195 participating nations as to why their respective obligations in addressing climate change differ. As the New York Times points out, “the conflicts and controversies to be taken up in Durban are monotonously familiar; the differing obligations of industrialized and developing nations, the question of who will pay to help poor nations adapt, the urgency of protecting tropical forests, the need to rapidly develop and deploy clean energy technology.”
Another key component of the meeting, the Times noted, will be whether or not to extend the Kyoto Protocol, a 2007 international agreement linked to the United Nations Framework Convention on Climate Change that sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas (GHG) emissions from 1990 levels by a collective 5.2 percent through 2012. While this seems to be good in principle, there are no emissions reduction mandates through the Kyoto Protocol some larger locales, including China, India, Brazil, South Africa, and the U.S.
So what happens now or what needs to happen? While looking at some previous coverage on this, I found some very interesting observations, which still ring true a year later—especially from a supply chain and logistics perspective.
“My advice to the White House and Congress would be to create a GHG reduction ‘Manhattan Project’ with participation from leaders of the major economies, developing nations and the business community for the purpose of separating fact from fiction in terms of climate change in order to build a consensus,” said Brittan Ladd, global supply chain consultant for CapGemini Consulting.
Ladd also pointed out that potential negative consequence this type of mandate could have on business and supply chains, explaining that the worst thing that could happen to the United States is that massive amounts of climate regulations are enacted that put U.S. businesses at a disadvantage while developing nations continue operating as normal.
This comment below came from Kevin Smith, president and CEO of Sustainable Supply Chain Consulting, in the wake of the failed Kerry-Lieberman bill.
“I am afraid that what is going to happen is because this legislation has stalled everyone will probably go back to business as usual and probably not do some of the things they should be doing when it comes to sustainability,” said Smith. “One thing we do not have in the supply chain industry is a unified lobbying process for these matters. So you have trucking and rail and other sectors with their own groups and associations, but there is no unified structure inside or outside of Washington, DC that is saying for the good of the economy in general there needs to be a structure or guidelines for things to do and to get a unified message across as opposed to being a bunch of special interest groups.”