Firms climb toward 'climate neutral'

Here's a quiz. For all the talk about slowing global warming, which of the following have taken steps to do it:

a) Countries that have just agreed to implement the Kyoto Protocol?

b) Environmental groups?

c) Some of the world's biggest polluters?

Some of the world's largest corporations, responsible for spewing millions of tons of greenhouse gases into the air, are taking the boldest steps to trim their emissions. Although such efforts may not solve global warming on their own, corporations are pioneering methods and systems that governments may one day mandate.

"In the long term, we believe that you're going to see increasingly tight environmental restrictions and regulations, and we're not sure that's a bad thing," says Chris Schoenherr, spokesman for Alliant Energy Corporation. Since 1991, the mid-size utility and energy company based in Madison, Wis., has knocked out the equivalent of 7.3 million metric tons of carbon-dioxide emissions at its domestic operations. "It's the right thing to do. It's good business as well."

Alliant is not alone. Consider:

• While nations last month wrangled over an agreement to eventually cut their emissions by 5 percent below their 1990 levels, DuPont has already cut its emissions in half. And the chemical manufacturer aims to reach a 65 percent reduction by 2010. Even environmentalists are impressed. "DuPont is a standout," says Daniel Dudek, senior economist in the New York office of the Environmental Defense Fund. "They have really set the bar out there for everyone."

• BP became the first major oil company to concede that global warming represents a serious problem. The British-based company is halfway to its 2010 goal of cutting emissions 10 percent from its 1990 baseline. It's accomplishing that by various measures, such as capturing and selling methane from its gas wells in the western United States rather than releasing it into the air.

• Ford Motor Company has joined other companies pioneering a carbon-dioxide trading exchange. The exchange could serve as a model for governments, as they look for ways to implement the Kyoto targets in the cheapest way possible.

"We wanted to get in on the ground floor so we could understand the business case" for emissions trading, says Ford spokeswoman Ellen Dickson.

To be sure, many other companies - especially in the energy sector - oppose the Kyoto treaty and the notion of emissions limits. But virtually everyone applauds voluntary actions. They often lead to energy conservation that saves companies money.

"Voluntary actions are certainly the centerpiece of what needs to take place," says Glenn Kelly, executive director of the Global Climate Coalition, a Washington group of industry trade associations opposed to the Kyoto treaty. "The key linchpin is the technology component."

New technology will ultimately help BP eliminate "flaring" of natural gas on its offshore oil rigs. It may also help utilities squeeze the same amount of energy from less coal. What experts disagree on: whether voluntary moves can replace government regulation.

"I'm pretty skeptical," says Tim Brennan, professor of policy sciences at the University of Maryland, Baltimore County.

"We can't close down the Environmental Protection Agency on the hope that corporations are going to agree to reduce pollution on their own ... especially a greenhouse problem, which is international," he says.

Other specialists believe government should let the private sector mature before stepping in.

"Markets will develop bottom-up," says Richard Sandor, project leader of the new Chicago Climate Exchange, which is setting up a voluntary emissions-trading system for the Midwest. "The model of a treaty with a homogenous structure, with a uniform start date, with 133 signatories, is not the way it works."

Under the trading system,companies that find itexpensive to cut pollution will pay companies with less costly emission controls to make cuts for them. That way, the world gets the same greenhouse gas reduction - but at the least cost to firms.

Government will eventually step in to ratify and standardize procedures started piecemeal by corporations, he believes.

Already, the exchange boasts 33 participating companies, from utilities to agricultural cooperatives to forest-product concerns. The group hopes to begin real trading of emissions in the latter half of next year.

The Chicago exchange represents one of many private-sector efforts to coordinate emissions reduction. Eight large corporations have joined the Environmental Defense Fund to create the Partnership for Climate Action. Environmental Resources Trust, a Washington nonprofit organization, is helping corporations track their current emissions. Cantor Fitzgerald group and PricewaterhouseCoopers, two global financial services firms, have joined together to create CO2e.com, a Web-based service for companies wanting to move to emissions trading.

Such private-sector experiments may prove crucial down the road. "Nothing is as powerful as an idea whose time has come," says Mr. Sandor of Chicago Climate Exchange. "And this is an idea whose time has come."