Chicago Climate Exchange Chairman Richard Sandor wants to reduce emissions and minimize transaction costs.

Several large corporations recently announced they would voluntarily reduce their greenhouse gas emissions by participating in EPA’s "Climate Leaders" program – an industry-government partnership. Of the 54 participating companies, 20 have set formal goals that together will prevent the emission of 7.5 million metric tons of carbon equivalent per year, an amount equal to the emissions of five million cars, according to EPA.

The Climate Leaders program is a response to the White House’s stated goal of reducing U.S. greenhouse gas (GHG) emissions intensity — the ratio of emissions to economic output by American industry — by 18% by 2012 through voluntary means.

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"This program is the best way to move forward within our current statutory authority," says John Millett, spokesperson for EPA, adding that if industry is able to demonstrate the effectiveness of a voluntary program, a future mandatory system may be avoidable.

Many companies, however, say they are participating in EPA’s program not to forestall future regulations but instead to better understand how a nationwide mandate might work, believing that formal GHG controls are inevitable, even if they are not implemented under the Bush administration.

"As a company, we believe that there will be a mandatory constraint on carbon sometime in the future. Our activities now are to allow us to gain an early-mover advantage," says Melissa McHenry, spokesperson for American Electric Power (AEP), Columbus, Ohio.

EPA requires participating companies to undertake a corporate-wide inventory of six GHGs, the most significant of which is carbon dioxide. The company then selects a reduction target — either as a percentage of absolute GHG emissions or per unit of production. Climate Leaders must commit to provide EPA with periodic reports describing their progress toward meeting the agreed-upon emissions reduction goal. Third-party verification based on internationally accepted emissions accounting protocols must anchor supporting data.

Setting a Target   
Company Location
Emissions Reduction Target
Date
3M St. Paul, Minn.
30 % absolute reduction
2007
Advanced Micro Devices, Inc. Sunnyvale, Calif.
40 % of manufacturing index
2007
American Electric Power Columbus
4 % absolute reduction
2006
Cinergy Corp. Cincinnati, Ohio
5 % absolute reduction
2010
Eastman Kodak Rochester, N.Y.
10 % absolute reduction
2008
FPL Group Inc. Juno Beach, Fla.
18 % per kilowatt-hour
2008
General Motors Detroit, Mich.
10 % absolute reduction
2005
Holcim Dundee, Mich.
12 % per ton of cement
2005
IBM Corp. Armonk, NY
4 % absolute annually; 10% in PFCs
2005
Interface, Inc. Atlanta, Ga.
15 % per production unit
2010
International Paper Stamford, Conn.
15 % absolute reduction
2010
Johnson & Johnson New Brunswick, NJ
14 % absolute reductions
2010
Miller Brewing Milwaukee, Wisc.
18 % per barrel of production
2006
National Renewable Energy Laboratory Golden, Colo.
10 % per square foot
2005
Norm Thompson Portland, Ore.
90 % absolute reductions
2005
Pfizer New York, N.Y.
35 % per dollar revenue
2007
PSEG Newark, N.J.
18 % per kilowatt-hour
2008
S&C Johnson and Son, Inc Racine, Wisc.
23% per pound of product
2005
St. Lawrence Cement Quebec
15% per ton of cement product
2010
United Technologies Corp Hartford
16% per $ of
2006

In the eyes of the environmental community, this rigorous transparency elevates the program above the public relations spin of industry-sponsored initiatives that lack accountability. While preferring a mandatory program, the EPA program is at least "based on a solid measurement system," says Janet Ranganathan, senior associate at the World Resources Institute, Wash, D.C.

EPA helps Climate Leader companies meet the accountability challenge by providing access to outside technical consulting expertise at no charge.
"EPA pays us to provide technical support to these companies," says Lisa Grice, director of GHG management programs, CH2M Hill, Englewood, Colo. This expertise is important because "for large companies, the baseline emissions inventory can require many steps" and can get very complex.

(Photo top courtesy of Chicago Climate Exchange)