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DuPont, Zurich Chase $135 Billion Climate Markets (Update1)
2010-11-29 01:04:21.766 GMT
(Updates with comment from EU's negotiator at the talks
from 13th paragraph.)
By Jim Efstathiou Jr. and Kim Chipman
Nov. 29 (Bloomberg) -- Seed maker DuPont Co., wind-turbine
manufacturer General Electric Co. and insurer Zurich Financial
Services AG are devising products to help the world adapt to
climate change, a potential $135 billion-a-year market by 2030.
The companies are driven in part by the failure of
international efforts to cut the greenhouse gases that
scientists say contribute to global warming. Discussions last
year in Copenhagen yielded little progress, and officials
leading more than 190 countries in talks that begin today in
Cancun, Mexico, say they don't expect to achieve a binding
agreement on measures to slow the growth of emissions.
Damages from climate-related disasters are mounting.
Insured losses from storms and floods have risen more than
fivefold to $27 billion annually in the past four decades, Swiss
Reinsurance Co. said in a September report. By 2030, the world
may need to spend $135 billion a year on flood protection,
buildings that can withstand hurricanes and drought-resistant
crops, Swiss Re said, citing United Nations data.
"Climate change presents a direct threat to our
business," Jim Hanna, director of environmental impact for
Seattle-based Starbucks Corp., the world's largest coffee chain,
said in an interview. "We are already hearing some anecdotal
evidence that shifting weather patterns and increased erosion
and pest infestation are starting to impact coffee crops."
Adaptation strategies, such as rewarding farmers for taking
extra steps to prevent erosion on vulnerable land, will help
Starbucks prepare, Hanna said.
Richer, Poorer Nations
Relatively rich nations such as the U.S. are devoting more
attention and resources to adaptation and are negotiating a fund
to help poorer countries cope with the higher sea levels,
droughts, heat waves, more severe storms and erratic weather
predicted by climate scientists.
"Sooner or later all businesses will have to climate-proof
their operations," Christiana Figueres, the UN's climate chief,
said in a September speech in New York. "Adaptation will be
imperative if businesses want to avoid climate-change impacts
that could drive them out of business."
Crops better able to resist drought can help DuPont expand
its $8.2 billion agriculture business, according to Jim Borel,
vice president in charge of seed operations for the Wilmington,
Delaware-based company, the world's second-biggest seed maker
behind Monsanto Co.
Farmers' Productivity
"Real business opportunity comes from using science to
help improve productivity for farmers, and they will have to do
that to deal with climate change over the next few decades,"
Borel said in an interview.
Zurich is offering policies letting businesses and
homeowners replace storm-damaged property with structures better
able to withstand extreme weather, said Lindene Patton, chief
climate-protection officer for the Zurich-based insurer.
"There is more social demand on our customers and other
stakeholders in the sense that when governments are not acting,
people fill gaps with whatever tools are available," Patton
said.
The Cancun climate talks through Dec. 10, led by Figueres,
will seek incremental steps after last year's failure at
meetings in Copenhagen to agree on a new binding international
accord to cut heat-trapping greenhouse-gas pollution.
U.S. vs China
While China looks like it will incorporate its Copenhagen
pledges into domestic law next year, the situation in the U.S.
is "difficult" at the moment after elections earlier in the
month changed the composition of Congress, said Artur Runge-
Metzger, lead negotiator for the 27-nation European Union.
"China is certainly trying to make efforts to put the
pledges they made into Copenhagen into their 5-year plan,"
Runge-Metzger said in an interview in Cancun last night. "It's a
tough task for the Obama administration to take this matter
forward because it's heavily politicized."
Even if nations were to implement ambitious emissions cuts
now, some climate-change effects are unavoidable because of
carbon dioxide already in the atmosphere, the Arlington,
Virginia-based Pew Center on Global Climate Change said in an
August report.
Effects Locked In
"There are climate impacts locked into the system because
of the inertia of the atmosphere," said Andrew Voysey,
secretary of ClimateWise, an association of insurers based at
the University of Cambridge in the U.K. that works to reduce the
damage from climate change. "The increased focus on adaptation
is certainly welcome, but we have to be quite conscious of the
limits of what we can adapt out of."
Lack of progress toward global cuts in carbon emissions
means higher adaptation costs in the future, said Joel Smith, a
principal at Boulder, Colorado-based Stratus Consulting Inc. and
a lead author on U.N climate-change reports.
"The less we do to mitigate the more we're going to have
to deal with the consequences," Smith said in an interview.
Nations have been slow to live up to commitments to help
developing nations, said Frances Beinecke, president of the
Natural Resources Defense Council, a New York-based
environmental group.
"We have put some money on the table," Beinecke said in
an interview. "Not nearly enough. There's going to be more and
more conversations about adaption and the need to take it
seriously."
'People Are Hurting'
Making the argument to spend millions of dollars today to
deal with effects that may not be seen for decades is difficult,
said Ruben Kraiem, a partner with the law firm Covington &
Burling LLP in New York and an adviser to the Coalition for
Rainforest Nations, a New York-based group that works to
preserve tropical forests.
"When people are hurting as many people are, it's
extremely difficult to make that case," Kraiem said. "How much
does it make sense to pay for a more robust piece of
infrastructure today to protect against potential damage in 30
or 40 years?"
President Barack Obama failed to win passage in Congress
this year of legislation to cap carbon emissions linked to
global warming. Prospects for action will grow slimmer next year
when Republicans take control of the House of Representatives
and expand their minority in the Senate. Dozens of Republican
lawmakers elected this month have expressed skepticism about
global warming or action to curb it.
'Inevitable Effects'
Obama's task force on climate-change adaptation is urging
government agencies to prepare for the "inevitable effects" of
global warming.
"We're not looking at climate-change impacts that are far
in the future," Shere Abbott, associate director of environment
for the White House Office of Science and Technology Policy,
said in an interview. "We're already seeing impacts today."
The U.S. Gulf Coast alone may face $350 billion in damages
by 2030 as powerful storms fueled by climate change ravage the
region, according to a study released last month that was
commissioned by Entergy Corp. of New Orleans, an energy company
that operates nuclear-power plants.
Texas Instruments Inc., the second-largest U.S. chipmaker
behind Intel Corp., and Siemens AG, Europe's largest engineering
company, are among companies that say increased demand for
energy-efficient appliances and other business opportunities may
counter risks to business from climate change such as higher
energy costs, according to a report released last month by the
Carbon Disclosure Project, which is backed by 534 institutional
investors with more than $64 trillion in assets under
management.
GE's Effort
GE of Fairfield, Connecticut, which has pushed for
mandatory carbon limits in the U.S. and worldwide, is working on
a project with Goldman Sachs Group Inc. to map water-related
risks for investors. GE, the world's second-biggest wind-turbine
maker behind Vestas Wind Systems A/S, also views the database as
a tool to help the company identify areas worldwide where a
shifting climate is causing water scarcity, said Jeff Fulgham,
sustainability chief for GE Water.
"We want to make sure we are on the ground in those high-
stress areas," Fulgham said in an interview. Revenue from GE's
business recycling water for use in power plants, agriculture
and manufacturing is expected to grow at least 10 percent a year
through at least 2016, he said.
Levi Strauss Cotton
While some businesses seek profit in adapting to climate
change, others are preparing for the liabilities.
Levi Strauss & Co. says it's worried higher temperatures
and sea levels worldwide will cause diminishing supplies and
soaring costs for the cotton used in its jeans.
The apparel-maker is mapping out its operations and supply
chain to see where water scarcity may cause damage now and
later, said Anna Walker, the San Francisco-based company's
senior manager of government affairs and public policy.
Negotiators pledged in Copenhagen to keep the global
temperature rise since industrialization to 2 degrees Celsius
(3.6 degrees Fahrenheit), part of a political pact nations
settled upon after failing to reach a deal on curbing emissions.
Average surface temperatures have risen by about 0.74 degrees
Celsius during the 20th century, according to the UN.
Munich Re, the biggest reinsurer, and Swiss Re, the second-
largest, back the 2-degree cap and say exceeding it would result
in an explosion of risk.
"Adaptation needs more attention," said Andrew Steer, the
World Bank's climate-change chief who became the first to hold
the post in July. "I'm not saying adaptation is better than
mitigation. It's not. But unfortunately it's unlikely we will be
able to prevent temperatures from rising less than 2 degrees."
For Related News and Information:
Top environmental stories: TOP ENV <GO>
Carbon markets: EMIS <GO>
Alternative energy monitor: ALTM <GO>
--With additional assistance from Alex Morales in Cancun.
Editors: Larry Liebert, Todd White
To contact the reporters on this story:
Kim Chipman in Washington at +1-202-624-1927 or
kchipman@bloomberg.net;
Jim Efstathiou Jr. in New York at +1-212-617-1647 or
jefstathiou@bloomberg.net.
To contact the editor responsible for this story:
Larry Liebert at +1-202-624-1936 or
LLiebert@bloomberg.net.
