“We've also got to fundamentally rethink the way we build and produce goods in this country.” –Gary Locke, U.S. Secretary of Commerce
If you don’t think curbing emissions of carbon dioxide (CO2) is becoming a big deal within the Executive and Congressional branches of government in this country, think again. Right now, not one but two legislative efforts in both the U.S. House of Representatives and the U.S. Senate seek to establish a “cap-and-trade” program in the U.S. to limit CO2 emissions, referred to more broadly as “greenhouse gases.”
That “greenhouse” terms relates to the environmental effect CO2 is supposed to cause – turning the Earth into a “greenhouse,” leading to global warming and all sorts of ecological disasters.
Now, from where I sit, there’s still an awful lot of scientific debate over “global warming,” and I’ve got plenty of my own reservations about this supposed disastrous environmental trend. But all that is almost beside the point, because the federal government and many members of Congress are moving full speed ahead to reduce CO2 emissions in this country. So regardless of your position on greenhouse gases and global warming, there’s inexorable movement forward to deal with them – and that is going to directly impact a broad swath of American industries.
Gary Locke (seen here below), the former Governor of Washington State and now U.S. Secretary of Commerce, summed up the federal government’s direction on the issue of carbon controls – and the issue of energy conservation and efficiency as well – during a speech last week at the International Trade Administration’s Sustainability and U.S. Competitiveness Summit held in Washington, D.C.
His remarks provide some interesting insight into the debate over greenhouse gas controls and global warming, because Locke is right at the focal point of all of this – a cabinet member that must carry the Administration’s “green banner” while at the same time responsible for overseeing the health of American business.
Yet he made some excellent points – noting that conservation and efficiency efforts, especially when it comes to energy use, could go a long way to producing a smaller environmental footprint for American business and lower cost structure at the same time.
In Locke’s view, sustainability and competitiveness must go together from here on out in U.S. business circle, he said, “Because in today's economy, I don't think you can have one without the other.”
He also strongly believes revitalizing American manufacturing is a critical national necessity. “For too long, we've just accepted that a shrinking manufacturing sector is a natural byproduct of globalization or technology or any other number of structural factors,” Locke explained. “Once employing one in three Americans, manufacturing now only accounts for one in 10 jobs. It's time to arrest and reverse the decline. Manufacturing employment may never again make up one-third of our workforce—nor would we necessarily want it to. But a vibrant manufacturing base is absolutely essential to America's future.”
Locke said manufacturing is a vital source of middle-class jobs, as manufacturing employees make 13% cent more than the average for all other workers in America and comprises two-thirds of our nation’s research and development spending – not to mention the boatloads of freight demand this sector of the economy generates, from shipping raw materials to the factories while taking finished goods from them to market.
But the landscape is changing fast for manufacturing and transportion, too, said Locke – not just in terms of greenhouse gas restrictions but also in terms of energy demand. “Take a look at the last century, and there were two things American manufacturers could usually count on: Fossil fuels were cheap, and the externalities of using them, like carbon emissions, were of almost no concern,” he explained. “Those days are over. Fuel is no longer cheap. And the external costs associated with fossil fuel energy are dangerously high. If we don’t curb the carbon, the consequences for our environment and our economy will be devastating.”
OK, there’s his – and President Obama’s – position on CO2 emissions. How does that impact manufacturing and – by extension – transportation?
“Over the next few decades, virtually every economic activity—from the way we manufacture goods to the way we design our transportation systems—will have to be re-engineered to reflect a carbon-constrained world,” Locke said.
“But this long-term project shouldn't distract us from the fact that we can make a huge impact immediately, by being more efficient and more sustainable in everything we do,” he stressed. “And if our manufacturers get serious about more sustainably using everything from water to land to energy, it will save them money and go a long way towards making them more competitive in the global marketplace.
Take energy, for example, said Locke: The Department of Energy just did a study finding that the United States electric-power industry alone wastes enough energy annually to fuel the entire nation of Japan for a year. A study by the Environmental Protection Agency also found that if the U.S. harnessed all of our industrial waste energy, it could meet 19% of the country’s electricity needs – the equivalent of 95 nuclear plants.
“Is it any wonder, then, that people have taken to calling efficiency the ‘low hanging fruit’ of the world’s energy challenge? With efficiency, we don't have to depend on scientific breakthroughs or engineering miracles. We're not waiting for economies of scale to get big enough so efficiency can compete with other energy alternatives.”
Locke said an upfront investment in efficiency is on average five times cheaper than investments in new supply. And it is immune to the troubling vagaries of the energy market. “Efficiency is an economical investment whether oil is $20 or $200 a barrel, because it is not competing with fossil fuels,” he explained. “Efficiency is a win-win all the way around. It's good for our country; it's good for consumers. It's going to enable our manufacturers to do more with less energy … and we know how to do this, [for] the American economy is already more than twice as efficient as it was in 1970.”
Building on that success is simply a matter of working with industry to implement efficiency processes that work for their businesses, Locke noted, pointing to a broad effort by the National Institute of Standards and Technology in partnership with other federal agencies and industry to help small- and mid-sized companies cut costs.
“This public-private effort has already reviewed 125 companies and found ways for them to cut $62 million in costs by reducing water and energy use, and air emissions and solid waste production – and the return on the companies’ investment to implement these practices is estimated to be 130 to one,” he said.
Now, $62 million in savings is a drop in the very large bucket of energy consumption here in the U.S. And one wonders if such savings would be dwarfed by the costs imposed by strict carbon limits. But whichever way you view it, CO2 limits are coming to the U.S. in some shape or form, sooner or later. And getting more efficient at energy use might be one of the major ways businesses can minimize the impact of such rules on their operations. Of course, time – plus Congressional legislation and federal mandates – will tell.