The Carbon Economy: A Brave New World?

Abstract

Many regions throughout the world have adopted some form of carbon market mechanism, such as carbon trading (cap and trade) or taxes. As the outcome of the Copenhagen accord, the European Commission has set the new carbon emission target at 30% by 2020, up from 20%. In the United States the Securities and Exchange Commission (SEC) recognizes the issues of ‘climate change-related risks’, and asks companies to disclose ‘material climate risks’. Even in large carbon emitting countries that have not signed or are opting out of the Kyoto accord, administrative areas are adopting market-based incentives to reduce carbon emissions from various industries. In December 2011, Canada opted out of the Kyoto protocol; however, in 2008, the Canadian province of British Columbia implemented a carbon tax, starting from $10 per tonne of carbon dioxide, then increasing gradually to the current price of $30 per tonne. It has been very effective in tackling the root cause of carbon pollution—the burning of fossil fuels. Since the tax came into effect, fuel use in British Columbia has dropped by 16 per cent while in the rest of Canada, it has risen by 3 per cent. A recent survey by Statistics Canada shows that within just six years of implementation, British Columbia’s policy has been an environmental and economic success. In 2012, the province of Quebec (Canada) announced that it had joined California’s existing carbon trading scheme by imposing a cap on energy intensive industries’ greenhouse gas emissions (e.g., mining, cement, utility and manufacturing industries).

Appendices

Key Terms and Glossary

Carbon trading (cap and trade) :

A government imposed ceiling (cap) on the amount of allowed greenhouse gas emissions, combined with a system which allows a firm to sell (trade) its emission reductions to another firm whose emissions exceed the allowed cap.

Climate Change Costs and Risks :

As a result of climate change, extreme weather events such as droughts, storms and flooding are occurring more and more frequently The cost and the risk associated with these events varies, but the main point is that there will be economic, social and environmental effects as a direct and indirect result of climate change. These affect businesses, partners and supply chains.

Collaboration in the supply network :

Collaboration in the supply network means that companies leverage each other on an operational basis so that together they perform better than they did separately. Collaboration in the supply network creates a synergistic business environment in which the sum of the parts is greater than the whole. A strategic collection of mutually complementary competencies and capabilities through collaboration, forming an integrated supply network, is highly competitive against other supply networks.

Coordination in the supply network :

Since the central challenge of supply management is coordinating the actions of different organizational members in the supply network, coordination acts as a means of developing the capabilities of partner organizations and promoting shared goals and strategies to achieve mutual benefit.

Restrictions on hazardous substances (RoHS) :

Under the RoHS 1 (2002/95/EC) Directive and the RoHS 2 (2011/65/EU) Directive, RoHS were required to be enforced, and became law in each member state on 1 July 2006. This directive restricts (with exceptions) the use of six hazardous materials—lead (Pb), mercury (Hg), cadmium (Cd), hexavalent chromium (Cr6+), polybrominated biphenyls (PBB), polybrominated diphenyl ether (PBDE)—in the manufacture of various types of electronic and electrical equipment. This directive is closely linked with the WEEE Directive (see below), and is part of a legislative initiative to attempt to solve the problem of huge amounts of toxic waste.

Sustainability collaboration :

In order to reduce negative environmental and social footprints, companies collaborate by creating mutual benefit as well as business sustainability value. Sustainability collaboration requires a shift from stand-alone competition to network rivalry in order to achieve business sustainability through the supply network.

The Waste Electrical and Electronic Equipment (WEEE) Directive :

Under the European Community (EC) Directive 2012/19/EU the WEEE Directive set targets for collection, recycling and recovery for all types of electrical goods, with a minimum rate of 4 kilograms per head of population per annum recovered for recycling by 2009. This target was revised in 2012. The overall aim is that by 2016 the EU will be recycling at least 85% of electrical and electronics waste equipment.

List of Companies

American Airlines

Apple

China Shipping Development

CMA CGM

General Motors

Honda Motors

LG Electronics

Maersk

Mitsui OSK Lines

MSC

Nissan Motors

Samsung Electronics

Sony Electronics

Sumitomo Corporation

Tesla

Toyota Motors

Unifeeder

United Parcel Service (UPS)

Volkswagen

Walmart