Research Brief

WWF & CDP release The 3% Solution

In a multi-year project for the World Wildlife Fund and CDP, Point380, McKinsey&Company and Deloitte conducted research and analysis to determine the potential for the US corporate sector to reduce greenhouse-gas (GHG) emissions over the period 2010 to 2020. The technical potential to save emissions from this research is compared to the reductions recommended by the Intergovernmental Panel on Climate Change (IPCC) to avoid the worst effects of climate change.

Read The 3% Solution: Driving Profits Through Carbon Reduction

Top Finding

The results of this analysis show substantial opportunity for US corporations to reduce GHG emissions at a profit—nearly enough for the US to meet the lower end of the 2020 IPCC recommended range of GHG reductions, a 25 percent reduction from 1990 emissions levels.

New in this Analysis

In this analysis new data from over 100 projects to implement management behaviors and techniques to reduce emissions is included in addition to the traditional fugitive emissions mitigation, energy efficiency and renewable energy technologies that these studies typically address. Also, this analysis includes expanded potential for combined heat and power and photovoltaic applications made economically viable by the historic drop in the current and expected cost of these energy resources.

Implications for Resource Managers

The implications of this report are potentially significant for corporate energy and GHG emissions program managers. For two reasons it may increase senior corporate managers' expectations for efficiency and renewable energy application and emissions reductions. First, it sets expectations for action according to the profitable opportunity for a company to reduce emissions. And, in parallel it builds on the trend of holding corporations accountable to targets driven by scientific analysis of climate change, rather than national targets negotiated under international agreements or those set internally.

Economic Opportunity

The 3% Solution, and similar studies by other leading researchers[1] find that there currently exists a large profitable opportunity to reduce emissions in the US corporate sector. This type of economy-wide analysis is not directly applicable to all companies—some have already taken advantage of the bulk of their opportunity, others are not representative of their industry as a whole and therefore may have different or limited opportunities in comparison to the model. As senior managers become more knowledgable about the case for profitable emissions reduction there is more pressure on resource managers to estimate and characterize the true size of their companies' profitable investment opportunity. And also the opportunity of their industry partners, especially for companies that purchase goods and services from supply-chain parters that possess more profitable ways to reduce emissions. Once characterized, the obvious next step is to expand programs to go after all profitable opportunities. Managers at leading companies have found multiple operational and financial barriers to full implementation, and have had to develop solutions, from retooling continuous improvement efforts, to improving the investment case they present to financial officers, and entering cost- and profit-sharing collaborations with technical service providers to accelerate implementation.

Science-based Targets

Addressing climate science-based targets heightens the importance of two critical dimensions of climate change science. One is the recognition that long-term economy-wide reductions must be very deep, on the order of 80 percent. And second, the physical nature of the climate means that missing near-term targets will increase the rate and depth of reduction required in the future. These factors are captured by the idea of an emissions "pathway", where near-term implementation of existing techniques and technologies is required to stay on a safe path—otherwise mitigation of catastrophic changes will become practically impossible; and, at the same time research and development to must be conducted to provide technical opportunities to maintain a viable trajectory over the long-term. For many energy and GHG emissions managers this indicates a need to grow their role beyond typical continuous improvement activities. Staying on a safe pathway increasingly requires managers be able to drive technical innovation, research and development for internal emissions, and for some, also their companies' products and services.

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