August 1, 2011

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Article

Climate Change

Six Steps to Prepare Any Business for the Legal Tsunami

James Holtkamp

August 1, 2011

Climate change has emerged as one of the most contentious issues of the 21st century. The overwhelming majority of climate change scientists have concluded that manmade influences are a significant contributor to climate change. Governments at all levels are grappling with policy and legal initiatives to deal with emissions of greenhouse gases and adaptation to the effects of climate change. Regardless of one’s views as to the science, there is a legal tsunami developing that threatens to sweep aside businesses who do not prepare for it.

But, you say, what in the world can my business do? How can my company cope with the myriad of fast-emerging and often fast-changing legal requirements dealing with emissions of greenhouse gases? The particulars of any given corporate approach will vary widely depending on the size and type of business. But you might consider some or all of the following six steps, which will allow your company to cope with regulations, reduce its carbon footprint, communicate its good corporate citizenship to its customers and shareholders, and improve its bottom line.

1 Determine Your Carbon Footprint
Figure out your actual “carbon footprint.” Does your company generate carbon dioxide or other greenhouse gas emissions from its business activities? What is the carbon dioxide output from company vehicles? How much electricity does your business use? The climate change impact from all of these activities can be calculated using well-established methodologies. You can then make an informed decision as to whether to set a greenhouse gas emissions reduction goal or other climate change-related milestones for your company. Many companies include such goals in company policies on stewardship and sustainability.

2 Reduce Your Greenhouse Emissions
Think about ways to reduce greenhouse gas emissions. Upgrading or modernizing equipment or processes often results in more efficient energy use, which not only means substantial savings in energy costs but also fewer greenhouse gases emitted per unit of output. For example, changing to energy-efficient lighting and ventilation systems will reduce the emissions of carbon dioxide from the electric power plants that provide your electricity. New boilers typically use less fuel to generate the heat necessary for a manufacturing process.

3 Cash in on Incentives
Take advantage of available tax breaks, subsidies and other incentives for reducing energy and greenhouse gas emissions. There are, for example, tax incentives for conversion of vehicles to clean fuels. The federal government also provides tax incentives and subsidies for development and implementation of certain types of energy-efficient technologies.

4 Consider Buying Carbon Credits
Consider becoming “carbon-neutral” by purchasing carbon credits to offset the amount of carbon dioxide emitted by the energy your business uses. Carbon credits are derived from a variety of sources, including power plant and factory shutdowns, reductions from plant modifications and renovations, and carbon sequestration from reforestation and avoided deforestation.

5 Sell Your Carbon Credits
If you are able to identify permanent and measurable carbon dioxide reductions from your own operations, you might want to turn them into carbon credits and sell them. There are a number of well-established protocols for verifying carbon reduction credits developed by the World Resources Institute, the California Climate Action Registry, the Climate Trust, the Gold Standard and the Voluntary Carbon Standard, among others.

6 Encourage Others to Reduce Their Personal Energy Use
Educate your employees and sponsor initiatives in your community to educate citizens on the steps they can take in their own homes to reduce their energy use. It is a good way to gain brand recognition in your market and contribute to the greater good at the same time.

The success of your enterprise depends on energy, creativity and focus. The same is true in devising an approach to climate change that can both reduce your carbon footprint and improve your bottom line.

Jim Holtkamp, a partner in the Salt Lake City office of Holland & Hart LLP, is the firm’s Climate Change Practice Team Leader. He can be reached at jholtkamp@hollandhart.com.

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