Thursday, November 20, 2014

Can we still do big things?

By Jim Vaughan, Senior Fellow.

The news that the U.S. and China have set goals to cut net greenhouse gas emissions and increase the production of energy from clean sources should be welcomed across the globe — especially after the dire warning from the United Nations that climate change may soon be “irreversible.”
  • For our part, President Obama announced an ambitious 2025 target to cut U.S. climate pollution by 26-28 percent from 2005 levels.
  • China’s President Xi Jinping said his country would increase the non-fossil fuel share of all energy to around 20 percent by 2030.
One would think the agreement would silence critics who have opposed U.S. action on climate change unless and until other countries also agree to act (so much for American leadership). But now the two biggest climate polluters in the world have agreed to act. The U.S. and China account for more than a third of global carbon dioxide emissions.

The reality is, we are not alone in addressing the problem. The European Union committed last month to cut its emissions 40 percent by 2030. And there are indications that the world’s next-biggest emitter—India—might be feeling the pressure. As reported by the Associated Press on Nov. 12, a former India official said, “the international community will now expect India to make some firm commitments.”

So it would appear that there is momentum on the side of acting to reverse climate change. The New York Times went so far as to say the announcement “has fundamentally shifted the global politics on climate change.”

But as Lee Corso would say on ESPN’s College Game Day, “not so fast.”

Opponents immediately slammed the climate deal. One said it would “ensure higher utility rates and far fewer jobs” and another called the agreement “hollow, not believable (and) a non-binding charade.” The bottom line, they said in a variety of ways, “Our economy can’t take a war on coal that will increase the squeeze on middle-class families and struggling miners."

Really? America can’t take action on what may be the biggest economic and environmental challenge of our time? Opponents to the far-reaching agreement apparently believe that the only way forward is to keep doing what we’ve been doing.

News this month from three iconic businesses suggests otherwise. 1) A retailer with declining market share, is reinventing itself by capitalizing on its vast real estate holdings; 2) The manufacturer of the best selling truck in America is changing the very material from which the vehicle is made “to get a jump on its rivals in the pickup wars;” and 3) Another car maker is introducing an emissions-free vehicle that runs on fuel that is not readily available and will initially be more expensive than gas.
  • Sears, Roebuck and Co.— on a long, slow contraction since 1989 when it was America’s largest retailer—is closing stores and leasing space in some stores to other retailers in an effort to turn the chain into a leaner, focused and more profitable company that one day may be better known as a real estate firm.

    The Miami Herald
    reported on Nov. 10 that Sears would redevelop its 12.3-acre site at a suburban Miami mall into the Esplanade at Aventura, “an open-air village featuring retail, restaurants, offices and a hotel.” The existing 192,000 square foot Sears store will be replaced with a smaller-format store at just 20,000 square feet.

    Who wants another Sears store? But what American city wouldn’t welcome a contemporary, open-air shopping and entertainment village on the site of one of its underperforming stores?
  • Ford Motor Co. is betting its future on its most fuel-efficient pickup ever, the aluminum-body F-150. The new design saves up to 700 pounds and Ford is shooting for a 20 percent increase in fuel economy.

    New government rules require Ford and other manufacturers to achieve a fleet average of 54.5 miles a gallon by 2025. Since Ford’s F-series pickups have been the best-selling trucks in America for 37 consecutive years, buyer acceptance of the lighter and more efficient F-150 can help the company reach the mileage goal.

    “Is this a risk? Yes,” William Clay Ford Jr., the automaker’s executive chairman said. “But it’s a risk worth taking.”

    One could say the new truck is the result of the government regulation. But with 850 new jobs and a $359 million renovation of the company’s Rouge assembly complex in Dearborn, “job-killing regulations” is a label that won’t stick.
  • Toyota Motor Corp. is entering the unproven but potentially lucrative market for emissions-free, hydrogen-powered vehicles. The company announced on Nov. 18, that it would begin selling fuel cell cars in Japan on Dec. 15 and in the U.S. and Europe in mid-2015.

    “Besides the relatively high cost, buyers will have to contend with finding fuel,” the Associated Press reported. “Only a few dozen hydrogen filling stations have been built worldwide, though governments are subsidizing the construction of more.”

    “Asked if it's a risk, Yoshikazu Tanaka, deputy chief engineer for Toyota's next generation vehicle development, said yes, but Toyota views it as a challenge. Likening it to a chicken and egg situation, he said if you say it's too risky and don't move forward with production, the number of filling stations will never grow. Toyota faced a similar scenario with its gasoline-electric hybrid, the Prius, which now sells in big numbers."
Can we still do big things?

The cry from climate change deniers and opponents of the US-China agreement suggests that we can only address big global challenges and new opportunities if we don’t have to change the way we are doing business today.

Fortunately, companies like Sears, Ford and Toyota—and large and small firms in the cities and regions where Market Street Services is working—are proving that we still can do big things. And in the process, proving that we can create good jobs that pay living wages, guarantee a quality education for our children, and provide affordable health care and housing for everybody.

Politicians and other critics are free to oppose the fight against climate change. But their excuse can’t be because it will kill jobs and hurt the economy. In fact, there’s nothing like a big challenge to bring about a better future. Just ask the shopper at the Esplanade, the guy driving that new Ford truck and the first owners of the emissions-free, hydrogen-powered Toyota.