Follow this procedure for evaluating the strategic importance of greenhouse

HE KYOTO PROTOCOL, THE SUBJECT OF intense political and scientific debate throughout the world since its introduction in 1997, is now poised to enter into force. The Protocol establishes a “double trigger,” requiring both ratification by 55 governments (which was met in 2002) and that the ratifying governments represent at least 55% of the developed nations’ 1990 carbon dioxide emissions. Although the U.S. and Australia have stated that they will not ratify it, by the end of February 2003, the Protocol had been ratified by 101 governments representing 43.9% of the developed countries’ 1990 CO2 emissions. To enter into force, the Protocol needs only to be ratified by the Russian Federation, whose Parliament at presstime was expected to act by mid-2003. With the Federation’s additional 17.4%, the final 55% requirement will have been met. Important strategic choices and opportunities now confront firms in their management of greenhouse gases (GHGs), not only those that have a global presence or are seeking to expand internationally, but also U.S. companies seeking to identify and take advantage of prospects for the creation and sale of tradable GHG emission allowances. Effective management of GHG emissions could mean thousands, perhaps millions, of dollars, both in avoided cost and additional revenue. How firms respond may be crucial to their realizing the benefits of these new opportunities and thereby gaining competitive advantage. This article outlines a proactive six-step approach for the management of GHG emissions. The GHG problem Greenhouse gases affect the balance between radiant energy from the sun and energy emitted back into space from the earth. GHGs in the air absorb some of the outgoing energy from the earth, trapping it and warming the lower atmosphere and the earth’s surface. Some GHGs, such as water vapor, carbon dioxide, methane, nitrous oxide and ozone, occur naturally in the atmosphere. Certain human activities, however, may add to the levels of these gases and contribute other, non-naturally occurring ones, such as hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride. GHGs allow the earth to retain enough heat from the sun to support life. At issue has been whether emissions of GHGs from human activities are causing an increase in the amount of heat retained in the atmosphere, thus gradually warming the earth beyond what otherwise would occur. With scientific consensus emerging that human activities are a contributing factor to global warming, the Kyoto Protocol was adopted by the United Nations Framework Convention on Climate Change (UNFCCC) in Kyoto in 1997 (1). The Protocol commits 38 developed countries to reducing their combined emissions of six key GHGs by 2008–2012. Individual reduction targets (2) relative to 1990 emission levels are 8% for Switzerland, most Central and East European states, and the European Union (which has distributed different rates among its members), and 6% for Canada, Hungary, Japan and Follow this procedure for evaluating the strategic importance of greenhouse gas (GHG) issues to your firm and developing a corporate strategy for managing GHGs. Profit from Effective Greenhouse Gas Management—A Six-Step Plan