For years, business and environmental leaders have been looking ahead to Copenhagen as the next big step in global climate change negotiations, and the anticipation has reached a fever pitch recently.  Although a binding accord remains elusive, it is still important time to clarify the way forward.  As the CEO of a sustainable chemicals start-up, I have two perspectives on the global climate negotiations. 

As a business leader seeking sustainable growth for our customers and my company, I believe that global leaders should push to establish a global climate agreement that will provide clarity on the economic implications of delivering low carbon solutions.  Without a global agreement, businesses are left to guess at the shape of future regulation.  Without national policy or global agreements in place, we cannot determine the specific impact on our regions, industries and businesses. 

An emissions cap would provide clarity and allow for long-term planning, while allowing business to seek the most efficient ways to reduce emissions.  As such, Genomatica supports a global emissions cap and long-term reduction pathway. Along with global chemical companies like BASF, BP and Braskem, we signed the Copenhagen Communiqué calling for a stable and clear climate policy.

A policy pathway will unleash more low-carbon innovation and economic growth.  In clean tech circles, it is easy to get behind a price on carbon.  By definition, clean technologies become more cost-effective when regulations place a price on carbon. 

But even for companies outside the cleantech sector, a clear policy framework will allow for strategic planning around research and development investment, carbon credits and other changes to operations.  Even, perhaps especially, for large emitters of greenhouse gasses, an emissions cap will be good for business.  The U.S. Climate Action Partnership has been leading on this issue, calling for "a mandatory economy-wide, market-driven approach to climate protection."  

However, the global petrochemicals industry faces unique challenges in a carbon-constrained world. According to the American Chemistry Council, the chemical industry is the largest energy consumer in the manufacturing sector.  Chemical companies use more natural gas than the entire state of California, both to power facilities and as a raw material for thousands of common chemicals. 

Industry leaders such as BASF, Dow and DuPont have publicly staked out forward-looking positions on climate change and have invested in reducing their environmental impacts.  For example, BASF invests over €400 million per year in research and development for products and technologies for energy efficiency, climate protection, resource conservation and renewable raw materials. (source)  Dow has pledged to advocate for an international framework that establishes clear pathways to slow, stop, and reverse emissions by all major carbon dioxide-emitting countries. (source)

Just as the telecom industry faced an existential challenge from technology disruption and recovered, I believe the chemical industry faces a tough challenge now but will innovate in multiple ways. Telephone companies of old adapted to offer text, data, video and voice services.  Disruption spawned new business models and new technologies, but allowed them to open new markets and even shift consumer behavior. 

The global chemicals industry must transform in two key ways to combat global warming.  First, the industry should seek renewable, responsible feedstocks to displace meaningful quantities of oil and natural gas used today as feedstocks. Extracting and processing fossil fuels is a major contributor to global warming, and a significant part of the industry's environmental impact. Reducing our use of today's petroleum feedstocks with renewable resources will have a significant positive impact on climate change. 

Even more importantly for the industry, diversifying our feedstock options will help stabilize costs and reduce the impact of any price on carbon.  According to a recent survey conducted by Genomatica and ICIS, 57 percent of chemical industry respondents believe their companies should reduce exposure to the petroleum-based commodity market.  Six in 10 companies are already engaged with sustainable chemical practices, and nearly all of these chemical companies (93 percent) are maintaining such programs during the economic downturn. Using renewable raw materials is good business, and good for the climate. 

Second, the industry should continue its energy efficiency gains by seeking innovative changes to reduce the energy consumption of manufacturing processes, and even consume greenhouse gasses.  Some of the largest global chemical companies have already been leading in this effort, even before the Kyoto Protocol. 

For example, in 1994, DuPont set a voluntary goal to reduce their global greenhouse gas emissions by 40 percent in just six years.  They reached the 40 percent reduction on time in 2000, and then revised the goal, aiming to achieve a total 65 percent reduction by 2010. In 2003, they achieved that goal seven years early. Advances by large producers like this have far outpaced the national goals set by global agreements, and the industry can be proud of that. 

Moving forward, bio-based processes can improve energy and greenhouse-gas efficiency even more.  Because we as an industry have picked the low-hanging fruit of improving energy efficiency in many cases, the next reductions will call for more innovation.  Bio-manufacturing already produces some important intermediate chemicals, and interesting new polymers as well.  Just as technology has lowered costs in other industries, new bio-based processes can use less energy for the same results. 

In addition, the industry can do a better job of educating the public on the potential of improved chemical processes.  Chemical industry entrepreneurs and scientists can do a better job of educating the public on possible solutions and what it will take to make them reality. We have the chance and responsibility to demonstrate how scientific research can revolutionize industry, combat global warming and bring economic growth. 

As negotiations wrap up in Denmark this week, the chemical industry is just one example of how business is taking a leadership role in remaking our economy.  A stable and clear climate policy would spur growth, but innovation must continue in parallel to ultimately deliver transformational change for the both the profitability of the industry and the environment.