Green Logistics and Supply Chain Management

Green Initiatives

From the Kyoto Protocols to the Copenhagen Accord, the United Nations has been working to set a global standard for the reduction in carbon dioxide emissions. Without a legal authority to impose any sort of rules, the best it can do is to provide political guidance. Of course, to see global emissions drop to some past year’s level, the developed countries would have to cut emissions to a higher degree than developing countries so that the latter can still grow economically (and perhaps socially as well). Developed countries have access to technology and politically-aware populaces which are willing to accept (or at least discuss) taxes, cap-and-trade, and other pollution premiums attached to production. Together they are also the largest source of GHG emissions. But the largest single source of carbon emissions, China, is understandably less willing to be pinned down to any binding and measurable carbon reduction target. The world economic downturn of 2008 only served to strain the discussion further as China wished to see its export engine continue and, indeed, some Western nations switched gears to the pressing concerns of job protection and fiscal stimuli. Fossil fuels are relatively abundant and cheap compared to Green energy technologies. Nonetheless, the Copenhagen Accord of December 2009 did pledge $10 billion in transfers per year for three years from developed to less developed countries in order to assist with carbon dioxide reductions. And China agreed to reduce its level of carbon intensity (as a proportion of product outputs) by 40-45% by 2020 (The Economist. p. 43). At this point in time, Green energy sources (e.g., solar and wind) are not as efficient as fossil fuels because they cannot facilitate the same level of production. This is a research and development problem. And switching a portion of the production process over to Green energy technology would just serve to raise costs at this point. Why would a firm do so at this stage?