By Catherine Barrett, Jeffrey Roth, and Emily Wasley
Recent changes in our global climate system and significant governmental actions in Washington, DC, indicate a trend towards taking action on climate change across all three branches of government—executive, judicial, and legislative. As a result, efficiently and effectively adapting to better withstand the near, medium and long-term impacts of global climate change represents a pressing and complex issue for both public and private sector entities. Rather than merely responding to events as they unfold, however, climate change has created an important opportunity for consultants to bring to bear a suite of strategic planning tools that can help their clients understand and better evaluate potential social, environmental, and economic impacts of climate change and associated regulatory actions.
Understanding the Context: Potential Impacts to Federal Facilities and Operations
It is widely believed that as a result of increased global greenhouse gas (GHG) emissions, surface temperatures have increased, sea-levels have risen, the Arctic summer sea ice is melting, and weather events have become more extreme and severe. Experts predict that these impacts may worsen in the near future, which could disrupt or otherwise burden the operations of the federal government. For example, higher summer and winter temperatures can seriously impact agricultural production throughout the U.S. while increased severe weather (e.g., intense heat waves and accompanying droughts or fires) increases demands for emergency management and disaster relief expenditures.
In addition to these direct impacts, the defense and national security communities are extremely concerned by potential second- and third-order effects from an altered climate. For example, water or food scarcity is a second-order impact of climate change resulting from severe drought and a lack of water resources. As a result, the impact of this type of resource scarcity can potentially lead to such large-scale disruptions as famine and social unrest. Given the potential costs and heightened sense of uncertainty about the future demands for government resources, it is no wonder there is a significant focus on understanding and addressing these issues in a more deliberate manner.
Bias for Action: An Emerging Trend across All Three Branches of Government
In October of last year, President Obama signed Executive Order (EO) 13514, Federal Leadership in Environment, Energy and Economic Performance. This mandate requires all federal departments and agencies to develop an integrated sustainability strategy. Within the sustainability strategy, each agency is required to meet a series of sustainability targets that reduce greenhouse gas (GHG) emissions, increase energy efficiency, reduce fleet petroleum consumption, conserve water, reduce waste, support sustainable communities, and leverage federal purchasing power to procure environmentally-responsible products and technologies. EO 13514 also requires federal departments and agencies to address climate change risks and vulnerabilities and to prioritize actions based on total lifecycle return on investment (ROI) within their sustainability strategy.
Two months later, the Environmental Protection Agency (EPA) released two findings regarding GHGs under section 202(a) of the Clean Air Act (CAA). Both of these findings are significant because they link GHGs in the atmosphere to a legal term of art – the “endangerment of public health and welfare” finding. First, the “Endangerment Finding” refers to current and projected concentrations of six GHGs in the atmosphere as threatening the public health and welfare of current and future generations. Second, the “Cause or Contribute Finding” states that the combined emissions of GHGs from new motor vehicles contribute to the pollution which threatens public health and welfare.
Finally, in February 2010 the Securities and Exchange Commission (SEC) issued new guidelines that require public companies to disclose the possible effects of climate change impacts on their business operations. These new guidelines reference the EPA’s endangerment finding and the growing interest from insurance companies in evaluating the risks associated with climate change impacts and acknowledged that the growing trend towards regulating greenhouse gas emissions and climate change-related risks will result in a significant impact on business operations.
Turning to the judicial branch, climate change impacts were considered by the U.S. Supreme Court in 2007. In Massachusetts v. EPA, twelve states, several cities, and numerous nonprofits brought suit against the EPA alleging it had “abdicated its responsibility under the CAA to regulate the emissions of four greenhouse gases, including carbon dioxide (CO2)” and sought to force the EPA to regulate certain GHGs as pollutants. For the first time, the Supreme Court found that CO2 is an air pollutant and noted that the EPA has the power to regulate GHGs under the existing CAA. This case clearly established, for the first time, that the EPA has the express authority to issue findings regarding GHGs under the CAA and is significant because it lays the foundation for broader regulatory action under the CAA.
The legislative branch has also been quite active on the climate change issue, and Majority Leader Harry Reid (D-Nev.) and President Obama have announced that they are committed to passing a climate change bill this year. Indeed, just last year Congress moved closer than ever before to passing comprehensive climate change legislation when the House passed the American Clean Energy and Security Act (HR 2454) in June, although a companion bill stalled in the Senate. While it is still unclear whether Congress will pass climate change legislation in 2010, given the pronounced economic pressures, most experts agree the U.S. faces increasing domestic and international pressure to act.
Strategic Planning as a Tool for Tackling Climate Change Challenges
As the U.S. government seeks to more actively address the impacts of climate change, strategy consultants are well positioned to assist through a series of tools ranging from seminars and workshops to tabletop exercises aimed at helping clients better understand the future affects that climate change will have on their overall facilities and operations. Such strategic planning tools provide clients with a practical approach to better understand the inherent complexities of climate change and offer a dynamic test-bed for conducting scenario-based “what-if” analysis of policy and regulatory alternatives.
One particularly effective time and resource-efficient approach that is the use of scenario-based exercises to address complex and interdisciplinary issues such as climate change. In particular, such exercises offer a structured process to move participants from simply discussing a complex issue to take specific actions to address specific issues in a short period of time. As a formal process that involves senior staff, elected or appointed officials, and other key personnel in a facilitator-led discussion centered on a potential real-world scenario, these exercises can be used to assess plans, policies, and procedures, or to assess the types of systems needed to guide the prevention of, response to, and recovery from a defined event. Significantly, the outcome of any effective exercise also includes a list of concrete action items—with prescribed deadlines for completion—which clearly define the steps required to begin addressing the problem.
For example, a scenario may be developed to measure how the impacts of rising sea levels impact both the responsibilities and facilities of the Department of Defense. Such a scenario would guide the discussion about preparing for and responding to possible increases in operational tempo as well as direct threats to facilities and security from rising sea levels and migrating populations. Throughout the exercise, participants would reference existing plans, identify the need for future plans, and determine gaps to be addressed to meet stated objectives.
Regardless of the specific Department or Agency conducting the analysis, the basic process includes 5 key steps that maximize the impacts and codify key actions for creating lasting results:
• First, it is necessary to clearly establish the client’s key objectives. These objectives might include identifying a list of vulnerabilities within existing policies/plans, identifying regulatory compliance gaps, or creating a climate change mitigation plan.
• Second, an exercise type is selected. Based on objectives, this may be a seminar, workshop, or tabletop based on whether the goal is to present information, develop a plan, or test a plan.
• Third, the consulting team and select client representatives develop one or more plausible scenarios to allow participants to “respond” to an event, implement a proposed plan, and/or determine if the plan is sufficient in a “safe” environment.
• Fourth, Following a thorough scenario development, key participants are assembled and the exercise is conducted. During the exercise, relevant climate change issues will be broken down through a structured discussion that encourages dialogue among the participants. Exercises can take one or several days, depending on client’s objective.
• Fifth, a list of specific action items are captured throughout the exercise process and assigned to individuals with a deadline for completion.
This list of action items represents the substantive outcome from the exercise process that moves clients from just discussing a complex issue to actually taking actions towards resolution. It is therefore important these action items be both clear and achievable, and that they also embrace the potential for innovation in order to align the organization’s efforts with their overall strategy.
The acceptance of the need for regulatory action on climate change appears to be growing as visible changes in our climate become more apparent and all branches of government take steps to address this complex issue. From the White House to the U.S. Courts to Congress, every branch of government has taken steps that indicate a willingness to act in response to domestic and international pressure on this matter. It is therefore important for consultants to increase a collective understanding of potential impacts in the near, medium, and long-term to ensure we are well-informed and our clients are well-served. Strategic planning tools such as scenario-based exercises offer a great way to help public and private sector clients at all levels to think about and understand their role in the future operating environment.
Catherine Barrett, Jeffrey Roth, and Emily Wasley are members of the Booz Allen Hamilton Infrastructure Team where they provide environmental impact analysis and strategic planning on climate change issues for federal clients. They may be reached at Barrett_Catherine@bah.com, Roth_Jeffrey@bah.com, and Wasley_Emily@bah.com. Booz Allen has completed more than 700 exercises since 1997 and worked with thousands of federal employees from various agencies. Booz Allen’s customized tabletop exercise process allows participating agencies to address environmental challenges in a proven, structured way that produces tangible results.