Cuiting Gao Cost and Risks of Going Clean In the article "Business strategies for climate change", the

authors Per-Anders Enkvist, Tomas Naucler and Jeremy M Oppenheim point out that the economy is shifting to the direction of low-carbon emission. They believe that the government is going to release more strict policies regarding the carbon emission. Besides that the market of carbon-trading market has a great potential of growing. In order to be more competitive and to make profit in the lowcarbon future, the companies, especially those in the carbon-intensive industries, not only need to reduce cost by carbon-efficient operations, but also have to use new plant and technologies that generate less carbon emission. There is no doubt that in the long run the opportunities of adapting clean technologies will be huge because of enhanced company image, development of new products or services, cost reduction. I believe that in the future those companies which can use the resources more efficient and emit less greenhouse gas will be the clear winners. It is true that reducing carbon emission and using new clean sources of power will be the ultimate way we need to go, but there are also a lot of costs and risks associate with going clean. First we must consider the cost of replacing with new plants and investment on new technologies. Even for big firms, the amount of capital and time invested on new plants and technologies will be a big burden, not to mention those relatively small companies. I think many small companies will be forced out of business or sharply reduce their production because of more strict government regulation on carbon emission. And for firms that have capacity to reposition their portfolio, they also have the risk of becoming less competitive in

the world market because of lower standard of carbon emission in developing countries. Currently, many developed nations are imposing or going to impose higher tax on over emission of carbon. Some firms just simply transfer their plants to developing countries to avoid the penalty. For those who dont choose to shift their carbon-intensive production abroad, it is quite predictable that they will lose sales to the international competitors. We all know that the ultimate goal of a firm is to make profit. If the cost of production increases, it is very naturally for them to increase the prices of their products. Eventually, the consumers will suffer. As consumers, we can buy certain imported commodities that have lower prices, but for commodity like electricity, we dont have choices. Energy sector is one of the industries that have the heaviest carbon emission. Either new sources of power or higher tax and penalties on energy industry will make our electricity bill more expensive. There is a possible risk that the energy companies will reduce production, which will affect the whole economy. Smaller GDP and job losses are the most possible outcomes of insufficient energy supply. Besides more strict regulation on carbon emission, the government is encouraging more investment on the development of new source of power. Till now, burning coals and fuels are still the major sources of power and they are blamed for generating heat to the earth and the prices of them are increasing. As a result, the government and companies are paying more attention on the investment of clean power. However, these clean powers are much more expensive than coals and fuels so far and some of them even may generate more serious pollutions to the environment, for example, the nuclear power. Because of its relatively low construction cost and high production of energy, nuclear power stations are constructed in

many places. It may not require much money to build a nuclear power station, but the cost needed to spend on safety can go really high. Besides that, if something goes wrong, the pollution of nuclear power is extremely dangerous. Thousands of people could die or affected by the radiant of the nuclear. Not only nuclear power, many other forms of powers are still very new to us, there are some potential hazards that we dont know yet. Generally speaking, the cost of investment on new power could be very high and new source of power doesnt mean there is no pollution to the environment. To conclude, I do believe that there are huge opportunities in the low-carbon future. My point is that to gain success in the future, the government and companies need to take the costs and risks into consideration when they implement the strategies for climate change.