Two years ago President Skorton signed the American College and University Presidents Climate Commitment, pledging Cornell to develop a plan by September 2009 in order to bring its net greenhouse gas (GHG) output down to zero. As part of this commitment, universities recognize that the act of emitting carbon dioxide or other GHG’s will place a cost on the institution, society and the planet.

Determining what this cost is, predicting what it will be in the future and using it in the University’s planning process is a daunting task, but not one that Cornell is shying away from. The University has formed a working group consisting of faculty, staff and students and has partnered with a consulting team to work on this effort. This week Cornell has released a draft memorandum to its peers that analyzes the cost of emitting GHG’s and financial impact it will have on Cornell.

The true costs of global climate change are detailed in the Intergovernmental Panel on Climate Change’s (IPCC) Fourth Assessment Report, which predicted that the likely effects will include an increase in global average temperature, sea levels and instances of extreme weather as well as cause potentially catastrophic disruptions to various ecosystems. The Stern Review, a document produced for the British government in 2006, placed a monetary value on these costs suggesting that “the estimates of damage could rise to 20 percent of [global gross domestic product] or more.”

Alternatively one could view the cost of emitting GHG’s in terms of what it would take to abate their production by generating energy through wind, photovoltaics and biofuels or by sequestering carbon from more traditional energy sources. The Stern Review estimates that abatement actions would only require one percent of the global GDP, a number that is corroborated by the consulting firm McKinsey and Co.

Pending legislation will likely give rise to a cap and trade system with the aim to lower GHG emissions 80 percent from their peak levels by 2050. The IPCC estimates that this will stabilize emissions enough and allow only for an increase of about 2.5-3 degrees Celsius in the average global temperature, a level of increase that will minimize many of the aforementioned tangible costs.

Cap and trade systems work by creating a market for the allowance to emit GHG’s. A set amount of GHG’s are allowed to be emitted each year, and the total number of these allowances are decreased over time. Market forces set a price for each allowance and spur conservation and innovation. Costs of mitigating one’s GHG footprint will be cheaper if mitigation technology is readily available and more expensive if such innovation develops slowly.

Cornell is not immune to these financial costs. Recent estimates by Energy Strategies, a consulting firm working on the University’s Climate Action Plan, predict that the cost for Cornell to comply with such mandates ranges from $50 to $300 million over the next 40 years. On a per year basis the higher estimate represents a fraction of a percent of the University’s operating budget. Not a trivial amount in these times, but something that can be effectively planned for.

This analysis represents the reduction in GHG’s required by likely federal mandates, yet Cornell has committed to reduce its output by 100 percent. The additional commitment demonstrates that Cornell believes this action is an essential component of its education, research, outreach and community leadership missions. Consequently, the study by Energy Strategies recommends that the university value the emission of GHG’s at a level that is higher than predicted market values.

The valuation and costing of GHG’s in the University’s decision making process will manifest itself in various ways. Adding a cost to emit GHG’s adds a cost to using energy from fossil fuels. This would encourage the University to take steps to utilize less fossil fuels either through conservation or replacement of those fuels with less carbon intensive energy sources.

During this period of economic turmoil, many may wonder if it is a worthwhile investment to be a leader in developing a Climate Action Plan and mitigating our carbon footprint. Cornell is not alone as other universities, corporations and even remaining investment banks prepare for a world where there is a financial cost to emit carbon. Such prudent planning will protect the University from the risk and volatility associated with the carbon market and energy prices.

Professor Emeritus Tom Tietenberg, a leading expert on emissions trading at Colby College, states that in regards to GHG abatement, “university investments are needed not only to protect the viability of the institution in the future, but also those investments serve as a model for the rest of the community.” As centers of innovation and education, colleges and universities need to be leaders in valuing GHG’s and developing the technology and institutional methodology aimed at mitigating them.

Hopefully such leadership will serve as a model for students. As we make our own decisions, in our residences, play spaces and labs, we need to be cognizant that our decisions to leave the light on or keep the computer running, all result in a cost to the University, future generations and ultimately ourselves. This challenge of valuing our future is not only a responsibility of the University but of each of us as well.