The Other Half of the Nobel

I'd be derelict in my duty if I let the announcement of this year's Nobel Peace Prize pass by without comment. However, I'd like to focus on the half of the award that did not go to former Vice President Gore. If you read the Nobel citation, you'll see that the Intergovernmental Panel on Climate Change (IPCC) actually received top billing, even though the media have largely ignored that or treated it as incidental. While it's understandable that we should focus more on the individual who personifies the cause of climate change in this country, and perhaps the world, I think the award to the IPCC might actually be more significant. By awarding the Nobel Peace Prize to the IPCC, the Norwegian Nobel Committee is putting its moral authority behind what is generally referred to as the "scientific consensus on climate change."

Not to diminish Mr. Gore's efforts, but without the work of the IPCC, his presentation on climate change, captured on film in "An Inconvenient Truth," would have rested on mere conjecture. It took thousands of scientists and decades of research, peer review and public debate to arrive at the present picture of the interaction of all the factors affecting the global climate system, including the man-made greenhouse gas emissions that are nudging the Earth's climate towards a warmer state, with consequences both foreseeable and unknowable. Nor is this a static picture. Evidence is still being gathered, computer models improved, and data periodically reviewed and corrected. That's how science works.

But if the Nobel for the IPCC is a vote for this cumulative body of science and the scientists who produced it, I think it's important to understand that it is a very different kind of endorsement than the Nobel Prizes for the various sciences, which are awarded by the Nobel Committee of the Royal Swedish Academy of Sciences. The Peace Prize, on the other hand, is awarded by a committee selected by Norway's parliament, the Storting. This year's committee includes a university president, a theologian, and a consultant. All served in Norwegian politics or government at some point. In that light, the award to the IPCC should be viewed as a recognition of the geopolitical and world-historical importance of global warming, rather than any kind of peer review of the science behind it. My purpose in drawing this distinction is not to validate skepticism, but to suggest that this Nobel signals an evolution and perhaps even a turning point on the issue.

Now, I realize that some of my readers remain skeptical about the extent and risks of climate change, and of the very notion of a "scientific consensus." But I think we're now at a point with regard to our understanding of climate change and its risks that the main theater of activity will be political and diplomatic, rather than scientific. The scientists have communicated their conclusions, including a detailed series of reports released this year on the scientific basis, potential impacts, and mitigation strategies. It is now up to governments at all levels to decide what to do about it, based not only on the science, but on all of the other issues for which they are responsible: the prosperity, security, and well-being of their citizens, and of the world as a whole. The choices aren't as simple as they apparently seem to some, but neither can they be ignored. And that's what the committee says plainly in the concluding paragraph of the citation:

"By awarding the Nobel Peace Prize for 2007 to the IPCC and Al Gore, the Norwegian Nobel Committee is seeking to contribute to a sharper focus on the processes and decisions that appear to be necessary to protect the world’s future climate, and thereby to reduce the threat to the security of mankind. Action is necessary now, before climate change moves beyond man’s control."

Oscar's Reach

I suspect I'm not the only one wondering this morning if it was entirely coincidental that the leveraged buyout of one of the country's largest electricity generators, TXU, came together around a proactive climate change agenda on the same weekend that the film of former Vice President Gore's presentation on climate change collected an Academy Award. The indirect connection is obvious: climate change has become one of the biggest issues of our times, and both of these events reflect that reality. At the same time, it's tempting to see a causal link between the influence of Mr. Gore's documentary and the recognition by KKR and its partners that stakeholder concerns about the global-warming impact of TXU's coal power plant construction program could put their entire transaction at risk.

The New York Times' article on the TXU deal makes fascinating reading. It illustrates the attention that TXU's emissions profile received in the structuring of this private equity transaction, and it describes the contacts between the prospective buyers and key non-governmental organizations, such as Environmental Defense and the Natural Resources Defence Council. Although the deal will still have to be approved by regulators and TXU's shareholders, its case history could provide the template for all future large, carbon-intensive transactions of this type.

I don't think it overstates matters to suggest that "An Inconvenient Truth" played a role in this. Released in a year that was among the warmest on record, less than 12 months after hurricanes devastated Louisiana and Mississippi, the movie did more than just rehabilitate Mr. Gore's public image. It provided a context for the odd weather that Americans are routinely experiencing or seeing on the evening news, at time when the pivotal Baby Boomer generation appears to be going green. I can only wonder how many of the investment bankers working on the TXU deal saw the film in a Manhattan cinema and recognized its business implications. Had it been released a decade ago, it would have been written off as alarmist ravings. Now, with an Oscar under its belt, it could get another run in theaters, and will certainly attract more viewings on DVD, perhaps becoming as embedded in the Zeitgeist as "The China Syndrome" did in the late 1970s.

Last night's award came in the middle of an otherwise lackluster broadcast. But even before the nominees for Best Documentary were read out by Jerry Seinfeld, Mr. Gore took the stage with Leonardo DiCaprio to deliver an environmental message and describe the Academy's efforts to make the production greener--along with teasing the audience about his Presidential aspirations. His message about a manageable climate crisis and the need for political will to address it was delivered to a sea of nods, and if it had a similar effect on the program's enormous global audience, it could cause further ripples beyond Hollywood. Whether there's any causal connection between all this and the structure of the TXU deal, the Global Warming Oscar--for all its pop-culture triviality--joins a growing list of affirmations of the problem, including the Stern Report and IPCC Fourth Assessment Review. Business is clearly taking notice.