This article clearly illustrates profit motives on both sides of the AGW debate. We frequently see entities applauded for their 'noble' advocacy for fighting global warming and see others demonized for opposing regulations and policies that will increase economic miseries for those least able to afford them.
Apparently enough of our elected leaders represent both and that puts them in a dilemma. We are already seeing real hardships resulting from some policies already out there and we aren't seeing much positive effect from many of these. We can hope that finally both sides of the debate might be put on equal footing to make their case.
Last Updated: May 30, 2008
Chances dim for climate-change legislation
Business coalition splinters, and without widespread corporate support, the bill headed to the Senate is almost certainly doomed.
By Marc Gunther, senior editor
FORTUNE 500
NEW YORK (Fortune) -- An influential coalition of Fortune 500 companies and environmental groups that was formed to support climate-change legislation has splintered over the Lieberman-Warner bill that is headed next week to the Senate floor.
The U.S. Climate Action Partnership formed last year won't take a position on the bill, although nine of its members - including General Electric (GE, Fortune 500), Alcoa (AA, Fortune 500) and four utility companies - signed a letter to senators backing the legislation.
The letter, also signed by big environmental groups and obtained by Fortune, says: "Prompt action on climate change is essential to protect America's economy, security, quality of life and natural environment."
But other members of the coalition known as U.S. Cap, most visibly Duke Energy (DUK, Fortune 500), a coal-burning utility, are strongly opposed. "It's going to translate into significant electricity price increases," says Jim Rogers, Duke's CEO.
Without widespread corporate support, passage of the bill - already a long shot at best - becomes even more unlikely this year. President Bush remains opposed. House Democrats have been slow to act.
Besides that, a backdrop of rising gasoline prices and the sluggish economy makes it difficult to win votes for a regulatory scheme that will raise the prices of electricity and gasoline. In fact, a key purpose of the bill is to put a price on the emissions of greenhouse gases, as a way to speed the transition to a clean-energy economy and slow down global warming.
With the Senate scheduled to begin debate Monday, lobbying and advertising around the bill are intensifying. (Here's a new TV commercial supporting the bill from Environmental Defense Fund, and a radio ad opposing the bill from the Club for Growth.) But even supporters concede that the debate will set the scene for action in 2009.
"This will put us in a position to have action next year," says David Doniger, director of the climate center at the Natural Resources Defense Council, a supporter of the bill. "We expect in the Senate that the 60-vote rule will be applied. That's a hard one to get over."
"It's a teachable moment," agreed Scott Segal, an advocate for coal-burning utilities that oppose Lieberman-Warner.
The Lieberman-Warner bill sets a cap on greenhouse gas emissions that would reduce them by 70% by 2050. Companies would need permits to emit pollutants that cause global warming. The government would allocate some permits to utilities and industrial companies, and auction others to generate revenues. The question of how to distribute permits and what to do with the money divides even supporters of greenhouse gas regulation.
As currently written, Lieberman-Warner might fall short of a 50-vote majority in the Senate, let alone the 60 votes required to close debate, insiders say. Presidential candidates (and Senators) Clinton, McCain and Obama all support climate-change legislation.
Businesses supporting Lieberman-Warner stand to profit from clean-energy or energy-efficiency iniatitives. GE, for instance, sells wind turbines, compact fluorescent lightbulbs, and energy-efficient locomotives and aircraft engines. Just this week, GE and the oil-field services firm Schlumberger announced plans to work together on clean-coal technology.
Utility companies Exelon, FPL Group, NRG Energy and PG&E Corp., which signed a letter supporting the bill, are developing nuclear energy, wind or solar power, or so-called clean-coal plants. They would gain as the costs of burning coal in conventional plans goes up. About 50% of electricity in the United States comes from burning coal.
"In the long run, you want people who burn carbon to pay more," says John Rowe, the CEO of Exelon, the nation's biggest generator of nuclear power. Still, even Rowe worries that the economy could be shocked if the cost of emitting carbon dioxide rises too quickly. "We don't think the economy can stand $30 to $40 carbon in the early years," he says. Political support for climate action could also erode if consumers revolt. In Europe, where permits to emit carbon have been trading since 2005, it now costs nearly $40 to emit a ton of carbon.
The Environmental Defense Fund circulated the letter supporting the bill, which was also signed by U.S. Cap members NRDC and the National Wildlife Federation. The letter was put together in a hurry, a backer said, and not all of the 30 or so companies in U.S. Cap were asked to sign it. The climate action coalition was announced with great fanfare in January of last year.
Rogers, Duke Energy's CEO, says he supports climate action but warns that Lieberman-Warner would have a "draconian effect" on his customers and others in the 25 states that now burn 80% of the coal in the United States. It's unfair, he argues, to place the burden of solving the climate-change problem on coal-burning states, which were urged by regulators to build coal plants in the 1970s and 1980s to achieve energy independence.
"I believe in cap and trade. I believe we ought to put a price on carbon," Rogers says. But senators who want to auction permits, and then use the money for a variety of projects - ranging from deficit reduction to water projects to job training - threaten to turn the climate-change bill into the "ultimate in earmarking."
Billions of dollars are at stake in this argument over how to auction or allocate the pollution permits. The outcome is "almost surely going to be a product of a lot of horse-trading," says Exelon's Rowe, once a final bill is written.
But the fact that businesses and senators are arguing about the details suggests that agreement is growing over the broader idea that Congress ought to regulate greenhouse gases.
"There is absolutely a majority of support for a cap-and-trade bill in the U.S. Senate," says Manik Roy, director of congressional affairs for the Pew Center on Global Climate Change. But, as Duke's Rogers likes to say, "both God and the devil are in the details."
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