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View related content: Environmental and Energy Economics
What’s the “green” driving some high-profile corporations to break
with the country’s largest business lobbyist over climate change? Hint:
It’s not the environmental kind.
This is a precarious moment for supporters of a measured approach to
carbon emissions legislation. On Thursday, Nike became the latest
prominent U.S. company to break from the U.S. Chamber of Commerce over
its fierce opposition to the cap-and-trade bill now languishing in the
Senate. Nike resigned its seat on the board just a few days after
Exelon announced its intention to quit the Chamber altogether, painting
the nation’s largest business lobby as scientific obstructionists.
The Obama administration took the opportunity to open up a second
front against cap-and-trade opponents. Concerned that Congress might
not produce legislation before the December Copenhagen climate change
summit, it announced that the Environmental Protection Agency will
regulate greenhouse gas emissions with or without Congressional
approval. That’s another direct rebuke of the Chamber, which has been
on the forefront of groups challenging the EPA’s expanding regulatory
authority over climate issues.
Two years ago, the U.S. Supreme Court ruled that the EPA has the
authority to regulate greenhouse gases under the Clean Air Act, by
labeling them as a pollutant. Since all sides recognized that any EPA
regulations would likely be complex and unwieldy, the administration
had the EPA hold its fire as Congress debated comprehensive
legislation. But that’s stalled, and Obama’s environmental team
apparently has decided to raise the stakes.
Earlier this week, the president authorized the EPA to compel large
power plants and industrial facilities–including 400 new facilities
and thousands more coal plants and refineries undergoing renovation–to
prove that they have the “best available” technology for reducing
greenhouse gas emissions or face sizable fines or delays in licensing,
with the rules taking effect as early as next year.
The New York Timescharacterized the announcement as a “cudgel to
push lawmakers to reach agreement” on a cap-and-trade bill, but it’s
more like a tactical bomb threat. The administration appears to be
trying to split the corporate community, which up until recently has
remained somewhere between hostile and skeptical of the Democrats’
climate change strategy, and the 1,400-page pork-filled bill, known as
Waxman-Markey, that passed the House last summer.
The chamber has proved an easy target, in part because of its own
blunders. Exelon’s exit followed earlier departures by PG&E and PNM
Resources. Two of the nation’s largest companies, General Electric and
Johnson & Johnson, have made it clear they think the chamber is out
of step on climate change, though they’ve retained their membership.
Duke Energy, while also remaining in the Chamber, said in May that it
would not renew its ties to the National Association of Manufacturers,
another Waxman-Markey opponent.
These resignations have environmentalists and their supporters in
Congress crowing. Jay Inslee, a House Democrat from Washington State
and a member of the Energy and Commerce Committee, says, “It’s an
earthquake.” Ceres, a liberal-lobbying group that supports the bill,
called it a “game-changer.”
That’s too soon to know.
Last week, when John Rowe, Exelon’s CEO, slammed the Chamber’s
“stridency against carbon legislation,” he was clearly casting his
company as a green knight.
But as is often the case in such high-profile public policy spats,
the story behind the story speaks more to opportunism.
Environmentalists are trying to divide and conquer the business
community by splitting it into two camps: self-proclaimed “progressive”
green-minded companies, egged on by campaigning environmentalists, vs.
greedy, Neanderthal defenders of the status quo.
This is ideological politics and hard-nosed business, pure and
simple. The New York Times bluntly reported on what’s likely driving
some businesses in the Northeast and West to break with cap-and-trade
skeptics like the Chamber and sing the bill’s praises.
“The utilities and other companies that are supporting climate
change legislation tend to be those based in more liberal parts of the
country and believe that being viewed as environmentally responsible is
a good marketing strategy, energy and business analysts said. The
utilities tend to be dependent on sources like nuclear power that emit
fewer greenhouse gas emissions than their competitors. Before, ‘voicing
their good fortune among higher- carbon colleagues was seen as
impolite,’ said Paul Bledsoe, director of communications and strategy
at the National Commission on Energy Policy, a bipartisan research
organization. ‘Now that legislation seems imminent, these companies are
stepping up to support legislation because it helps their bottom
Despite the attempt by some environmentalists to paint the U.S.
Chamber as an anti-science climate denier, the business group has
acknowledged the reality of greenhouse gas emissions and the need for a
coordinated response. “We’re challenging Waxman-Markey’s cap-and-trade
bill, not the need for a legislative response to climate change,” says
Karen Harbert, head of the Chamber’s Institute for 21st Century Energy.
“Our position is being grossly mischaracterized. Climate change has to
be addressed. But we think the bill will be hugely disruptive, shed
jobs, raise energy prices, unfairly target selective industries in this
country and put China at a competitive advantage. There are
Call the Chamber realists. Europe’s version of cap-and-trade not
only hasn’t cut emissions as forecast; it’s evolved into the most
“costly climate policy program in the world.” Forgive the Chamber for
not recklessly embracing a legislative option that promises to neither
cut greenhouse gas nor preserve U.S. competitiveness.
Support for Waxman-Markey is tepid in large measure because it’s
loaded with so much special-interest giveaways for environmental
programs and favored companies–which helps explain why the Chamber has
emerged as today’s punching bag. The bill’s fine print makes it clear
who the winners and losers will be if a version of Waxman-Markey
becomes law. For example, corporations that rely heavily on carbon-free
nuclear energy, which would be showered with financial hand-outs,
clearly fall in the first camp. (Read: Exelon.)
Smelling blood in the water and an opportunity to breathe new life
into the flailing bill, the National Resource Defense Council and other
environmental backers of cap-and-trade are now increasing efforts to
peal away from the Chamber other corporations, such as General
Electric. GE makes nuclear generators and should profit handsomely if
Waxman-Markey survives relatively intact, so its support of the bill is
hardly a surprise.
“Some companies are being tactical,” suggests Harbert. “They have
little invested in the Chamber and a lot to gain financially, and they
earn a lot of points from environmental groups that will have a lot to
say about the future of their businesses.”
Shed no tears for the Chamber in this messy brouhaha, however. It
brought this embarrassment on itself when William Kovacs, its senior
vice president for environment, technology and regulatory affairs, told
the Los Angeles Times that it might seek a full trial of the scientific
consensus on man-made climate change to block the EPA’s regulatory
agenda, which it believed was illegal, unless there were Congressional
hearings. “It would be evolution vs. creationism,” said Kovacs, drawing
a bizarre parallel with the famous 1925 Scopes trial on the validity of
the theory of evolution. “It would be the science of climate change on
trial.” Kovacs never addressed who would play the role of Darwin and
There are legitimate legal and policy gripes about the EPA’s
expanding power–it declared in April that it believed it had the right
to regulate greenhouse gases under the Clean Air Act. But Kovacs’
comments were political and scientific lunacy. It certainly opened the
door to accusations that the Chamber was indeed standing with the
anti-science Luddites denying the basics of climate change science. The
real issue, at least temporarily overshadowed, is the cost/benefit
analysis of the various proposals to control the human contribution to
The Chamber’s ill-timed and reckless interview also threatens to
undermine the growing support for a thoughtful legislative alternative
to cap and trade. The Chamber is hardly alone in concluding that the
Christmas-present-for-everyone approach known as Waxman-Markey is a
holy mess. It’s a view shared not only by many conservatives but also
by many on the left, including Al Gore’s former policy adviser and
co-founder of the U.S. Climate Task Force, Harvard lecturer Elaine
Kamarck, who wants to return to Gore’s original carbon tax tied to a
payroll tax cut.
The renewed clamoring to rush through Congress a European-style
climate bill before the international climate talks convene in Denmark
in December has at least temporarily shoved aside debate over whether
alternative carbon control strategies, such as a carbon tax, might be a
better choice both economically and environmentally.
Jon Entine is a visiting fellow at AEI.
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