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Climate Legislation: Watch out for the Enviros!

Posted by: John Carey on January 15, 2009

There’s a simple-minded view that the big battle ahead on climate change is between the ‘green’ crowd (including the upcoming Obama Administration and the Democratic Congress), which wants strong mandatory limits on greenhouse gas emissions, and ‘business’, which opposes such limits.

That view is plain wrong. An astonishingly high proportion of companies are backing the idea of tough limits on carbon emissions. Even the coal-dependent utilities that were among the biggest naysayers, such as Southern Company and Peabody, are on record as supporting the idea of cap-and-trade legislation. “They understand that they can’t be just ‘no, no, no’ anymore,” explains one lobbyist.

In one major example of the growing support, a group of 26 companies (including Alcoa, Caterpillar, BP, PepsiCo, Johnson & Johnson, and Rio Tinto) not only called for Washington to enact strong limits, it also laid out a detailed blueprint for solving the most contentious issues. “Is terribly important we get the cost of carbon into our economy,” argues John Rowe, CEO of Chicago-based utility provider Exelon. Far from being a drag on business, legislation that raises the price of emitting greenhouse gases will put the U.S. economy on a firmer better path, the company executives say. “This will spark a wave of investment and new jobs,” says Lewis Hay III, CEO of the FPL Group (Florida Power & Light).

With that kind of support for a middle ground, the biggest hurdle now to getting climate legislation, ironically, may be environmentalists. Moderate enviro groups, such as the Environmental Defense Fund and the Natural Resources Defense Council have signed on the companies’ blueprint (indeed they helped forge the plan). But many of the others believe the blueprint doesn’t go nearly far enough. Immediately after the announcement of the plan, some of these groups cried foul. The new blueprint “is deeply flawed,” says Brent Blackwelder, president of Friends of the Earth. Adds Emily Figdor, director of the global warming program at Environment America, “the United States must achieve much deeper cuts in the next 10 years than the coalition has endorsed if we hope to stave off the worst effects of global warming.”

Policy wonks who have worked on this issue for years are deeply concerned that opposition from the more left-leaning enviros could derail the progress being made. “I see the left going to the left,” frets one climate policy expect. “I see them looking at Barbara Boxer [the Senate environment committee chairman] and Henry Waxman [the House energy committee chairman] and saying, that’s our Dream Team, so let’s shoot for the moon.” What these groups don’t sufficiently realize, he says, is that any legislation has to get the support of the Blue Dog Democrats and other moderates, while also keeping companies on board. The only way to do that is to include provisions that keep the costs of the legislation from jumping too high, especially at first. But with the left-leaning enviros leading the opposition, the biggest battles ahead may be over these measures.



BusinessWeek correspondents John Carey and Mark Scott, cover the green scene, keeping on top of the business aspects of energy, the environment and climate change, as well as the technologies, policies, markets and people that are shaping how the earth's resources will be used in the century ahead.

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