Economics & Policy

Carbon Curbs: It's Business vs. Business


Even as the health-care fight rages, another fraught issue is back in the headlines: What to do about climate change. While the debate includes the familiar partisan split, this particular topic also pits conservative against conservative, business against business, and country against country.

At the Group of 20 meeting in Pittsburgh in late September, world leaders will be pressing the U.S. to act on the matter. Washington got only part way there when the House of Representatives passed a landmark bill putting caps on carbon emissions in June. The Senate has yet to take up the issue. And thanks to powerful opposition from business groups such as the National Association of Manufacturers, the American Petroleum Institute, and the U.S. Chamber of Commerce, the chances of Senate action have dimmed, many experts believe. The opponents "clearly have the jump on us," acknowledges Betsy Moler, lobbyist for Chicago utility Exelon (EXC), which strongly supports the bill.

Now Exelon and others are mounting a counterattack—and they believe they have a fighting chance. One of their arguments: If Congress doesn't act, business could face tougher rules from the Environmental Protection Agency. "Climate action is inevitable," says Michael G. Morris, CEO of Columbus (Ohio)-based utility American Electric Power, who is pushing for a bill. "The only choice is whether to encourage the Senate to pass comprehensive, well-crafted climate legislation or to wait for the EPA to enact regulations under the Clean Air Act."

Exelon is one of the leaders of a coalition of companies working to get out the message that a big chunk of American business—from Alcoa (AA) and General Electric (GE) to the utility industry—believes carbon caps and policies to boost cleaner energy are crucial (table). The latest sign of a rift in business: California utility PG&E (PCG) pulled out of the Chamber of Commerce to protest that body's opposition to climate legislation.

Some companies also worry about the effects of global warming. Levi Strauss, for instance, fears that rising sea levels, floods, and other changes could threaten factories in such places as Bangladesh. The companies are planning a blitz of op-ed articles and media campaigns, while leaders such as Exelon's Republican CEO, John W. Rowe, will plead the case in the Senate.

Meanwhile, environmentalists are stepping up their own advocacy efforts. In early September more than 60 groups launched a multimillion-dollar campaign, dubbed Clean Energy Works. "It's clear that just negotiating is not going to work," says David Goldston, director of government affairs at the Natural Resources Defense Council. "So we created this war room."

The contest will be fought across the country. Yet ultimately the fight is "really about the hearts and minds of about 20 people," says Exelon lobbyist Moler—the swing votes in the Senate. On the list: more than a dozen moderate Democrats, such as new Senate Agriculture Committee Chair Blanche Lincoln of Arkansas.

JOB CREATIONOpponents say a climate bill would cripple the economy. "Our message to Senators is that the bill is an anti-jobs, anti-energy piece of legislation," says Jay Timmons, executive vice-president of the National Association of Manufacturers.

But proponents of carbon caps insist they also have a good hand to play. For one thing, polls show that Americans favor what emissions curbs would encourage, namely a shift to cleaner, greener energy. "Even those who deny climate change are supporting clean energy and energy independence," says Maggie L. Fox, CEO of the Alliance for Climate Protection.

That's why supporters of the climate bill have largely stopped trying to scare people with dire predictions about global warming. Instead, they're planning to hammer home the message that legislation would bring green jobs and a cleaner environment while enhancing national security by reducing dependence on foreign energy sources.

When the Senate begins to take up the climate issue, though, supporters will have one scare message for lawmakers. If Congress doesn't act, the EPA will step in with potentially more onerous emissions curbs. Adding another legal threat, on Sept. 21 a federal court ruled that companies can be sued over their emissions. Congress isn't yet fully aware of these alternatives, says Keith Belton, director of government affairs at Dow Chemical (DOW). "I'm surprised by how many people think the choice is between legislation or nothing."

The battle ahead will be messy. The bill's opponents are stoking the same Big Government fears that have made health-care reform so divisive. Meanwhile, some environmental activists oppose the current House bill for being too weak, while groups such as farmers and natural gas producers are lobbying for more payouts than they got from the House. As a result, a Senate bill "will be very different," predicts AEP's Morris.

Much also depends on how hard the White House pushes. There, the signals are growing stronger. "We understand the gravity of the climate threat," President Barack Obama told the U.N. Summit on Climate Change on Sept. 22. "We are determined to act."

Return to the Copenhagen Climate Change Summit Special Report Table of Contents

Business Exchange: Read, save, and add content on BW's new Web 2.0 topic networkDissension in the RanksU.S. companies are grappling with how to quantify risks associated with climate change. The Washington Post, in a Sept. 21 story titled "Firms Start to See Climate Change as Barrier to Profit," notes that some members of the National Association of Manufacturers now support climate legislation of the sort their trade group opposes.To read this story and others like it, go to http://bx.businessweek.com/global-climate-change/reference/
John_carey
Carey is a senior correspondent for BusinessWeek in Washington.

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