Greenhouse bill heats business debate

Sam Eaton May 29, 2008

Greenhouse bill heats business debate

Sam Eaton May 29, 2008


Kai Ryssdal: John McCain said last night he’s going to skip a big Senate vote next week on climate change. No word yet from the Obama and Clinton camps on whether they’ll show up to weigh in on the Lieberman-Warner Climate Security Act.

If it does pass, it’d cut U.S. greenhouse gas emissions nearly 70 percent by 2050 and it would do it by putting a price on carbon.

Most lawmakers do favor cutting CO2 emissions. The debate, though, is how to do get that done fairly once carbon’s not free anymore.

From the Marketplace Sustainability Desk, Sam Eaton reports.

Sam Eaton: In a carbon-constrained economy, like the one proposed under the Lieberman-Warner bill, Eric Williamson would be deeply affected. The three dozen employees at his Southern California aluminum foundry hand craft everything from skateboard axles to electric motor casings.

Eric Williamson: And so you’re basically constantly spending money on energy, whether it’s air, electricity, welders, ovens, furnaces. That’s all we do. That’s all we do.

A cap on greenhouse gas emissions would trickle down to businesses like Williamson’s in the form of higher energy bills and shipping costs. Despite that, Williamson still supports Lieberman-Warner.

Williamson: If it is beneficial to Planet Earth and it’s beneficial to human beings, I cannot oppose it. You know what I mean? I have kids. I have family. I want this world to do well.

But if that same legislation doesn’t help companies like his adapt to the new low-carbon economy, Williamson says he’d have no choice but to close up shop. This is a major dilemma facing Senators as they begin to debate the climate bill.

Steve Cochran is with the Environmental Defense Fund.

Steve Cochran: This is a transition that were talking about and what government policy will be attempting to focus on is how to manage that transition; how to ease that so that costs don’t fall disproportionately on companies.

Basically it boils down to a question a fairness. The Lieberman-Warner bill would place a limit or cap on all greenhouse gas emissions beginning five years from now. Over several decades, that cap would gradually increase, giving polluters a simple choice: Clean up or pay for every ton of CO2 they emit beyond their government-issued quota. In order to ease big emitters into the new system, Congress would give some industries their emissions quotas, otherwise known as allowances, for free in the beginning.

But not everyone’s happy.

Lou Hayden: This bill, just on its face, chooses winners and losers. I mean, it’s very obvious.

Lou Hayden is with the American Petroleum Institute, the main trade group for big oil.

Hayden: Some emitters get some allowances in year one to soften the economic burden on them. However, we found that how these are distributed seems to be a political decision.

Hayden says oil companies have gotten the short end of the stick in the allocation of free allowances. That means they’ll be forced to pay for most of their greenhouse gas emissions from the outset.

But Environmental Defense’s Steve Cochran says that’s the point of not giving too many allowances away for free.

Cochran: They become the commodity, they become the currency by which the value of these reductions is measured and by which we can manage and monitor and evaluate and ultimately succeed in changing our energy economy.

Federal sales of emissions allowances are expected to generate nearly $6 trillion in revenue by mid-century. That’s money the government can use to help both consumers and industry ease the transition to a low carbon world — think tax relief for individuals and hundreds of billions of dollars in incentives for industrial efficiency projects.

But Cochran says with a bill that touches nearly every corner of the American economy, it’s impossible to please everyone.

Cochran: More money to help consumers could mean less money to help business.

Cochran says inequities like these may be a political reality, but they pale in comparison to the cost of business as usual. A study out this week by Tufts University predicts the U.S. economy would suffer a $4 trillion annual hit by the end of the century if nothing is done to curb global warming.

In Los Angeles, I’m Sam Eaton for Marketplace.

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