Leading members of the corporate world have formed an alliance to reverse global warming and put the brakes on its leading cause, global greenhouse gas (GHG) emissions. The alliance includes corporations Alcoa, BP America, Caterpillar, Duke Energy, DuPont, FPL Group, General Electric, Lehman Brothers, PG&E Corp., and PNN Resources.
Forming a coalition with four well-known environmental groups—World Resources Institute, Natural Resources Defense Council, and Environmental Defense—they call upon the Congress and the president to set mandatory reductions in GHG emissions.
Called the United States Climate Action Partnership (USCAP), this alliance challenges the passivity and voluntarism normally associated with the business interests towards global warming. On Jan 22, timed on the eve of the president's State of Union speech, about a dozen members made urgent appeals in front of a lot of TV cameras and a couple of hundred of the press and well-wishers at Washington, D.C.'s National Press Club, calling for prompt "action" of the Congress to establish mandatory emission reduction targets.
Their report or principles and recommendations, "A Call For Action," presumes environmental goals are best accomplished through a "market-driven" approach. The "cornerstone" of their plan is a "cap and trade program" that imposes fixed limits on GHG emissions to meet target pollution goals, but would be flexible too with the creation of a market mechanism by which companies could buy and sell emission credits. The "Call For Action" can be read online at www.us-cap.org.
Their program urges the Congress to enact legislation as "quickly as possible" to put the country on a different course in meeting its energy needs.
"The science of climate warming is clear. We know enough to act now," says Jim Rogers, founding member of USCAP, and President and CEO of Duke Energy Corp., one of the largest electric companies in the U.S.
"U.S. legislation should be designed to achieve the goal of limiting global atmospheric GHG concentrations to a level that minimized large-scale adverse climate change impacts to human populations and the natural environment…," says the report.
By the year 2022, their plan would achieve between 70-90% of today's levels of U.S. emissions, and demonstrate to us and nations around the world that the U.S. is taking the leadership to "slow, stop, and reverse the growth of U.S. emissions."
The plan, however, is realistic in that it envisions the same amount, or even allows a slight increase of emissions (5%) in the next five years. In 10 years, emissions should be 90-100% of today's levels. "Congress should specify an emission target zone aimed at reducing emissions by 60% to 80% from current levels by 2050," recommends the report.
A Business Approach to Controlling GHG Emissions
The USCAP wants to see enacted mandatory reductions in GHG emissions from major emitting sources: power plants, transportation, and energy use in commercial and residential buildings. But they want the process to be flexible and business-like in achieving goals rather than laying down harsh "caps" for emissions allowed, making the cost of doing business prohibitive, and harming economic growth.
The basic approach of this alliance of businesses to reducing emissions is to use market mechanisms to reach stated goals. USCAP believes the legislation should permit businesses to meet part of their obligations through the purchase of "emissions offsets." Where initially the economic transition costs would be higher, or would more adversely affect a particular region or particular sector of the economy, emission "allowances" would be distributed free to business under emission limits. The plan calls for the possibility of funding transition assistance to adversely affected workers and communities. Eventually, the free allowances would be phased out over a "reasonable" period of time.
"We believe the most powerful cost control measure is a robust cap-and-trade program since markets do the best job of controlling costs over time," says the "A Call For Action."
"I am convinced that we can build a global plan of action on climate change in ways that create more economic opportunities than risks,'' said Alain J.P. Belda, Chairman and CEO of Alcoa and a founding member of USCAP.
Up till now, industry has been uncomfortable with "cap-and-trade" proposals, and the Bush administration has opposed them as well.
This opposition of the administration is perplexing to Jason Gamut, executive director of the National Commission on Energy Policy, who said on PBS' Lehrer Report (Jan 24) that the administration relies on the market for solving every other problem except this situation. Gamut would like to let the marketplace make a difference in providing the incentives in reduction of emissions and the development of new energy technologies.
"As long as the cost of venting a ton of carbon is zero, people aren't going to do a whole lot… I think there is an inevitability now to moving forward with a mandatory action."
Grumet stressed that "volunteerism is just fundamentally no longer a responsible strategy to confront climate change."
All the bills introduced in the new Democratically-controlled Congress have adopted some "cap-and-trade" approach to the climate change problem, including those of Sen Barack Obama (D-Ill) and Sen John McCain (R-AZ), according to the Associated Press (Jan 23, 2007).
Support From Congress and the President
USCAP got a little boost for its goals from the President's State of the Union speech, delivered on the following day of USCAP's announcement, President Bush set a goal of reducing gasoline consumption by 20% within the next decade. This is to be accomplished by increasing the current level of biofuels by nearly five-fold (35 billion gallons by 2017), and raising the fuel economy standards of automobiles. Bush's main reason for setting the goal of gasoline reduction is to reduce our reliance on imported oil from the Middle East.
The president acknowledged for the first time "the serious challenge of global climate change," an issue he has refused to address for the past six years. The new energy technologies in "clean coal technology, solar and wind energy, and clean, safe nuclear power" and biofuels (especially ethanol) will enable us to become "better stewards of the environment," said the president in the State of Union address.
The hour was ripe this month for not just corporate CEOs and the president, but for the Congress as well, which also displayed some impatience and a sense of urgency regarding climate change.
House Speaker Nancy Pelosi (D-CA) is by-passing Rep. Dingell (D-MI), chairman of the House Committee on Energy and Commerce, and forming a special committee on climate change, to recommend legislation for cutting greenhouse gases, according to the Environment and Energy Study Institute (Jan 19) and various news sources. Though the panel, headed by Rep. Markey (D-MA), will have no legislative authority, its formation reveals Pelosi's seriousness about climate, says the Washington Post (Jan 23), and her willingness to offend a standing committee chair, Rep Dingell, the longest serving House member.
On one side of the debate are the Congress members like Jay Inslee (D-WA), who see the time for deliberation has passed and action is needed in 2007. Speaker Pelosi "is pushing for action by July 4," according to the Washington Post (Jan 23). On the other side, is the more cautious and careful approach of Rep Dingell, who feels, according to the Washington Post, that "overzealous restrictions on emissions could decimate the U.S. economy."
Pelosi believes, along with Iraq, "that this is a big issue on which we have to take on the president," said Rep. Markey to the Washington Post (Jan 23). The corporate manifesto, "A Call to Action," formally announced last week, may just give her more ammunition she needs to do that.
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