Global Warming: A New Twist on an Old Fight

You'll never guess who's now leading the fight for new federal laws on greenhouse gas emissions.

By Laura Steele, Researcher-Reporter, the Kiplinger letters

February 19, 2007

Businesses are joining environmentalists in an unexpected alliance aimed at persuading Congress that it's time to enact laws limiting the greenhouse gas emissions that contribute to global warming. The companies, from financial giants to chemical manufacturers, feel that federal legislation is both inevitable and preferable to the patchwork of inconsistent state laws being passed. They also have concluded that they'll be better off participating in negotiations on a new law, rather than digging their heels in against any legislation. Among the companies getting involved are Alcoa, BP, Caterpillar, DuPont, Duke Energy, FPL Group, General Electric (GE), Lehman Brothers and PG&E Corp.

The firms have a lot at stake. They want to ensure that they'll be given credit for the voluntary measures they are taking to cut emissions, and they want to start planning for any changes they'll have to make down the road. Some, such as BP, are working to develop carbon capture and storage technology, while GE is developing more-energy-efficient appliances. As negotiations over a bill proceed in the next couple of years, the companies' aim will be to avoid regulations that put them at a competitive disadvantage and to spur markets for environmentally friendly innovations—wind turbines, photovoltaics, energy efficiency, emissions-capturing technologies and biofuels.

But Congress won't deliver this year. The disagreements are too great and the opposition from the Bush administration too formidable to get an effective climate change bill through Congress anytime soon. Instead, look for smaller initiatives aimed at increasing energy efficiency and moving toward greater use of alternative fuels.

For an illustration of just how tough it will be, remember that it took almost a decade to produce legislation to combat acid rain, even though it involved just one pollutant, definable sources and a known control technology. With global warming, regulators will have to deal with carbon dioxide, methane, nitrous oxide and fluorinated gases. Emissions come from numerous sources and affect every sector of the economy. And it's not clear which technology is most effective in curbing greenhouse gas emissions.

The states won't wait for Congress, however. They'll push forward with their own laws, particularly on the West Coast and in the Northeast. So far, 28 states have Climate Action Plans, meaning that they are closely considering ways of reducing emissions that contribute to climate change.

California will be first to impose a mandatory limit on greenhouse gas emissions, with a phased-in program that begins in January 2008 and is likely to lead to a market-based, cap-and-trade program by 2012. Other moves in California: a Green Building Action Plan, requiring all existing and new state buildings to increase energy performance and reduce grid-based energy use 20% by 2015, and higher standards for light-duty-vehicle greenhouse gas emissions. At least 11 states are moving to adopt similar vehicle emission standards: Arizona, Connecticut, Maine, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington.

On the East Coast, nine states—Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont—have signed the Northeast Regional Greenhouse Gas Initiative, a mandatory cap-and-trade program covering greenhouse gas emissions. Maryland will become part of the program this summer, and Pennsylvania and the District of Columbia could move from observer status to full membership.

Some states will experiment not only with regional pacts and legislation, but also with technology as they look to the risks, costs and potential new markets that action on climate change will spur. Others will push for more energy efficiency through renewable energy portfolios, green building standards, more use of biomass and "net metering"—allowing consumers to sell electricity back to the grid.

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