Big business sweats climate change laws
By David Greising
Tribune chief business correspondent
Published March 2, 2007
Recent state actions to curb global warming are having a surprising
effect: They are prompting big power companies and manufacturers to call
on the Bush administration to mount a fight against climate change.
It's a major turnabout for big business. For years, industrial companies
fought back whenever lawmakers in Washington talked about ways to reduce
greenhouse gases. Some even supported scientific research that questioned
whether climate change really is a problem.
Now, facing a crazy quilt of state initiatives, industry is calling for
federal action, which they see as more manageable and predictable. And as
a safeguard, they're taking seats on state commissions, such as the one
in Illinois, that governors have formed to help draw up state policies on
"Every state is trying to get on the bandwagon, to be perceived as being
serious about climate change. It's the worst possible situation," said
Douglas R. Oberhelman, group president of Caterpillar Inc.'s global
diesel engine business and head of compliance. "California is on the
verge of banning imports of electricity generated by coal. What are you
going to do if you have 50 of those, and they're all different?"
Maryland's legislature last week passed a law that would make it the 12th
state to place new "clean car" restrictions on automobile exhaust. At
least 23 states have mandated that a minimum amount of power must come
from renewable resources. States also are banding together on a regional
basis. New Mexico and Arizona this week joined an existing California,
Oregon and Washington alliance to form a new Western Regional Climate
Change Initiative. A group of Northeastern and mid-Atlantic states also
is working on climate issues.
"You're seeing states accelerate their involvement because it's not at
all clear that the federal government is going to do anything," said
Barry Rabe, a University of Michigan professor who has written
extensively about the balance between state and federal action on global
Illinois is among the states that have begun following California's lead.
Gov. Rod Blagojevich has asked a new Climate Change Advisory Group to
propose to him ways in which greenhouse gas emissions from throughout
Illinois could be reduced to 1990 levels by 2010. "There's a lot of work
to do by the end of June, but we'll get there," said Doug Scott, director
of the Illinois Environmental Protection Agency.
States are stepping in partly because those who act now may have an
advantage when federal laws are put into place.
"Ultimately, there is going to be a big bargaining session in Congress
with an allocation of credits" for states that already have acted to
reduce greenhouse gases, Rabe said. By setting tough environmental
standards, the states also are encouraging the growth of companies that
produce new, energy-efficient technologies, he added.
For big industrial companies that operate in many states, the patchwork
approach creates uncertainties and can add significant risks and costs.
For big companies used to pushing their agendas in Washington, the flurry
of state action has made them feel left out of the political process at a
In an effort to get back in the game, Caterpillar Chief Executive James
Owens joined up late last month with the CEOs of General Electric,
DuPont, Alcoa, Duke Energy and other industrial giants to urge Congress
to adopt a national emissions reduction program. Previously, business
leaders have said any such goals should be voluntary.
The business group also invited four leading non-governmental
organizations to join the initiative. Participation by Environmental
Defense, the Natural Resources Defense Council, the Pew Center on Global
Climate Change and World Resources Institute added "green" credentials to
the corporate initiative.
"We wanted a seat at the table" when lawmakers in Washington draft
climate-change legislation, said Caterpillar's Oberhelman.
Some in the environmental movement believe industry may be the victim of
its own success. The lobbying against federal action has been so
successful in recent years that it created room for states to step in
with more aggressive actions than the federal government would have
taken, they say.
"Businesses are now placed in a position of either supporting state
action, supporting a unified federal action or just opposing everything,"
said Howard Learner, executive director of the Environmental Law and
Policy Center, an environmental advocacy group based in Chicago.
But business support for federal law is far from unanimous. "For every
GE, you have a number of companies that say, `Wait. Wait. We don't
support it yet,'" said Learner, who is working on Blagojevich's
environmental task force alongside business and government leaders.
As they go to Washington, the business leaders offer a simple argument:
Federal action is required because it's preferable to the uncertainty and
inconsistency of state action. Companies can't commit to new power and
manufacturing plants, or design new cars, when they don't know what
regulation will look like. A national approach would offer a single,
One leader of the business lobby's push for action is Jim Rogers, CEO of
Duke Energy, a major utility in the Southeast. At a conference of
lawmakers from around the world who met on Capitol Hill last month,
Rogers called on Congress to provide uniformity or risk having businesses
delay important investment decisions.
"Today, in the U.S., we don't know what the cost of carbon [dioxide
emissions] is," Rogers said. "If you don't know the cost of carbon, you
can't make an informed investment decision."
The time is not far off when the cost may become more apparent. The new
Democratic majority in Congress has held numerous hearings on climate
change. A bill proposed by Sen. John McCain (R-Ariz.) and Joe Lieberman
(I-Conn.), and another by Sen. Barbara Boxer (D-Calif.), are expected to
go to a vote this term.
Many business leaders believe they will get a better deal out of Congress
than they are getting from the states. "Whatever comes out will be more
moderate than what might come out of the Northeast or California," said
Tim Profeta, director of the Nicholas Institute for Environmental Studies
at Duke University. "It would be a better deal for business."
Timing could be important. Businesses seem to prefer legislative action
soon, rather than waiting for science and public sentiment to harden on
the climate change issue, and risk the results of the next presidential
election, when Congress might be inclined to push a more aggressive