The Beginning of the End for Cap-and-Trade? (BP America, Conoco-Phillips, and Caterpillar bolt) (UPDATED)
With little fanfare, an earthquake has rippled through the United States Climate Action Partnership (USCAP). Three significant members, two of them being integrated oil majors, are no longer planning the cap-and-trade (aka, cap-and-tax) game. And if energy affordability and reliability is a metric, expect more companies to bolt. Social corporate responsibility, anyone? After all, there is no climate gain from a unilateral U.S. cap by the alarmists’ own math.
Here is the background. According to its website, USCAP is “a group of businesses and leading environmental organizations that have come together to call on the federal government to quickly enact strong national legislation to require significant reductions of greenhouse gas emissions.” Others of a less charitable bent would characterize them as central headquarters of the U.S. Climate-Industrial Complex, a group of corporate rent-seekers (the bootleggers), made whole by the environmental scaremongers (the Baptists) hell-bent on slapping the United States into a carbon rationing scheme.
Members of USCAP include AES, Alcoa, Alstom, Boston Scientific Corporation, Chrysler, Deere & Company, The Dow Chemical Company, Duke Energy, DuPont, Environmental Defense Fund (EDF), Exelon Corporation, Ford Motor Company, FPL Group, General Electric (GE), General Motors Corporation, Honeywell, Johnson & Johnson, Natural Resources Defense Council (NRDC), The Nature Conservancy, NRG Energy, PepsiCo, Pew Center on Global Climate Change, PG&E Corporation, PNM Resources, Rio Tinto, Shell, Siemens Corporation, and the World Resources Institute (WRI).
It doesn’t take a great deal of analysis to see who hopes to get what from cap-and-trade. The environmental posse– EDF, NRDC, Nature Conservancy, Pew Center, and WRI–get their ultimate dream: control of the U.S. economy by environmental bureaucrats who can determine who gets to buy carbon permits, who gets to sell them, how many can be bought overseas, who gets to slurp from the giant trough of government permit sales, and so on.
It’s not much harder to figure out what the corporations get, whether it’s simply “green” bragging rights to use in commercials (PepsiCo), or the hope to sell subsidized hybrid cars (Ford and GM), or the chance to sell new thermostats to millions of houses and businesses (Honeywell), to build nuclear plants, windmills, or solar farms (GE, Exelon), or to get in early in the hopes of getting free permits from the government (coal, oil, and other high GHG emitters). Again, a sober comparison of social costs and benefits should get these ‘greenwashers’ to bolt.
Three groups that used to be on that list which you won’t find mentioned at USCAP’s website are Caterpillar Inc., BP America, and ConocoPhillips which have made a relatively quiet exit, stage left. While the media isn’t covering this with the mad intensity that it covered Apple’s departure from the U.S. Chamber of Commerce (Google: “Apple leaves Chamber,” 1.8 million hits), it is no less a ground-shaking event. When you have major companies like BP America and Caterpillar bailing on the idea of cap-and-trade, you can assume that the writing is on the wall for the concept.
Despite the bravado of Senators Lindsey Graham, Joe Lieberman, and John Kerry, prevailing wisdom suggests that Nancy Pelosi couldn’t get the votes to pass Waxman-Markey again, much less anything comparable. And with Scott Brown in the Senate, and the 2010 elections looking something like a nightmare for Democrats, the probabilities of seeing an aggressive climate bill with a cap-and-trade element before the mid-term elections are slim to none. Depending on how those midterms go, the probability could easily drop to zero.
So much for the argument that all of us have heard for many, many years. Get out in front of the issue…. Get your seat at the table…. It’s coming…. It’s inevitable…. The choice is cap-and-trade or a carbon tax….
Well, that has not happened even with Democratic political control. And pragmatic corporate America–even BP, which started the intra-industry civil war on the carbon question back in May 1997–is having second thoughts. But the Obama Administration sees PR value is promoting the mirage. Reported E&E News (sub. req.):
In comments to reporters at a State Department press briefing, Todd Stern, the chief U.S. international climate envoy, said businesses are together on the idea of addressing the climate issue.
“Whatever the ups and downs of this process at any particular moment, there is only one direction that this process can go, which is in the direction of action to reduce emissions,” Stern said. “Whether it’s sooner or later, it’s coming. Businesses get that.”
Still, opponents of bad climate policy are hardly out of the woods. EPA is still plugging ahead on its own plan to take control of the commanding heights of the economy, while various plotters in Congress are looking for a backdoor into greenhouse gas control through energy legislation. But emboldened by the scientific controversies that have fortuitouosly spilled into the public domain and the political death of global CO2 mitigation in Copenhagen, new voices and institutions are coming forth to right the wrongs of a futile, ignoble crusade.
Even Al Gore isn’t talking about climate change much any more: the newest commercials from his “Repower America” initiative talk all about clean energy and jobs, but climate change isn’t seen on the main page of the site, and solving “the climate crisis” has dropped to the third reason why we should switch to clean energy.
Let’s hope that BP and ConocoPhillips donate enough fuel to Caterpillar to bury cap-and-trade so deeply it can’t re-emerge. But, stay ready. Like a vampire, cap-and-trade won’t really be dead until it’s been staked through the heart, decapitated, cremated, and had its ashes scattered over running water. That a good start on that may be the fracturing and fraying of the unholly business alliance that in the U.S. can be traced back to …. Ken Lay and Enron.
Add another two companies to the exodus roll: Xerox has copied BP America, ConocoPhillips, and Caterpillar Inc. in bailing out on the Climate Action Partnership. So has Marsh, an “insurance broker” according to Investor’s Business Daily. The US Chamber of Commerce, undoubtedly still peevish over the massive fuss that the mainstream media made over Apple’s high-profile defection over the Chamber’s climate change stance, observes that “USCAP’s Tuesday press release “misled the public by failing to disclose” that Xerox and Marsh had left too.”
None of this is surprising, of course. As E&E reporter Joel Kirkland observed (subs. required), “The decisions by BP, Conoco and Caterpillar [and now Xerox and Marsh, ed.] underscore the difficulty in keeping broad business coalitions together in such a turbulent political and economic environment. The direction of energy and climate policy is in flux in the Senate. The Democrats’ loss of a 60-vote, filibuster-proof Senate majority, a 10 percent unemployment rate across much of the nation and the unclear path for climate legislation all could factor into shifting positions in the weeks and months ahead, sources said yesterday.”
“It’s the natural consequence of evolving strategies,” said Adele Morris, the policy director for climate and energy economics at the Brookings Institution.” Adele’s right, but there are also more prosaic reasons, as the E&E article points out:
For ConocoPhillips and BP, the reason for leaving U.S. CAP has to do with natural gas and the extent to which oil refineries get the short end of the stick in the House climate bill passed in June. Conoco said in a statement that by not renewing its membership, it can “better focus its efforts on ensuring fair and equitable treatment of the transportation sector” and concentrate on securing natural gas’s role in any future energy and climate policy.
“House climate legislation and Senate proposals to date have disadvantaged the transportation sector and its consumers, left domestic refineries unfairly penalized versus international competition, and ignored the critical role that natural gas can play in reducing GHG emissions,” said Conoco Chairman and CEO Jim Mulva.
No matter how you look at it, the trend is obvious. CAPs declining corporate membership is leaving behind little more than environmental groups and corporations engaged in blatant rent-seeking, perhaps because their businesses are not sustainable without federal largess and mandates to force some of their non-market-worthy goods onto the market.