Some powerful organizations are taking up the banner of climate change. According to today’s Wall Street Journal, a group of influential investors, including Allainz, Calpers, and Merrill,
….waded into the fray, pressing for legislation mandating emissions cuts ranging from 60% to 90% by the middle of this century and requiring companies to disclose investor risks associated with climate change with the Securities and Exchange Commission.
As the Financial Times reported, this group, which has allied itself with an existing business coalition that includes Alcoa, BP America, DuPont, and Sun Microsystems, to form Investors and Business for US Climate Action
….constituted the largest array of US private sector leaders that has so far come together to call for radical action on global warming….
“In the absence of strong federal leadership there is a risk that US businesses may get left behind, losing ground against competitors in the rapidly growing global market for low-carbon solutions,” it said in the statement.
“By establishing a national policy rather than leaving leadership to the courts and state governments, it would remove unnecessary risk in asset management and corporate governance and help to regularise an increasingly complex regulatory environment.”
No matter what the outcome of this week’s House hearings, the lobbying group’s high profile stance is going to make it hard for global warming Luddites to claim that corrective measures are “bad for business.” They will at least have to make a more sophisticated argument. It may also encourage other companies to step forward.
The Wall Street Journal indicated it wasn’t clear yet how the Bush administration would respond if Congress passed a tough bill. A veto would make it an issue in the 2008 elections.
A very large bit of bad news: it seems almost certain that the cornerstone of any bill is likely to be cap and trade rather than carbon taxes. As we’ve discussed, carbon taxes are a much better solution because they motivate everyone to reduce their greenhouse gas emissions (i.e., more reduction = more savings), while cap and trade in effect says carbon output up to a certain level is OK, and also involves greater administrative and frictional costs (and trading markets could be manipulated).