American corporations are increasingly calling for action on global warming,
sensing a business opportunity in cutting greenhouse gases while hoping to shape
regulations they believe are inevitable.
Bucking the Bush administration's position that tougher rules would harm the
U.S. economy, Fortune 500 companies including General Electric Co., Duke Energy
Corp. and JPMorgan Chase & Co. in recent months have championed stronger
government measures to reduce industrial releases of carbon dioxide, the main
heat-trapping gas that scientists have linked to rising temperatures and sea
This shift in corporate thinking was on display at a congressional hearing
last week, where executives from large companies including DuPont Co., United
Technologies Corp. and Baxter International Inc. described how they were getting
an early start on reducing greenhouse gas emissions -- something they believe
they would be required to do sooner or later.
"People increasingly will believe that greenhouse gas emissions should
be reduced and that actions should begin today to prepare for that eventuality,"
James Rogers, the chairman of power generator Cinergy Corp., told the House
Science Committee on Wednesday. Rogers now advocates a national program to reduce
greenhouse gas emissions.
The number of companies involved remains small, but it is growing, particularly
in the energy sector, and is emerging as a new dynamic in the debate over the
future of America's global warming policies. The U.S., the world's largest emitter
of greenhouse gases, was the only major developed nation other than Australia
to reject the Kyoto Protocol, an international pact to cut emissions to about
5% below 1990 levels by 2012.
Although their rhetoric is rife with references to protecting planet Earth,
some of the corporations acknowledge that their newfound focus on global warming
is driven by opportunity for profit. Duke Energy would like to build a new nuclear
power plant, a type of electricity generation that does not emit greenhouse
gases, for instance, while GE wants to expand sales of wind power turbines and
"We believe we can help improve the environment and make money doing it,"
GE Chairman Jeffrey Immelt said last month in a speech at George Washington
University that attracted widespread notice. "We see that green is green."
Many multinational companies, which already deal with carbon reduction regulations
in other parts of the world, believe it's only a matter of time before they
will be required in the U.S. Rather than resist the inevitable, they want to
help shape new regulations in a way that will give them a competitive advantage.
In addition, some companies fear that in the absence of federal action, many
cities and states, which already are proposing their own regulations, will create
a hodgepodge of compliance standards across the country.
Those concerns were amplified this month, when California Gov. Arnold Schwarzenegger
signed an executive order that pledges to reduce the state's emissions by more
than 80% in the next half-century.
"We don't need a patchwork of inconsistent state or local regulations
to complicate and increase the cost of compliance," Duke Energy Chairman
Paul Anderson said in an April speech to Charlotte, N.C., business leaders in
which he surprised the electric power industry by advocating a federal tax on
the carbon content of fossil fuels. "Yet a patchwork is exactly what we
are getting, due to federal inaction."
Duke, which has announced plans to acquire Cinergy, formally proposed the levy
to President Bush's tax reform panel in April -- an approach that critics noted
would penalize Duke far less than some competitors in the electricity business
that depend more on coal power.
Anderson later said that he did not think such a tax would be approved while
Bush was in office.
As more businesses express an openness to greenhouse gas regulations, some
politicians are attempting to seize the momentum. That is reflected in a number
of amendments to the sweeping energy bill being considered by Congress that
offers incentives to business.
Revised legislation by Sens. John McCain (R-Ariz.) and Joe Lieberman (D-Conn.)
to establish firm limits on carbon dioxide exhaust has added hundreds of millions
of dollars in subsidies for nuclear power and other types of cleaner electricity
sources. More companies have expressed interest in the legislation since the
subsidies were added, but have stopped short of supporting it.
An amendment by Sen. Jeff Bingaman (D-N.M.) seeks to enact the recommendations
of the National Commission on Energy Policy, a bipartisan panel of experts from
business, government, environmental groups and academia that recommended a less
restrictive cap on greenhouse gas emissions than the one proposed in the McCain-Lieberman
"Businesses don't like taxes, and they don't like uncertainty. Right now,
they face a future where they will be hit with some kind of regulation on carbon,
and a growing number of them are saying, if we take some actions now perhaps
we can avoid stronger actions later," said Sen. Thomas R. Carper (D-Del.)
who has proposed legislation to reduce carbon dioxide along with traditional
"There is more support for doing something than there was a year ago,"
Carper said. "Will there be enough to pass one of them? Anybody's guess
The Bush administration, which has pursued an energy policy that heavily promotes
fossil fuels, has shown few signs of altering its position on climate change,
"Our position is very straightforward: We need to take all aggressive
actions within our capabilities, as long as they further our economic growth,"
said Jim Connaughton, Bush's chief environmental advisor.
Most oil and gas companies, among the president's biggest political benefactors,
remain firmly opposed to toughening the administration's existing policies,
which promote only voluntary reductions of greenhouse gases.
The American Petroleum Institute has been lobbying against the recommendations
of the National Commission on Energy Policy, which also suggested a moderated
"cap and trade" system in which companies that reduced more than their
share of greenhouse gases would obtain credits they could sell to others.
A similar, less restricted market is already underway in Europe, where a ton
of carbon credits was recently valued at $25.
There is also far less momentum for global warming regulations in the House
than in the Senate, backers acknowledge, making passage of any legislation unlikely.
"We're not there yet in the House, quite frankly. These businesses are
way ahead of us," said Rep. Sherwood L. Boehlert (R-N.Y.), who supports
a federal program to reduce greenhouse gases. The Bush administration stance
"happens to be wrong," he added, but he expressed optimism that it
could change as dissenting businesses become more vocal.
Advisor Connaughton said that the Bush administration opposed hard limits on
greenhouse gas emissions because it believed that they would drive up energy
prices, forcing manufacturers out of the country and costing hundreds of thousands
of Americans their jobs.
He noted that more than 100 companies had pledged to reduce their greenhouse
gases under the administration's voluntary Climate Leaders program, including
IBM Corp., General Motors Corp. and Johnson & Johnson.
To more and more companies, however, the status quo is not enough.
"American industry leaders are not calling for us to adopt Kyoto, but
they are growing increasingly impatient with the voluntary approach," said
William K. Reilly, who served as head of the Environmental Protection Agency
under President George H.W. Bush and is co-chairman of the National Commission
on Energy Policy.
At the heart of the increase in corporate advocacy on global warming is a belief
that the U.S. is missing a golden opportunity to cash in on the burgeoning worldwide
response to the threat.
Some companies are concerned that the Bush administration's voluntary programs
are too weak to encourage expanded use of cleaner technologies such as solar,
wind and even nuclear power, compared with the market-based regulations now
required nearly everywhere else in the developed world. Japan now leads the
world in the development of solar power cells, and Europe is the top producer
of wind-power machinery.
Some companies are also concerned that by failing to assert leadership on global
warming, the U.S. is allowing the European Union -- and a number of states around
the country -- to dictate how industries are expected to conduct themselves
around the world.
California has already passed a law to reduce car and truck emissions of greenhouse
gases, and a group of Northeastern states has begun creating its own carbon
trading market to cut smokestack exhaust.
The European Union has passed rules to produce 22% of its electricity from
renewable energy sources by 2010. Similar laws have been approved by 18 American
states, including California.
Other companies are concerned that global warming could affect long-term supplies
of natural resources they depend on.
"We think the science is pretty compelling, and it is appropriate to take
action now" to reduce global warming, said Helen Howes, vice president
for environment, health and safety at Exelon Corp., one of the nation's largest
utilities, which participated in the National Commission on Energy Policy. "You
have seen thawing in the Arctic, issues of potential rising water levels. For
us, because we have a lot of nuclear plants that use a lot of cooling water,
we are worried that water supplies may not be as reliable in the future."
Though some corporations are willingly stepping forward with proposals to tackle
global warming, others are being dragged into the debate by socially conscious
Evangelical and environmental investor groups, as well as state pension fund
officials who together control more than $3 trillion in assets, are pushing
resolutions at shareholder meetings that seek to compel companies to disclose
their financial exposure to global warming regulations.
The resolutions almost never win majority support. But in response to the pressure,
many companies are choosing to develop global warming policies to head off continuing
Some are even putting pressure on their corporate peers. JPMorgan Chase recently
announced that it would ask clients that are large emitters of greenhouse gases
to develop reduction plans, following similar commitments by Citigroup Inc.
and Bank of America Corp. .
"Two years ago, the concept of climate risk was something alien to investors.
That's certainly not the case today," said Mindy S. Lubber, the president
of Ceres, an organization that compels companies to embrace environmental responsibility.
"Investors are raising these issues because they feel that they are affecting
the value of companies, and they are raising the issues en masse. It is a good
thing because it is promoting a dialogue and discussion."
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