Corporations Make Case for Mandatory Carbon Caps

Although the United States has not signed on to the Kyoto Protocol, many U.S. corporations are realizing that taking action to reduce greenhouse gas emissions makes good business sense. Saving on energy costs, improving their public image, and addressing investor concerns about global warming all provide incentives for companies to voluntarily cut their carbon emissions, according to a May 30 article in the New York Times.

But some corporations wish to go even further. At an April 4 Senate hearing, Wal-Mart, General Electric, Shell Oil, and Duke Energy were among several major retailers and energy companies urging the U.S. Congress to impose mandatory carbon caps on their businesses. The hearing was organized by New Mexico senators Pete Domenici (R) and Jeff Bingaman (D), who have sought to create bi-partisan support for a carbon cap-and-trade program similar to those being developed under the Kyoto treaty, in California, and in the U.S. northeast.

A carbon cap sets a limit on the total amount of carbon emissions an individual company may produce; if the company manages to reduce its emissions below the permitted limit, it may sell its extra carbon “credits” to other companies that did not reduce emissions to the maximum allowed level.

Rising interest in carbon-limiting legislation at the international and state levels has convinced some corporate leaders that their businesses will benefit from having a comprehensive national program in place sooner rather than later. “Now is the time for a healthy debate at the federal level on climate change,” declared Jeff Sterba, chairman and president of energy holding company PNM Resources, at the hearing. Ruth Shaw, president of Duke’s nuclear subsidiary, agreed that, “Customers and shareholders need greater certainty.” In order to invest wisely, she said, companies want to know what future restrictions will be in place.

Though several powerful companies are in favor of mandatory carbon caps, there is still a lack of consensus within the trade associations of many key industries, who fear such regulations will hinder business activities. The Bush Administration, meanwhile, supports voluntary, rather than mandatory, programs for emissions reduction.

This story was produced by Eye on Earth, a joint project of the Worldwatch Institute and the blue moon fund. View the complete archive of Eye on Earth stories, or contact Staff Writer Alana Herro at aherro [AT] worldwatch [DOT] org with your questions, comments, and story ideas.