Cashing In On Climate Change

Why does big business support cap-and-trade?


Bloomberg's Eric Pooley has one of the oddest arguments I've read in favor of a cap on carbon emissions:

You can cast your lot with the deny-and-delay crowd or join the coal, oil and electric-power executives who are making a place for themselves in the new world. “We want carbon legislation,” a coal executive named Fred Palmer said last month, though he opposes the bill now before Congress.

...Peabody Energy has read the signs and made an intelligent business decision. Now it’s your turn.

It's probably true that supporting a cap on emissions is an "intelligent business decision" for Peabody. But being good for energy executives has nothing to do with being good for the country.

Pooley is implying that business support for climate change legislation shows that these policies would be good for economic growth, and so holding them back would be counterproductive to moving past the recession. "So what's it going to be? The past or the future?", he says. But there are two far more likely reasons a company like Peabody would support these policies, reasons that have nothing to do with what's good for the country or world.

First, it's a good PR move. Energy corporations don't want to be seen as evil polluters who hate cute little polar bears and penguins. In terms of reputation, they have far more to gain from supporting legislation than opposing--especially because they're probably guessing, like most of us, that we will get some kind of carbon cap.

Second, they at least one big self-interested economic reason--the cap would hurt upstart competitiors. Big corporations can afford the costs of capping emissions much better than small companies trying to expand or get off the ground. Tim Carney has been an invaluable resource cataloguing how big business love restrictions on carbon emissions and other environmental regulations for that reason. Ken Lay was a supporter of cap-and-trade and Enron actively lobbied for it.  Surely Pooley would not have written at that time--"Be like Enron! Support cap-and-trade."

There might be many good reasons to support climate change regulation, but this is not one of them.