Sunday, January 28, 2007

Why is big business suddenly hopping aboard the global warming bandwagon?

It seems like everybody (but me) is suddenly clamoring to hop aboard the global warming bandwagon. What's up? Has the science suddenly become crystal clear and truly indisputable? (Nope.) Have the opponents all suddenly had a change of heart about the environment and future generations? (Nope.) Then what could it be? The answer can be found the same way you answer most mysteries in Washington, D.C.: follow the money. Yep, businesses are realizing that there is big money, boatloads of it, to be made from claiming that they are working to counter and reverse the effects of greenhouse gases, the greenhouse effect, global warming, and climate change.

A small story that got a lot of notice was a brief comment by President Bush in his latest State of the Union Address:

America is on the verge of technological breakthroughs that will enable us to live our lives less dependent on oil. And these technologies will help us be better stewards of the environment, and they will help us to confront the serious challenge of global climate change. (Applause.)
[My emphasis]

That's it. There was no elaboration, but people interpret it as at least an admission by the administration that they now fully acknowledge greenhouse gases, global warming, and climate change, and the role of fossil fuels in the warming process. I would point out that the emphasis of that paragraph was oil dependence, and that the global warming benefits of a reduction of the use of crude oil are essentially a freebie. In the rules of politics, if you can get some political mileage from a freebie, you should always go for it. If the paragraph had been worded in the opposite order, then it would have been a strong signal of a commmitment to countering global warming, but it wasn't. For example, it would have been much more meaningful as a commitment to countering global warming if he had said something like "In order to counter the environmental damage from global warming, we need to dramatically reduce our consumption of oil and other fossil fuels", but he didn't say anything like that.

That was on the evening of Tuesday, January 23, 2007. Meanwhile, back on the ranch, earlier on Tuesday there was an article by Jeffrey Ball in the Wall Streeet Journal entitled "In climate controversy, industry cedes ground" that tells us that "The global-warming debate is shifting from science to economics" and that "some of the country's biggest industrial companies are acknowledging that fossil fuels are a major culprit whose emissions should be cut significantly over time. A growing number of these companies are pushing for a mandatory emissions limit, or 'cap.'" Wow, that's a major turnaround.

But then, just when we are tempted to praise these companies for their amazing foresight and environmental stewardship, the article bursts that bubble by telling us that:

Some see a lucrative new market in clean-energy technologies. Many figure a regulation is politically inevitable and they want to be in the room when it's negotiated, to minimize the burden that falls on them.
[My emphasis]

There you have it, their naked motive: money. I love that phrase: "lucrative new market." How to make more of it and how to keep more of it. Sigh.

The Journal tells us that:

Monday, 10 companies, including industrial giants that make everything from bulldozers to chemicals to electricity, joined environmental groups in calling for a federal law to "slow, stop and reverse the growth" of global-warming emissions "over the shortest period of time reasonably achievable."

It is fairly clear that rather than trying to facilitate environmental efforts, some of these industries are simply trying to negotiate a better deal:

In the center of the regulatory cross hairs are utilities. They're the world's biggest emitters of carbon dioxide, the global-warming gas that's produced whenever fossil fuels are burned. Written one way, a cap would help utilities in the Southeast or the Midwest, which burn lots of coal, a particularly carbon-intensive fuel. Written another way, a rule would help utilities on the West Coast, the Northeast and the Gulf Coast. They use mainly natural gas, which produces lower CO2 emissions than coal, and nuclear energy, which produces essentially no CO2.

My own reading on this move is that big business sees huge opportunities for revenue enhancement by selling newer and more expensive technologies, as well as huge opportunities for massive government subsidies to pay for the technology upgrades. It's not at all clear to me that the environment will be that better off with all of this expense compared with the natural evolution of unsubsidized technological and economic forces, but it is clear that a lot of big businesses and corporate executives will be earning huge piles of "green" by going green. And a lot of that money will simply be a transfer from the pockets of average workers who are already struggling from paycheck to paycheck to already overpaid executives and nimble investors. Sure, I'm sure there will also be some number of new jobs as well, but the net economic impact on the average person will likely be negative.

The real bottom line is that although the administration and big businesses are now acknowleding global warming and climate change, that in no way validates the so-called science behind the push against carbon dioxide, nor does it mean that the environment will really be better off fifty years from now because of these efforts.

I do want to emphasize that I am all in favor of reducing our consumption of fossil fuels and imported oil, but I don't think you need to misguidely embrace so-called global warming and climate change to justify reductions in energy usage. Simple economic efficiency (over the long run) is sufficient. Alas, there are far too many people who believe that you have to beat people over the head and use naked force and the power of central government to effect any kind of change. I am deeply disheartened by the lack of honesty, integrity, and respect for others that so many of these people employ.

-- Jack Krupansky

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