Energy Companies "Crying Wolf" Over Costs Of Going Green? - Energy Source with Sharon Epperson

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Jun.02

9:37 AM ET

Monday, 2 Jun 2008

Energy Companies "Crying Wolf" Over Costs Of Going Green?

Posted By:Kenneth Stier

Topics:Congress | Alternative Energy | Energy | Economy (Global)

Sectors:Oil and Gas

Wind farm, Evia, Greece
Wind farm in Evia, Greece
Has anyone systematically studied how businesses have falsely cried wolf about the unbearable cost of just about every major environmental initiative to its own detriment?

It’s practically a hallowed tradition, going back decades and continues today. Not just in the environment; the introduction of seatbelts was put up as financially ruinous.

That surely seems absurd nowadays, but it’s that kind of reflex that has meaningfully contributed to the fix the U.S. auto industry finds itself in, hemorrhaging market share. In short, the industry’s lobbying against environment-friendly fuel efficiency improvements was simply too successful for its own good.

There is at least a PhD-in-waiting examining other such examples.

This comes to mind ahead of debate over landmark climate legislation that the Senate will take up this week. The sparks that fly will be fueled by dueling studies about the economic consequences of the cap-and-trade program envisioned by the Lieberman-Warner Climate Security Act of 2008.

The accumulating tower of studies has yielded a wide range of projected impacts from fairly mild to catastrophic. ‘Simply put, this bill puts our country’s economy at stake and may have little or no environmental benefit,” the National Petrochemical and Refiners Association, says in classic corporate Cassandra mode.

But not all studies are equal; the better ones make their key assumptions and other parameters transparent. There are at least six major economic models being employed and with costs being projected out decades ahead, even small tweaks can turn up very different projected futures.

A meta-analysis conducted by Environmental Defense of five peer-reviewed studies, including from the Energy Information Administration, found that the median projected impact of climate policy on the U.S. GDP is less than one half of one percent for 2010-2030, and under three-quarters of one percent through the mid-century.

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“This is not simply environmentalists saying one thing and industry saying another,” says Tony Kreindler, a spokesman for the Environmental Defense. “We have just taken what’s out there – this is what the professional economic modeling community is saying about this [issue], versus the black-box models that other people are trotting out to scare people away from doing anything about [the climate challenge.]”

These relatively modest impact projections may ultimately prove blitheful. Any plan to curb carbon emissions is going to be a work in progress, even after it gets under way in 2012, in the current bill. That’s why designing in flexibility is critical.

Increasingly the Lieberman-Warner bill provides for that, more so after Barbara Boxer’s recent amendments. Smart corporates are already in the trenches trying to incorporate even more flexibility they can live--and thrive--with. “Prompt action on climate change is essential to protect America’s economy, security, qualify and natural environment,” argued a letter issued Friday advocating Congress pass the Lieberman-Warner bill signed by nine major corporations.

It will be an encouraging day when the rest of American business joins in to try to find the silver lining in tomorrow’s carbon-constrained world, rather than crying the sky’s falling, once again.

Questions? Comments? energysource@cnbc.com

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