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US Climate Legislation

Last week US politicians and regulators made their latest move on the global climate change chess board. Senators Kerry (Democrat) and Lieberman (independent) (sans Republican co-author Senator Graham—though not without his support. Graham has stated that he will place the 60th vote necessary to pass the legislation if Kerry and Lieberman can find the additional 57 votes) released a draft of the newest Senate climate legislation. Under the guise of the American Power Act, the 987 page bill sets forth a plan to rein in US greenhouse gas emissions. Not to be out done, US EPA Administrator Lisa Jackson’s agency also released their latest step towards greenhouse gas regulation under the Clean Air Act with the GHG Tailoring Rule. Coincidence? Not so much. The nearly simultaneous announcements are an indication of just how ambitious the current administration is about passing climate legislation—though that is not to say it is more important than say, immigration issues or financial reform.


Reactions to the American Power Act have been…mixed. Republicans tend to say it goes too far and will hinder our economic recovery, while environmentalists cry that it is not enough.  The bill is a mixed bag to be sure. It provides support for disparate technologies like renewable and nuclear power; it introduces a price on carbon via market mechanisms yet places both a ceiling and floor on the price—essentially making it a variable tax; the bill attempts to reduce market manipulation, but allows “market makers” to participate in the auction and primary cash markets. But to give the Senators credit, the bill represents what might be the US’s best shot at passing climate legislation in 2010—with all of the horse trading and pork required.


In the other corner, weighing in at a mere 515 pages, is the US EPA’s GHG Tailoring Rule. Born of the April 2nd, 2007, Supreme Court ruling (Massachusetts vs. EPA, 549 US 497 [2007]), raised as a neglected child during the W. Bush administration, and currently enjoying a new found love from its adopted Obama family, the regulation is less about regulating and more about intimidating. The current powers that be have repeatedly come out and said that they would prefer not to regulate greenhouse gas emissions under the Clean Air Act. Instead, they (along with many environmentalists and businesses) say they prefer a congressionally led effort.


So, if everybody (that is everybody who accepts we will have climate change legislation passed in the US) prefers a bill where they can have input via congress, why do not Senators Kerry and Lieberman have greater support? What do you think?


As I alluded to in the previous paragraph, not everybody thinks we will have greenhouse gas regulation here in the US—I, however, believe we will. As an SAP employee, I remain neutral on what I want to have happen given that many of our customers will face changing business environments—some advantageous, some burdensome. That said, putting on the hat of both environmentalist and economist, I think we ought to push to have some type of legislation put in place. Climate change is perhaps the greatest externality we will face as a species (as an aside and for the record: I hate hyperbole and never use it) and it will damage not only the environment but also the viability of many economies and businesses. Some examples to illustrate the point: insurance companies are beginning to factor climate change into their customers’ premiums and last year EFH had their credit rating downgraded in part due to their carbon emissions.


Warning: Now comes the shameless product plug that no company sponsored blog should go without.


At SAP, we see greenhouse gas management as an inevitable business requirement, whether it is driven by government regulation or consumer demand, and would like to think we can help. We are developing and delivering software solutions to measure, mitigate, manage, and report greenhouse gas emissions. We provide tools within the financial, regulatory, and consumer-driven spaces to help our customers credibly report their carbon liabilities and profitably reduce their emissions—be it through abatement projects or sophisticated financial planning. The point here is that we are doing something—something to make our customers businesses run more efficiently and profitably and something to do our part to save the planet.

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      Author's profile photo Marilyn Pratt
      Marilyn Pratt
      as well as the stewardship of businesses in providing leadership in anticipating regulatory requirements: ”A company that is sustainably profitable is not robbing the future to survive in the present”