WASHINGTON — U.S. businesses are betting that the federal government soon will put mandatory limits on greenhouse gas emissions, and they're making sure they have a say in shaping a vast new regulatory system.
Some of the country's biggest businesses support a cap and trade system, the approach that Congress is considering. Under cap and trade, the government gives or sells companies allowances to emit certain amounts of greenhouse gases, and companies may sell unused allowances to other companies.
While it may sound simple, the details would be complex and the plan would affect the entire economy and require monitoring for decades.
The U.S. Climate Action Partnership — which includes U.S. automakers, other big manufacturers such as Alcoa and Caterpillar Inc. and energy companies such as FPL Group, Duke Energy and PG&E Corp. — supports a cap and trade system, but its members have questions about key elements, such as how emissions could be offset and how much they'd have to pay for the allowances.
"In the last year there's been a sea change" in business thinking on a mandatory federal emissions policy, said Truman Semans, the director for marketing and business strategy for a group of large U.S. companies at the Pew Center on Global Climate Change's Business Environmental Leadership Council.
The council comprises 44 companies with $2.8 trillion in market capitalization, a sizable chunk of the world economy. Most favor a mandatory market-based emissions policy, Semans said.
Semans argues that businesses naturally want to shape the system to suit their interests, but they also see opportunities as the world is forced to find ways to cut emissions of carbon, the main gas that's causing the Earth's average temperature to rise.
"Many businesses see a path to a thriving economy where most everyone is OK and we still have economic resources we need to deal with people affected as the economy transforms, because you can be sure of this, the economy is going to change," he said.
Semans said the "chances are not great" that Congress will pass a bill this year, but "there's a high chance that 95 percent of the solution will be on the table." That would lay a foundation for policy once a new Congress and administration take office next January.
President Bush opposes mandatory emission controls. Business, however, looks at the long term.
"Almost everyone in the business community recognizes there will be greenhouse gas regulations in this country sometime in the next five to 10 years," said Nikki Roy, the director of congressional affairs at the Pew Center on Global Climate Change, a member of the U.S. Climate Action Partnership.
Early this year, possibly by March, the Senate is expected to consider a bill by Sens. Joseph Lieberman, an independent Democrat from Connecticut, and John Warner, R-Va., that would create a cap and trade system with a mix of allowances, some given to businesses and others sold. Some of the money from the sales of emissions allowances would be used to develop green technologies and help those hard-hit by higher energy costs.
Supporters, including Sen. Barbara Boxer, D-Calif., the chairman of the Senate Environment and Public Works Committee, are working to get the 60 votes needed to close debate. Its 10 co-sponsors include Sen. Elizabeth Dole, R-N.C.
Other conservative Republican senators, including Alaska's Lisa Murkowski and Ted Stevens, co-sponsored another cap and trade bill that set an upper limit on the price of allowances.
A cap and trade plan could be a small part of the global changes in energy use that scientists say are needed to avert catastrophic climate problems in the decades ahead. Lieberman and Warner say their bill would cover 75 percent of U.S. greenhouse gas emissions, and would reduce them by 70 percent from 2005 levels by 2050. Rep. Rick Boucher, D-Va., said that a cap and trade bill he was working on in the House of Representatives would cut emissions 60 percent to 80 percent by 2050.
Scientists on the international Intergovernmental Panel on Climate Change have said that as much as an 85 percent global reduction from 2000 levels would be needed by mid-century to keep temperatures from rising more than 3.6 to 4.3 degrees Fahrenheit. They warn of threats to ecosystems and agriculture even if warming is below that level, and increasingly devastating consequences, such as mass plant and animal extinctions, if temperatures rise higher.
The U.S. Chamber of Commerce recognizes that something needs to be done, but it opposes the Lieberman-Warner bill and generally dislikes regulating emissions, said William L. Kovacs, its vice president for environment, technology and regulatory affairs.
Kovacs said that only a minority of businesses supported the bill. Many companies like cap and trade in concept but will oppose any plan that doesn't give away generous allowances, he said.
The Business Roundtable's members disagree about whether emissions controls should be mandatory, said its director of public policy, Marian Hopkins. Like the Chamber of Commerce, the group of high-level executives plans to raise concerns about the cost and the need for a global solution.
Andrew J. Hoffman of the Erb Institute for Global Sustainable Enterprise at the University of Michigan said he expected to see more businesses support a cap and trade policy, but he predicted that it won't achieve aggressive climate goals in the short run.
"In the long term, especially as businesses ramp up to respond to the price for carbon, there will be more rapid and drastic change," he said. The unanswered question, he added, "is whether the pace of change in policy and business will be rapid enough to avert the climatic shifts that scientists are looking at."
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U.S. Climate Action Partnership's recommendations.