On Friday, the U.S. House of Representatives narrowly passed the “American Clean Energy and Security Act of 2009” (aka Waxman-Markey) by a 219 to 212 vote (only 8 Republicans voted in support of the bill, while 44 Democrats voted against it). The bill now goes to the Senate where its fate is highly uncertain at the moment.
I’ve written extensively on this topic in the past…
- “Inconvenient Truths About ‘Green’ Supply Chain Management“
- “The Road to Cap-and-Trade“
- “More Green Supply Chain News (And Asteroids Too)“
- “Defining ‘Carbon Neutrality’“
…so I won’t repeat myself here. My main takeaway from the close vote, as well as the various commentaries in the media, is that plenty of people on both sides of the debate are not happy with the bill. Environmentalists believe the legislation has been watered down to win votes, while the business community views this bill as a huge tax on business and consumers.
What is the problem that we’re trying to solve? What are the possible solutions? Are the benefits worth the costs?
These are the fundamental questions that I ask myself, and I assume some of you are asking too. Is the main problem climate change or reducing dependency on foreign oil? Your reaction to Waxman-Markey depends, in part, on which “problem” resonates with you the most. And the best solutions for addressing climate change may not be the best solutions for reducing our dependency on foreign oil (e.g., cap-and-trade versus off-shore drilling and nuclear power). Finally, the costs associated with Waxman-Markey are arguably more tangible (even if the estimates vary greatly) than the benefits, which some environmentalists believe are not large enough (not to mention the mixed results of cap-and-trade programs in Europe).
And perhaps the biggest question of all: What about China and India?
The debate will continue, and only in hindsight will we know if whatever actions we take are worth the cost and effort.
My advice to supply chain and logistics professionals remains the same: stay informed of what’s happening in Washington; if your company doesn’t have a “sustainability” strategy, start developing one now; collaborate with your trading partners and industry peers, particularly on the standards front; and establish your carbon footprint baseline, even if it won’t be fully accurate or all-encompassing.
Adrian,
You are right to ask all those questions…
Keep Life simple, deal with the problem….
Assuming a need to deal with emissions,
electricity generation (coal, gas) and transport (mainly automobiles) alone account for nearly 80% of fuel combustion emissions
More:
No Trade Problems like the ones Obama mentions.
Unlike with Cap and Trade, that involves cement, steel and other industries having to face imports from unregulated countries, electricity and transport changes are not just more limited, but also largely local.
The focus on electricity and transport gives several advantages – apart from lowering CO2 emissions:
1. Local environmental benefit from less pollution of sulphur and all else that’s in the emissions, regardless of the less certain or immediate global benefit from CO2 reduction – and that is one reason why the focus on carbon trading is wrong, compared with the focus on reducing fuel combustion emissions.
2. Electricity supply alternatives which together with improved grid distribution gives better competition and keeps down electricity bills for consumers.
3. Transport alternatives (using electricity, hydrogen and other energy sources), which also reduces the dependency on oil imports.
Funding and Impact
Equity and long term loan finance can be used: Long term industrial loans from financial institutions, particularly if federal/state guaranteed, give low yearly interest repayments and lessen the effect on electricity bills or transport cost.
The impact on the businesses is further lessened by the stability and predictability surrounding the funding.
Since only electricity and transport are involved, other business continues as usual and consumers and society in general are spared expense and disruption.
This is even more obvious from energy efficiency regulation not being necessary either.
Compare with
today’s all-encompassing Cap and Trade (emission trading) suggestions, with unpredictability, expense, and needless disruption from normal business practice on one hand, or unnecessary profiteering from free allowance handouts with little actual emission reduction on the other hand – together with extensive efficiency regulation on what people can or can’t buy and use.
Understanding Cap and Trade, and why it is bad for America:
http://www.ceolas.net/#cce5x
Market Reduction of CO2: Cap and Trade – or Not?
Basic Idea — Offsets — Tree Planting — Manufacture Shift — Fair Trade — Surreal Market — Real Market — Allowances: Auctions + Hand-Outs — Allowance Trading — Companies: Business Stability + Cost —
In Conclusion
A New Electric America: http://ceolas.net/#cc10x onwards