Seeing Red About Going Green

The climate change debate has become a “winner take all” battle royal.

This month, environmentalists and politicians (is that redundant?) from throughout the world converge in the city of Copenhagen to discuss, among other things, the future of the planet. Although the main topic of the conference will ostensibly be what to do about climate change, it could just as easily be argued that a tougher task will be confronting another kind of change — as in, changing people's minds.

They say two things you should never talk about in polite conversation are politics and religion, which might explain why global warming discussions often get so (excuse the pun) heated, since for many on both sides of the issue, climate change is debated with zealous fervor. Recently we learned about the behind-the-scenes efforts of some “global warming is real” zealots to squelch any data indicating flaws in their research. Meanwhile, the extremists on the “global warming is false” side are just as passionate in derailing any efforts aimed at reducing the amount of greenhouse gas (GHG) emissions. If nothing else, these debates illustrate that for many, climate change is a “winner take all” event.

One thing everybody wants to know, no matter what side of the debate they're on, is exactly how much it would cost the U.S. economy if we went ahead and adopted the proposed regulations that would restrict the amount of GHGs companies could emit. One answer, based on a study conducted by the Economic Policy Institute (EPI): 4 million jobs.

The non-partisan Alliance for American Manufacturing (AAM) has taken a look at the EPI study and concluded that legislation pending in the U.S. Senate (the Boxer-Kerry bill) “should include a steady and sufficient supply of emission allowances for energy-intensive, trade-sensitive industries to rebate the cost of compliance, as well as a border adjustment fee on the carbon content of goods from countries that fail to regulate GHGs emitted in the production of goods.”

However, the AAM adds, there's a very real risk that climate legislation could seriously damage any chances for a near-term economic recovery, particularly if U.S. manufacturers decide it's far easier and cheaper to step up offshoring efforts than attempt to meet the GHG regulations.

Robert Scott, author of the EPI study, predicts two things could happen if the climate change legislation ignores the effects such policies could have on trade:

  1. “Production of energy-intensive manufactured goods, especially price-sensitive manufactured products that already face high levels of import competition, could rapidly be outsourced to countries like China and India that do not restrict GHG emissions. This could lead to job losses in manufacturing and related industries and to a growing trade deficit.”

  2. “Increased production of energy-intensive goods, such as iron and steel, pulp and paper, basic chemicals and glass products, in developing countries would be likely to increase net global GHG emissions,” a process known as carbon leakage.

“The stakes are simply too great, and the potential damage to the economy and environment too large, if we fail to adequately address the trade-related implications of climate change,” adds Scott Paul, executive director of the AAM.

On the other hand, Stephen Stokes and Hiranya Fernando, two analysts with AMR Research, believe the stakes are too great to adopt a “wait and see” attitude. “Get over it!” they urge. “No matter what happens at Copenhagen, much of the uncertainty surrounding the integration of carbon as a business variable has been removed or reduced.”

As Stokes and Fernando see it, it's time that manufacturers start embracing the transformation and maximizing the opportunities for their organizations. Funding and tax exemptions for energy efficiency and emission reduction are abundant in both the American Recovery and Reinvestment Act and the Troubled Asset Relief Program. “Wasting the crisis and the clean transformation,” they say, “would be unfortunate indeed.”

In any event, as we count down the last days of 2009, a year many of us would just as soon forget, it's a good time to count our many blessings and celebrate the lives of our loved ones. Here's to a little “green and red” holiday cheer for all of us — we certainly deserve it!

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