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Green Bootleggers

Posted By Russ Roberts On January 29, 2007 @ 8:00 am In Politics | Comments Disabled

Just a few weeks after Bruce Yandle’s podcast on bootleggers and Baptists [1] comes this story in the WSJ [2] (HT: Matt Carson) about how corporations are trying to look like Baptists to hide their bootlegging ways:

There was a time when the
financial press understood that companies exist to make money. And it
happens that the cap-and-trade climate program these 10 jolly green
giants are now calling for is a regulatory device designed to
financially reward companies that reduce CO2 emissions, and punish
those that don’t.

Four of the affiliates–Duke,
PG&E, FPL and PNM Resources–are utilities that have made big bets
on wind, hydroelectric and nuclear power. So a Kyoto program would
reward them for simply enacting their business plan, and simultaneously
sock it to their competitors. Duke also owns Cinergy, which relies
heavily on dirty, CO2-emitting coal plants. But Cinergy will soon have
to replace those plants with cleaner equipment. Under a Kyoto, it’ll
get paid for its trouble.

DuPont has been plunging into
biofuels, the use of which would soar under a cap. Somebody has to
cobble together all these complex trading deals, so say hello to Lehman
Brothers. Caterpillar has invested heavily in new engines that generate
"clean energy." British Petroleum is mostly doing public penance for
its dirty oil habit, but also gets a plug for its own biofuels venture.

Finally, there’s General Electric,
whose CEO Jeffrey Immelt these days spends as much time in Washington
as Connecticut. GE makes all the solar equipment and wind turbines (at
$2 million a pop) that utilities would have to buy under a climate
regime. GE’s revenue from environmental products long ago passed the
$10 billion mark, and it doesn’t take much "ecomagination" to see why
Mr. Immelt is leading the pack of climate profiteers.

CEOs are quick learners, and even
those who would get smacked by a carbon cap are now devising ways to
make warming work to their political advantage. The "most creative"
prize goes to steel giant Nucor. Steven Rowlan, the company’s
environmental director, doesn’t want carbon caps in the U.S.–oh, no.
The smarter answer, he explains, would be for the U.S. to impose trade
restrictions on foreign firms that aren’t environmentally clean. Global
warming as foil for trade protectionism: Chuck Schumer’s dream.

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[1] Bruce Yandle’s podcast on bootleggers and Baptists: http://www.econtalk.org/archives/2007/01/bruce_yandle_on.html

[2] this story in the WSJ: http://www.opinionjournal.com/columnists/kstrasselpw/?id=110009578

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