A shorter version of this post was published as an op-ed in the Washington Examiner last week.
The Business Roundtable (BRT), an association of CEOs of large U.S.-based corporations, released a new policy document recently, “Addressing Climate Change.” The Wall Street Journal’s Greg Ip considers this “a sea change in corporate attitudes on climate action,” arguing that the statement “shows how business is shifting from a source of resistance to a force for action on climate.”
Well, maybe. The statement really seems crafted to cover the collective backsides of BRT members and the companies they run over a wide range of political scenarios while exposing them to the least possible financial risk. That’s perfectly fine for them, but not exactly a major change in corporate attitudes. It is also unlikely to garner them the environmental halo they clearly covet—ExxonMobil has been moving closer to the supposedly enlightened position on climate change for about 15 years, and still remains the top corporate target of attacks and meritless, grandstanding lawsuits.
In coming out in favor of increased regulation, the BRT is doing what many big companies, industries, and trade associations have done over the years, which is to appear to support altruistic and disinterested goals while using the public policy process as a shield for their own interests and a sword against their potential competitors. They clearly acknowledge that artificially raising the price of energy will be an expensive and painful endeavor, entailing a “significant evolution” in the way “consumers operate.” For consumers used to running their household with affordable energy, the change will no doubt be significant indeed.
So, while they acknowledge that climate change “poses significant environmental, economic, public health, and security threats,” they want to make sure that new policy is “maximizing compliance flexibility and minimizing costs” for themselves. They want policy makers to “encourage and incentivize” energy efficiency, which means more subsidies and tax breaks. They also want the government to “support both public and private investment” in low-carbon technologies, which likely means giving more taxpayer handouts and subsidies to firms that are adept at playing the game of lobbying and courting executive branch officials. No doubt this will enable 100 new Solyndras to bloom.
The BRT statement also emphasizes the theme of “regulatory certainty” that corporate lobbying often does. Not having regulatory requirements change for light and transient causes is a good thing, of course, but in the world of special interest lobbying, wanting “certainty” often translates into locking in a good deal for oneself in a way that establishes a moat against one’s competitors. The new statement says that the current mix of federal and state climate policies “has negatively affected the long-term investment strategies of many U.S. companies.” Rather than calling for the repeal of those policies and a truly neutral market, however, they want the law rewritten in a way that better benefits them.
The irony of unveiling a climate policy meant to make companies look progressive and environmentally sensitive is that most environmental activists are unlikely to approve of BRT’s chosen path. That “existing patchwork of federal and state regulations” that they want swept away is the result of decades of work by those most worried about the effects of climate change—and most wary of corporate influence over public policy. I doubt they will acquiesce to the 200 or so largest U.S. companies rewriting the rulebook. BRT members also want their own disclosures about greenhouse gas emissions and related issues to be voluntary. Needless to say, climate activists are not in favor of compliance behaviors being anything but mandatory.
Perhaps most tellingly, the BRT statement envisions a future in which an expanding universe of law and regulation is aimed at paying, subsidizing, and protecting BRT member companies while they discharge their virtuous climate responsibilities. They claim, for example, that they want to make the current system of regulation simpler, but also acknowledge that hiking energy prices in the U.S. will put domestic manufacturing at risk, so they endorse a system of “rebates, allowances and/or border adjustments.” Much like the current administration’s policy of starting a trade war with China and then sending out billions of dollars in payments to U.S. farmers hurt by retaliatory tariffs, this system would kneecap American factories while attempting to simultaneously bail them out. That doesn’t sound very streamlined and competitive.
This ostensibly simple and equitable system would also require “targeted incentives” to “help to ease the transition.” That’s lobbyist talk for pure cronyism, in which every company (that can afford it) would come to Washington to stick its snout into the climate appropriations and tax loophole trough. Ditto with those “non-duplicative, tailored policies” that we’re told “may be more effective or administratively feasible.” Yes, it would no doubt be administratively feasible to allow a small handful of politically connected companies to opt out of the job-killing climate regulations that everyone else has to follow. If you want to know how that will work, just look at the steel and aluminum tariff exclusions that the Department of Commerce has been mysteriously granting and withholding over the last few years.
Finally, building a new clean energy infrastructure to replace fossil fuels—even assuming that is a good use of resources—will require both massive new investment and the removal of many of the legal and procedural hurdles that currently make major infrastructure projects so costly and slow. One of the biggest victories of the environmental movement since the first Earth Day in 1970 has been the proliferation and legal entrenchment of NIMBYism, the “not in my backyard” sentiment that has served as a graveyard for countless useful and well-planned construction projects across the country. To suggest that climate activists—who currently lay down in traffic to protest new road construction—will nod approvingly at the effort to take away their monkey wrenches is delusional.
The Business Roundtable’s climate policy will no doubt be good for the CEOs who signed it, but it’s not clear that American workers and taxpayers, much less the environmental activists it’s attempting to placate, will want anything to do with it.