Cap & trade: as fury begins, truth is elusive

For those not watching things in Congress, MBT blogger Roberto Michel is watching how the debate over the Waxman-Markey energy bill, centered around cap & trade, is evolving. Citing a Wall Street Journal blog from May 2009, he says there is plenty of partisan posturing around the bill. "This legislation matters to manufacturers, especially those in energy-intensive sectors who might exceed allowances if they use equipment such as coal-fired furnaces or boilers for their core processes. I’ve said here before that there would be a big political hubbub over this legislation, but something is likely to pass, given the Democrats’ advantage in Congress, and the overall political will for serious change on energy policy."

The political posturing around cap & trade isn’t surprising, says Michel. What’s more surprising is just how hard it is to sort through the conflicting study results. A Heritage Foundation study cited by some Republican critics of cap & trade says Waxman-Markey would drive jobs from the U.S. economy to the tune of 844,000 per year. However, a study from The Pew Center on Climate Research says energy-intensive manufacturing sectors would face only modest competitive impacts under a cap-and-trade program. The EPA also has its analysis.

"I would tend toward the Pew Center’s findings as more objective, but then again, the truth probably lies somewhere in the middle," says Michel. "Keep in mind these studies aren’t always based on the same set of assumptions. There is also much political obfuscation going on with study numbers, such as the inaccurate claim that cap & trade amounts to a $3,100 tax on families.

For managers in the trenches, Michel advises monitoring what actually unfolds, and preparing by enhancing your company’s ability to track and manage its carbon footprint.

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