Wednesday, December 2, 2009

Financial Times Reports That Some U.S. Industrial Firms Are Worried About Lack of Climate Law

As the U.S. government lurches (does anyone really know whether President Obama can deliver on his recent pledge to reduce greenhouse gas emissions?) towards the UN Climate Conference in Copenhagen next week, there are indications that at least some major U.S. industrial firms are very apprehensive about what sort of legal and regulatory environment they will face in the absence of federal legislation.

In effect, they are concerned that in the absence of federal legislation the legal and regulatory environment may be dictated by the U.S. Environmental Protection Agency or state legislation or perhaps both. Such a result would create enormous compliance issues, according to the firms.

For instance, the FT reported ("Industrial Groups Warn Over Climate Law," Dec. 1, 2009) that Peter Molinaro, Dow Chemical head of government affairs, said "an enormous administrative burden" would result in the absence of federal legislation. "Manufacturers are having enough trouble in [the U.S.] competing with foreign companies. We'd be adding administrative and cost burden where we shouldn't," he said.

The story also noted that a spokesman for the German firm Siemens said that in order to plan for the future, firms must know if there is a price for emitting carbon. "How do you have one price of carbon if you've got four or five different regimes," she asked according to the FT.

Before the holidays, we should know more about all of this. But in the meantime, the matter of how industrial firms can plan for future investment in the absence of any clear carbon price signals (at least in the U.S.) is daunting if not impossible.

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