Corporate concern on climate rises

More companies favor action on emissions, both for environmental and pragmatic reasons.

from the May 16, 2007 edition

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Will China and India be part of the picture? Eventually, everyone agrees that any viable effort to curb global emissions will have to include action in India and China. But where some say US action, on its own, is a vital first step, others say that could simply cause jobs and emissions to move overseas. One idea: a kind of tax on goods imported from countries with poor emissions controls.

How can market forces be brought to bear? The goal of many policies is to impose a "price signal" that encourages consumers and businesses to control greenhouse gases in the most efficient ways possible.

A cap-and-trade system may be easier to impose, politically, than a new tax on carbon. But since the price of fossil fuels can fluctuate widely, some experts say that one form of carbon tax could serve a crucial purpose: setting a price floor, so that alternative energy can be nurtured by a predictable price environment.

"What do we do with a precipitous fall in gasoline prices?" asks David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.

"We've been there," he says, referring to aftermath of the 1970s oil-price shock. "Prices fell dramatically, and the [alternative energy] game was over."

Now, with oil prices relatively high, it might be a politically palatable moment to create a new price floor – using a tax that's imposed only if the market price for oil falls to the ordained floor.

On these and other issues, the lobbying promises to move into a higher gear as lawmakers press forward. This year, Mr. Semans says, Congress has already held 48 hearings on climate change.

Some analysts say a major bill, such as one imposing a cap-and-trade system, could pass Congress before the next presidential election. Others say that controversial issues involved could require several years and active involvement by the next US president.

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