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‘Cap-and-Trade’ or ‘Pollution Reduction and Investment’?

Although healthcare reform remains in the spotlight, cap-and-trade legislation is back on the main stage too.  Last week, Senators Kerry (D-MA) and Boxer (D-CA) introduced the “Clean Energy Jobs and American Power Act.”  Instead of making references to cap-and-trade, the bill refers to greenhouse gas trading provisions as “pollution reduction and investment” programs.  Republicans call it a “national energy tax.”  You say po-TAY-toh, I say po-TAH-toh.  Who says words don’t matter?

The main objective of the bill is to reduce the country’s greenhouse gas emissions by 20 percent from 2005 levels by 2020.  The details still need to be worked out, with a number of senators on both sides of the aisle still on the fence, and some environmental groups like Greenpeace not completely happy with the draft proposal (see New York Times article for more details).

On the same day the Kerry-Boxer bill was introduced, the EPA issued a new rule requiring large industrial facilities (including power plants, refineries, and factories) that emit at least 25,000 tons of GHGs a year to obtain construction and operating permits covering these emissions.  U.S. EPA Administrator Lisa P. Jackson said in the press release, “By using the power and authority of the Clean Air Act, we can begin reducing emissions from the nation’s largest greenhouse gas emitting facilities without placing an undue burden on the businesses that make up the vast majority of our economy.”

Is it a coincidence that both of these announcements were made on the same day?  Maybe, maybe not.  But it nonetheless symbolizes what I’ve written about in the past: companies are getting pressure from the government to manage their carbon emissions from two fronts simultaneously, the regulatory front (the EPA) and the legislative front (Congress).  Choose your poison…or medicine, depending on where you stand on this issue.

And that’s exactly what some companies are doing.  For example, Apple, Nike, PG&E, and Exelon Corp (among others) have recently quit the U.S. Chamber of Commerce due to the group’s strong opposition to cap-and-trade.  Catherine Novelli, Apple’s vice president of worldwide government affairs, reportedly sent a letter to Thomas Donohue, president and CEO of the chamber, stating, “We would prefer that the Chamber take a more progressive stance on this critical issue.”

This chess game will continue in the weeks and months ahead.

The clear winners at the moment are software vendors and consultants.  Back in April, I wrote how ‘carbon information management’ is the latest gold mine opportunity for IT companies and I highlighted a couple of startups in this area, Carbonetworks and Planet Metrics.  There are now more than twenty best-of-breed technology companies pursuing this opportunity (some have been around for many years), including Eviance, Carbon Hub, Verteego, and Greenstone Carbon Management.  The large enterprise vendors are also very active in this area.  Earlier this year, for example, SAP acquired Clear Standards and Microsoft launched its Environmental Sustainability Dashboard for Microsoft Dynamics AX.  And just a few weeks ago, SAP, Microsoft, and Accenture announced that they will co-develop a new Carbon Disclosure Project (CDP) carbon reporting, benchmarking, and analytics system.

‘Green’ is the next Sarbanes Oxley for these guys.

Cap-and trade, pollution reduction and investment, a national tax, a business opportunity—what you call what’s happening in Washington doesn’t matter as much as what you do about it.  Logistics and supply chain professionals need to stay informed of the business risks and opportunities associated with ‘green’ regulations and legislation, both here in the United States and around the world, and take appropriate action.  Software vendors and consultants are betting on it.

Read the Article at Logistics Viewpoints