By Timothy P. Carney
Examiner Columnist 3/12/09
Big business is increasingly embracing green legislation — and taking advantage of opportunities for big profits for companies with a strong lobbying presence in Washington and in state capitals.
The motivations vary for companies that are going green, said Ben Lieberman, environmental policy expert at the conservative Heritage Foundation. “For some it is just public relations, [but] it’s pretty clear that the companies and legislators focus on whatever benefits them,” Lieberman said.
General Electric may be the most prolific at seeking ways to profit from environmental laws. When GE Chief Executive Officer Jeff Immelt began his “Eco-magination” initiative in 2005, he declared, “It’s no longer a zero-sum game — things that are good for the environment are also good for business.” But he added that this would only work if business was about to “work in concert with government.”
The company has founded a joint venture that invests in greenhouse gas credits and plans to manage the trade in these credits. President Barack Obama’s plan to curb greenhouse emissions would instantly create demand for the credits and thus business for GE. Already, GE benefits from federal subsidies for windmills, which are touted as a clean energy.
On the score of windmills, the champion may be Texas oilman T. Boone Pickens, who owns the largest wind farm in America. He has become a vocal advocate of more wind subsidies, citing environmental benefits as a justification for his “Pickens Plan.”
Turning environmental policy into profit sometimes pits partners against one another. Fuel economy standards may make life difficult for automakers, but their suppliers can find profit in stricter rules. For instance, aluminum giant Alcoa, which has lobbied Congress for tighter Corporate Average Fuel Economy standards, benefits because these standards force carmakers to turn toward aluminum frames, which are lighter but more expensive than steel.
Goldman Sachs’ bets that green investments are profitable are also based on expected or existing environmental regulations. The company in 2007 helped pass federal mandates for cellulosic ethanol — fuel made from grass, wood chips or similar materials — after investing in a Canadian cellulosic ethanol firm, which set up its U.S. headquarters in the D.C. area.
The Biotechnology Industry Organization, which includes many agricultural companies as members, is also a leading lobbyist for additional ethanol subsidies. Corn ethanol today has many environmentalist critics who point to the land, soil, fertilizer and water costs of growing corn as fuel, but it was long touted as the green replacement for gasoline.
Even the coal industry is seeing profits from the green surge. Obama supports federal subsidies for experiments on making coal burn cleaner, but the Sierra Club and other environmental groups argue that “there’s no such thing as ‘clean coal.’ ”
Nonetheless, last month’s stimulus bill included $1 billion for a clean coal plant, money that is expected to benefit an Illinois-based partnership of eight prominent coal companies.
Will these green bets pay off? In the case of climate change legislation, Heritage’s Lieberman doesn’t think so. “I don’t know whether these guys are fully taking into account the fact that cap-and-trade [climate regulations] will really hurt the economy.”
From http://www.dcexaminer.com/
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