Large pension funds and companies called Monday for Congress to create a cap-and-trade system for curbing emissions of carbon dioxide and other gases blamed for global warming, the latest among several business-oriented groups to call for a national climate policy.
The 65 signers of a letter to President Bush called for a 60 to 90 percent reduction of greenhouse gas emissions from 1990 levels by 2050, a goal that could require, among other changes, a major shift away from fossil fuels used to run power plants and automobiles. The letter promotes a market-based system that would give companies the incentive to curtail growth of these emissions.
The White House opposes mandatory, economy-wide carbon caps to deal with climate, instead citing its efforts to spend almost $3 billion a year on energy-technology research and development to slow climate change. Critics of strict limits on greenhouse gases, including the U.S. Chamber of Commerce, argue that any new laws on climate change should be crafted to avoid harming the economy.
The investors involved in Monday's announcement, who manage a total of $4 trillion, argued that a lack of action is worse for American business.
The investors' statement "says that climate action is good for business, and the current state of uncertainty is bad for business," said former Sen. Tim Wirth, a president of the United Nations Foundation, at a press conference announcing the effort, which was organized by Ceres, a Boston-based environmental investment group.
Largest public pension fund on board
Fred Buenrostro, chief executive of the California Public Employees' Retirement System, or CalPERS, the nation's largest public pension fund, said federal climate regulations would help "unleash American ingenuity and investment know-how."
The companies signing the also letter include the chief executives of utility companies Exelon Corp., Consolidated Edison Inc. and high tech firm Sun Microsystems Inc. Other signers, including Alcoa Inc. BP America and DuPont Co., had already joined in January with environmental groups to call for climate legislation.
Mark Goldfus, a senior vice president at Merrill Lynch & Co., said the investment bank sees big business in a potential global market for trading carbon emission credits. Merrill Lynch, for example, could act as a broker as companies all around the world would buy and sell the right to release carbon dioxide and other greenhouse gases into the atmosphere.
"We think this is a business in which we can do both well and good," he said.
Several lawmakers have introduced bills this year to tackle climate change.
Many lawmakers' bills would use a cap-and-trade system, which would put in place mandatory limits for greenhouse gas emissions, but would allow companies to trade emission credits to reduce the cost. Companies that can't meet the cap could purchase credits from those that exceed them.
Doubling of CO2 predicted
The Electric Power Research Institute forecasts that, with today's technology, global carbon dioxide emissions will more than double by 2050 to 80 billion metric tons a year. The U.S. already accounts for more than 7 billion tons a year. The group says it is possible to make significant reductions, in those emissions, but says it will take a mix of technologies — including nuclear power, energy efficiency and advanced technology to capture carbon emissions at coal plants, to make that goal possible.
Ray Kopp, a senior fellow with Resources for the Future, a nonpartisan environmental policy group that was not involved with Monday's announcement said that, while climate change legislation is not likely to pass while President Bush is in office, many companies believe is it is inevitable in the long run.
Companies, especially big emitters of greenhouse gases, want to influence legislation early on, he said.
"If these policies are going to be developed, they want to have a hand in it," Kopp said. "They see themselves as the targets of regulation."