Green logistics: Cap and trade is front and center in Boxer, Kerry legislation
Majority of respondents in LM reader survey indicate cap and trade will result in higher logistics costs
Jeff Berman, Group News Editor -- Logistics Management, 10/1/2009
WASHINGTON—Legislation introduced yesterday by Senators Barbara Boxer (D-Calif.) and John Kerry (D-Mass.)—with a goal to hit a 20 percent reduction from 2005 levels of carbon dioxide emissions—may have a major impact on freight transportation and logistics issues.
The emissions reduction goal in this bill, entitled the Clean Energy Jobs and American Power Act, represents a three percent increase from the House version of this bill (introduced by Senators Henry Waxman (D-Calif.) and Edward Markey (D-Mass.), which was passed in June. Both the House and Senate versions of the bill seek an 83 percent reduction in CO2 emissions by 2050.
A major component of both versions of this legislation that has been met with heavy opposition due to the potential for increased costs for businesses and consumers has to do with “cap and trade,” a form of emissions trading, which is used to control pollution by offering economic incentives in order to achieve reductions in emissions pollutants. Cap and trade would put limits on emissions from motor vehicles, coal-fired plants, and factories.
The argument against cap and trade—and its subsequent potential impact—on transportation and logistics was made clear in a recent Logistics Management reader survey poll of 115 logistics and transportation executives, which found that 90 percent of respondents opposed the bill, with 92 percent indicating it will increase costs to varying degrees.
The survey stated that 8 percent of respondents maintain cap and trade will raise costs by 0-5 percent, 24 percent said it would raise costs by 6-10 percent, 25 percent said it would raise costs by 11-15 percent, and a cumulative 44 percent indicating costs would go up by 16 percent or more.
But Kerry and Boxer maintain that these higher emission reduction targets impact “less than two percent of American businesses and keeps American industry competitive during the transition to a new energy economy.”
Meanwhile, reasons from survey respondents for the argument against cap and trade included: lack of details on how the process works, no scientific evidence to support human caused climate change, add extra costs to the supply chain and subsequently shift production to countries with less restrictions, lack of demonstrable benefits, and increased unemployment, among other factors.
While in the minority, those respondents that favored cap and trade noted there are various long-term benefits, including taking steps to reduce U.S. dependence on oil, coupled with economic incentives to cut CO2 emissions.
“It is the right thing to do for the planet,” said an automotive shipper. “Sustainable energy investment and growth is the newest economic and societal evolution. Cap and Trade can be an area for the U.S. to gain a competitive edge in being a supplier of a portion of the World's energy needs.”
This sentiment was shared by James Corless, director of Transportation for America, a coalition of national, state and local organizations calling for the renewal of a national transportation program for the 21st century.
Corless said that this bill makes significant advances in addressing the impact of transportation on our climate, noting that transportation contributes nearly one-third of the total annual CO2 emissions in the U.S. and will generate a significant portion of the revenues in the bill.
But as evidenced by the 90 percent of survey respondents against cap and trade, the bill is vehemently opposed by shipper-based organizations, including the U.S. Chamber of Commerce and the National Association of Manufacturers.
Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce said his organization opposes the bill, because it is neither comprehensive nor international, and it falls short on moving renewable and alternative energy technologies into the marketplace and enabling the transition to a lower carbon future. Donohue added that the bill would also impose carbon tariffs on goods imported into the U.S., which could spur retaliation from global trading partners.
Shipper takeaways: If this bill is eventually signed into law, there is going to be a huge need for shippers to account for their carbon footprint, according to Ben Gordon, managing director of BG Strategic Advisors, a strategy-led investment banking firm for the supply chain and logistics sector.
“There are all kinds of unintended consequences that are going to flow from this, and [large] shippers are going to have huge costs and reporting obligations associated with this…and reporting costs will be passed on to them, as well as having to report what is my carbon footprint and what is my liability and how do I quantify it and how do I reduce it? That is going to be a big deal.”
Like many survey respondents, Gordon explained that cap and trade is going to put a huge tax on transportation ultimately, because it is going to make fuel more expensive. The reason, he said, is it is not just anything that generates pollution; it is anything that generates carbon. As an example, he said truck to rail conversion may be viewed as a great thing under cap and trade, because it is better for the environment to use trains than trucks and it is more fuel efficient. But cap and trade does not help at all, because the fuel required to run the train generates as much carbon as the fuel required to power trucks, he said. So even though trains are better for the environment than trucks, Gordon said cap and trade will not have any effect on that at all, whereas it will have a huge impact on using biofuels instead of regular fuels.
The legislation will now move to the Senate Environment and Public Works Committee for consideration.
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If now is not the right time to take responsibility for our actions and responsibility for what we are doing to the environment and risking future generations when is it? Oh, that''s right pundants, it is not our problem. Reality check people we need to take ownership of our mess and try to repair the damage before it is to late. Before you go wining about doing without that extra latte think about what you are leaving your kids. Yes, it is going to all cost us in the end one way or another.
Smith - 2009-7-10 15:11:00 EDT -
Wow! I provided a link in my previous post to the senate cap & tax bill that is 801 pages long, dated 8/21/09. The new version at Senator Kerry’s website has 821 pages and is dated 8/30/09.
www.kerry.senate.gov/cleanenergyjobsandamericanpower/pdf/bill.pdf
I can't keep up. Will your senator read it? Will you have a chance to read it? Will our supposed watchdogs in the Press have a chance to read it?
NucEngineer - 2009-1-10 12:46:00 EDT -
How can the bill impact only 2 per cent of American business? Would like to see the data on this and who compiled the data.
Looks like another political spin!!!
Craig Manuel - 2009-1-10 12:35:00 EDT -
There is an election coming in 2010, suggest to vote them all out and start over...I don't think anybody could do any worse for our country than the current Congress and Administration is doing already. All incumbents in Congress take note, you can be part of the solution or part of the problem, show us by your actions that you are part of the solution....and for the rest of us, vote'm out....
Fedup N. Seattle - 2009-1-10 12:29:00 EDT -
ths is going to be a total disaster and will eventually only shift the cost burden to consumers while it creates an enormous reporting infrastructure.
Hugh Byrd - 2009-1-10 12:20:00 EDT
Are logistics pros happy on the job?
10/31/2002
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