Clean Energy Insight - Moving Energy Forward

[Approx. Read Time 6 minutes]

The US Chamber of Commerce has been making major news lately, and I’d like to make an attempt to analyze what the fuss is all about.  Hopefully, by asking a few questions and doing a little research, you will be able to better understand what you may be reading in the news.

The pro-Nuclear United States Chamber of Commerce is the world’s largest business federation.  It’s self-proclaimed goal is:

“To advance human progress through an economic, political and social system based on individual freedom, incentive, initiative, opportunity, and responsibility.”

According to a Harris Interactive Poll (2008), the Chamber was ranked 5th most familiar and 5th most trustworthy organization in the United States.  However, the Chamber has gotten a lot of harsh criticism lately from many of its members even leading to some companies dropping their memberships.

Recently, the Chamber of Commerce has come out in opposition to the Waxman-Markey Cap-and-Trade bill that passed the House during late summer.  Since the Chamber has made their opposition publicly known, several major public energy utilities that have heavy stakes in Nuclear power have left the Chamber.  These include Pacific Gas & Electric and Exelon (See here).  Surprisingly, even leading coal power generating utilities like Appalachian Electric Power and Duke Power have come out in support of the Waxman-Markey legislation.  Here is what PG&E Chairman and Chief Executive Peter Darbee had to say about their decision to split from the Chamber:

“We find it dismaying that the Chamber neglects the indisputable fact that a decisive majority of experts have said the data on global warming are compelling and point to a threat that cannot be ignored. In our opinion, an intellectually honest argument over the best policy response to the challenges of climate change is one thing; disingenuous attempts to diminish or distort the reality of these challenges are quite another.”

After reading PG&E’s comments, you may find yourself taking sides against the Chamber of Commerce.  I can certainly understand their support for this legislation.  But before you get hopping mad, take a cool head over to the Chamber’s website to see what they have to say about the situation.  In their explanation for their stance against Cap-and-Trade, they explicitly state that they believe the legislation doesn’t do enough to rollback emissions and implement renewable energy technology.  See below for an excerpt from the Chamber’s website:

Five Positions on Energy and the Environment

Also see our Transition Plan for Securing America’s Energy Future with 88 concrete recommendations and detailed timelines which form a comprehensive, long-term energy strategy that if adopted, will put America on a path for a more secure, prosperous and clean energy future.

1. The Chamber’s position on climate change

The Chamber has in its public documents, Hill letters and testimony, supported efforts to reduce greenhouse gas emissions in the atmosphere. Our position is simple: There should be a comprehensive legislative solution that does not harm the economy, recognizes that the problem is international in scope, and aggressively promotes new technologies and efficiency. Protecting our economy and the environment for future generations are mutually achievable goals.

2. The Chamber’s position on Waxman-Markey

We opposed this specific legislation because it would not reduce the global level of greenhouse gases in the atmosphere. It is neither comprehensive nor international, and it falls short on moving renewable and alternative technologies into the marketplace and enabling our transition to a lower carbon future. It would also impose carbon tariffs on goods imported into the U.S., a move that would almost certainly spur retaliation from global trading partners.

3. The Chamber’s position on EPA’s proposal to regulate greenhouse gases under the Clean Air Act:

The Clean Air Act is not the appropriate vehicle for regulating climate change. Even though EPA is only addressing motor vehicles, the Clean Air Act is structured so that once EPA regulates greenhouse gases in any manner; the Act regulates all emitters of the gases which includes stationary sources that have never been subject to EPA Air regulation. To quote Congressman John Dingell, this will be a “glorious mess.” Our economy does not need a glorious regulatory mess, especially now. Reason needs to prevail and Congress needs to enact a comprehensive climate change law.

4. The Chamber’s position on alternative/renewable energy sources:

The Chamber has vigorously supported the production and use of renewable energy and we have consistently called for additional funding for renewable and other clean energy technology advancements. The Chamber’s website contains all of our letters of support to Congress and comments to agencies, and our reports on the status of funding for new energy technologies. In addition, we have sent dozens of concrete policy recommendations to the Administration and Congress to reduce greenhouse gas emissions in the atmosphere while keeping our economy healthy. We are currently leading the fight to clear the regulatory, legal, and Not-In-My-Backyard roadblocks that are delaying promising wind, solar, nuclear and other clean energy projects across the nation.

5. The Chamber’s position on the role of technology in addressing these challenging issues:

American business is the single biggest investor in clean technology. The Chamber has routinely supported tax incentives and credits, appropriations and stimulus funding to promote the accelerated development of these technologies.  Our Institute for 21stCentury Energy dedicated an entire chapter of its Transition Plan for Securing America’s Energy Future to increasing sources of renewable energy in our transportation and electricity sectors. We supported all of the technology provisions of the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007, and has promoted their funding since the passage of these laws

PG&E’s Peter Darbee also claimed that he fears that the Chamber of Commerce “has forfeited an incredible chance to play a constructive leadership role on one of the most important issues our country may ever face.”

See the Chamber’s Transition Plan for Securing America’s Energy Future in which the Chamber notably came out in favor of an expansion of Nuclear power in America (page 21).

The Chamber’s official nuclear stances include the following:

• Increase the amount of federally stored uranium for use in domestic nuclear power.
• Expeditiously establish a program to recycle nuclear waste.
• Develop centrally located storage facilities for used nuclear fuel.
• Request that the current Administration must make a formal decision on Yucca Mountain.
• Mandate that the Federal Gov’t pay back Waste Fund payments to utility rate-payers ($27 Billion) if the Yucca Mountain plan is disregarded.
• Improve the DOE’s Loan Guarantee Program for nuclear power.
• Improve the NRC licensing review process with additional resources and more efficient processes.

Wading through this back-and-forth between the US Chamber of Commerce and public energy utilities may leave you feeling dizzy.  It left me wondering why the utilities were so hard on the Chamber for stances it really doesn’t seem to take.

The answer may lie in a statement or series of statements by one Chamber official in which he called for a “Scopes Monkey Trial of the 21st Century” in order to reportedly test the scientific theory of man-made global warming.  William Kovacs, a VP at the Chamber, immediately came out and retracted his statement. Claiming that he was misunderstood and didn’t effectively relay the Chamber’s position on the issue.

This all stemmed from the Chamber’s opposition to an EPA ruling that CO2 has a direct harmful effect on human health and welfare, which allows the EPA to use the Clean Air Act to more strongly regulate emissions on industry and business. (See here.)

However, other than this single statement/issue, the Chamber has been pro-climate change solutions.  The Chamber explicitly states that it’s mutually achievable goal is to protect the economy and the environment.  One of the main reasons the Chamber doesn’t think this is achievable with the Waxman-Markey bill can be seen in the graph below (Click graph for large size).

(Note - This graph was provided by Alex Flint, Senior VP of Governmental Affairs for the Nuclear Energy Institute, in a presentation he gave to NA-YGN members during this past summer.  Although, Flint and NEI came out in support of Waxman-Markey’s pro-nuclear provisions, his point by showing this data was that in order to reduce costs the final legislation must be more pro-nuclear.  This is currently being seen with the Boxer-Kerry legislation making its way through the Senate, although Waxman-Markey wasn’t as openly pro-nuclear.)

Regardless of your stance on climate change and climate change legislation–In it’s current form, the Waxman-Markey bill is a bottom-line price-increase on energy consumers, as shown above by NEI.

Furthermore, regardless of your stance on this legislation, public energy utilities are profit-seeking businesses, and a profit-seeking business would not go out of its way on principle alone to support something that would harm its profits.  Utilities like Exelon with a considerable number of operating nuclear power plants are naturally supporting the legislation because nuclear power emits zero greenhouse gases.  Exelon CEO John Rowe commented on this yesterday in the Wall Street Journal.

WSJ: You’re outspoken about the need for carbon-emission reductions. You dropped out of the U.S. Chamber of Commerce because it opposed legislation. But you own 17 nuclear reactors that would benefit.

Mr. Rowe: We don’t flinch from the charge that, yes, some of our motivation and enthusiasm comes from the fact that we should make money on it if it happens. I started dealing with this problem more than a decade ago, long before I had a sense of how much money I could make for Exelon. A good solution to a societal problem is one where the winners help solve the problem.

With the current Waxman-Markey bill not putting much stake in nuclear power, energy prices will rise.  But why are utilities that produce power using fossil fuels also fervently on board with the legislation?

In an attempt to explain, the demand for energy is for all intents and purposes perfectly inelastic.  A product that has inelastic demand has few substitutes.  Examples of inelastic goods include gasoline, medicine, Super Bowl tickets, and electricity.  In the case of energy, this is exhibited by the fact that energy consumers basically have no choice in who they purchase their electricity from or whether they need to use electricity at all.

Another characteristic of a perfectly inelastic good is that when a tax or price-increase is introduced, the producer is able to pass 100% of the increase on to the consumer.  That is the cost to produce electricity will be passed directly onto energy consumers by public utilities who emit a lot of greenhouse gases.  Hopefully, knowing these economic facts will help you understand why even coal-heavy public energy utilities with seemingly so much to lose are supporting Waxman-Markey.

In fact, if you do an internet search on “Chamber of Commerce Cap and Trade” you will find countless news articles that state the Chamber’s official position to be anti-climate change, anti-emissions reductions, anti-cap-and-trade, anti-renewable energy, etc.  All running contrary to the Chamber’s explicitly stated positions.

Personally, I’m not sure that the public energy utilities can be held completely responsible for the Chamber’s true message apparently getting lost in translation. Unless you do the necessary research, you will find that many ”credible” news-outlets are getting the story wrong.  All because of one statement that was immediately retracted.

Maybe the Chamber of Commerce is right when it states that current legislation isn’t doing enough to reduce greenhouse gas emissions and create a competitive renewable and clean energy sector in the United States?  But the next time you hear a news-release pronouncing that the Chamber of Commerce has decided to support climate legislation in Congress, you can bet that it will be because Congress has actually decided to take further and more effective steps in the direction of competitively reducing emissions and creating a strong renewable energy portfolio.  An energy future that includes nuclear power.  Until then, it just looks like business as usual.