DC Velocity - August 2009

greenlogistics

BY MARK B. SOLOMON, SENIOR EDITOR

GREEN RULES AND REGULATIONS

more green, less green?

Transportation interests worry that cap-and-trade environmental

legislation will do little more than lighten their wallets.

JIM BURNLEY DOESN’T MINCE WORDS. AFTER SERVING AS TRANSPORTATION SECRETARY UNDER President Ronald Reagan from 1987 to 1989 and spending the next 20 years as one of the nation’s most prominent transportation attorneys, lobbyists, and power brokers, he has, if nothing else, earned the privilege of candor in a town often bereft of it.

Now senior partner at the Washington law firm Venable LLP, Burnley is spending most of his time helping his transportation clients navigate the American Clean Energy and Security Act of 2009, a 1,100-page bill that seeks to reduce carbon emissions by 80 percent or more between 2012 and 2050 by imposing a national limit on greenhouse gases.

Burnley pulls no punches when the talk turns to the bill’s controversial centerpiece—a complex system called “cap and trade,” where emission limits are set for each industry, and industries are forced to amass credits or buy allowances equal to their emissions levels. As he sees it, cap and trade amounts to little more than a command-and-control exercise that will wreak havoc on supply chain economics. “This is industrial policy straight out of the 1930s,” he said in an interview.

Yet for all its many critics, the bill continues to move forward. The legislation, sponsored by

Reps. Henry A. Waxman (D-Calif.) and Edward J. Markey (D-Mass.), was narrowly passed by the House of Representatives on June 26. No companion bill has yet been offered in the Senate, though Majority Leader Harry Reid (D-Nev.) is believed to support the

Waxman-Markey legislation. President Barack Obama has said he expects to sign climate-change legislation sometime this fall.

“Massive energy tax”

Burnley and others in and out of transportation contend that when the federal government creates a scarce new commodity—in this case, the right to emit carbon—and then mandates that businesses buy it, the costs will inevitably be passed on to users in the form of higher prices.

Transportation interests worry the industry will be disproportionately affected by the cap-and-trade provision. For instance, the existing language calls for 85 percent of all emissions credits to be given away for free initially. However, from 2014 to 2016, the so-called “refiners” category—under which transportation is lumped—will only receive 2 percent of the credits given out during that time, even though by most estimates, the supply chain is responsible for 30 percent of all CO2 emissions in the United States.