Newsletter from Southwest Metro Chamber of Commerce

Cap-and-trade demands international solution

By David C. Olson

Clean air and a sound environment are vital to all Minnesotans and especially to the business community. Our greatest challenge is to accomplish this without slowing the development of our economy and job growth. Of particular concern is any initiative which puts Minnesota businesses at an economic disadvantage with their competitors in the national and global marketplaces.

That's why the Minnesota Chamber of Commerce and its statewide network of local chamber partners reject any cap-and-trade policy that places Minnesota or the Midwest on an island. We advocate a national policy - but only if it is crafted within the context of an international agreement. That critical element is missing from the current debate in Congress.

We endorse the goal to gradually reduce greenhouse gases from air emissions and to use a trading market among businesses, if it reduces the cost of reducing emissions. We support wise investments that diversify the nation's energy generation and make our nation more energy efficient and independent.

The cap-and-trade legislation before Congress, however, is certain to result in higher energy prices that will be passed to ratepayers. Our core concern is the impact of those costs on jobs and the ability of Minnesota businesses to compete in the global economy. The mining and forest products industries particularly will be hit hard. However, any product manufacturer with global sales will be less competitive if energy prices increase significantly.

This negative impact will be exacerbated by the proposed allocation of emission allowances for electric utilities - a formula based 50 percent on emissions and 50 percent on sales. Utilities that are more coal dependent will need to purchase even more allowances than if allowances were based on emissions alone. Customers in Minnesota and the Midwest rely heavily on coal-powered electricity generation. As a result, they will be affected disproportionately compared with other regions, creating another competitive disadvantage for businesses.

A more equitable system is to distribute allowances solely on the basis of emissions. We appreciate the efforts of Minnesota's two U.S. senators - Amy Klobuchar and Al Franken - who recently advocated this position in a letter to U.S. Senate leadership.

Technology is important to this debate, too. New, cost-effective carbon capture and storage technologies are necessary if we are to reduce greenhouse gases and be able to use the abundant, domestic resources like coal to meet energy needs. Nuclear power also will be critical to addressing growing electricity needs in a carbon-constrained world. Regulatory and liability hurdles must be addressed to ensure the timely development of all technology options.

The Minnesota Chamber is not standing still on addressing climate change. We believe much more can be done to reduce greenhouse gas emissions without additional government regulations, specifically in the areas of conservation and efficiency. To that end, we have launched Energy Smart which recently marked its one-year anniversary. Energy Smart helps businesses become more energy efficient. As a result, companies reduce carbon emissions and save money on their bottom lines.

The business community has a strong record of advancing initiatives that benefit the environment and the economy. But we believe the federal legislation as currently framed - especially without an accompanying international agreement - won't solve the problem, be efficient or cost effective. We are making that position very clear with our state's congressional delegation.

David Olson is president of the Minnesota Chamber of Commerce. For more information, visit the Web at www.mnchamber.com.