Thursday, November 15, 2007
By Steven Milloy
Sen. Hillary Clinton last week proposed to require that publicly-owned companies disclose to shareholders
the financial impacts of global warming. Financial reality, however, is already overtaking the financial
fantasy of climate alarmists.
The idea behind Sen. Clinton’s proposal ─ and other similar efforts by other Democrats on the Senate
Banking Committee, New York Attorney General Andrew Cuomo and the environmental advocacy group Ceres, to name
a few ─ is that the alleged environmental consequences of global warming, ranging from drought and
wildfires to lawsuits against energy companies and automobile manufacturers, pose significant financial risks
that ought to be disclosed to shareholders.
Putting aside that weather-related events can’t be tied to manmade emissions of carbon dioxide (CO2) and
that it’s the Democrat-supporting environmental advocacy groups that are banging the drum for global
warming-related litigation, Sen. Clinton’s proposal completely ignores the real climate-related threats to
business ─ the alarmism itself and attendant government regulation.
Congress and the state of California, for example, are considering legislation to ban by 2012 the
incandescent light bulb, thereby forcing consumers to buy compact fluorescent light bulbs (CFLs). Because
USCAP member General Electric manufactures CFLs in China, it now faces
labor problems with its U.S. employees who make incandescent bulbs.
Ironically, GE is working on a more efficient incandescent bulb that is slated to be available by 2010 ─
just in time to be banned.
Speaking of CFLs, let’s not forget the mass tort lawsuit potential against manufacturers and sellers of
potentially billions of mercury-containing CFL light bulbs that require special
clean-up and disposal procedures.
GE also has a business interest in coal – a major source of CO2 emissions. The company makes turbines for
traditional coal-fired power plants and is developing so-called “Integrated Gasification Combined Cycle” (IGCC)
technology – a system for capturing CO2 from coal-fired electricity plants. Although GE needs greenhouse gas
regulations to drive growth for IGCC, its entire coal business is threatened by alarmism and regulation that
would ban or greatly reduce the use of coal-fired power plants. Recent environmental group pressure caused the
cancellation of eight coal-fired power plants that TXU Corp. planned to build. The cancellation caused, in
turn, TXU to cancel its orders with GE for steam turbine generators.
USCAP member PepsiCo’s bottled water business is also being jeopardized by promotion of global warming
alarmism. The mayor of San Francisco recently banned the purchase of bottled water by the city government
because plastic bottles sold to U.S. consumers “require about 47 million gallons of oil, the equivalent of
one billion pounds of CO2 that is released into the atmosphere.” San Francisco is not an isolated case. The
mayor of Salt Lake City is urging the U.S. Conference of Mayors to promote tap water as a way to limit
greenhouse gas emissions.
Moreover, if bottled water is bad for the climate, it may be tough for PepsiCo to argue that other drinks in
plastic bottles aren’t similarly harmful to the climate.
A recent Congressional Budget Office study that found coal production would drop by 40 percent under global
warming regulation. You might think that would cause heavy-equipment manufacturer Caterpillar ─ whose
biggest customers include coal mining companies ─ to think twice before joining USCAP, but you’d be
wrong. At least one coal company is now boycotting Caterpillar products because of its participation in USCAP.
Energy-intensive companies like USCAP members Alcoa, Alcan, Dow Chemical and DuPont already disclose in
government filings that high-energy prices ─ a near-certain outcome of global warming regulation ─
are a significant business risk. While these companies may plan to offset higher energy prices and even profit
by selling any carbon credits given to them for free by Congress as part of a
cap-and-trade scheme, there is no guarantee that these companies will attain the favorable legislation
As the politics of windfall, pork-barrel global warming profits for special business interests become
untenable, in fact, it is quite possible that Congress may decide to auction the carbon credits instead of
giving them away. Companies that counted on free carbon credits may find that auctioned ones are a financial
The corporate failure to disclose the risk of global warming regulation goes beyond USCAP members.
Wal-Mart actively promotes the notion that action needs to be taken against global warming, despite the
likelihood of high energy prices. The company’s disappointing earnings in August 2007, after all, were
attributed to an “increase in the cost of living and gas prices” and the fact that “many customers are
running out of money towards the end of the month.”
High-energy prices will significantly increase the cost of Wal-Mart’s operations since it’s the largest
private user of electricity in the U.S. Each of its 2,074 supercenters uses an average of 1.5 million
kilowatts annually ─ enough as a group to power all of some small countries. Wal-Mart’s fleet of
trucks is the second largest and travel a billion miles a year.
The irony in all this, of course, is that many businesses are actually pushing Congress to make global
warming-related financial risks come true. Do these companies know something that we don’t? Or is this just
reckless political correctness? Only time will tell. But in the meantime, shouldn’t shareholder be told
about the risks related to global warming alarmism?
Steven Milloy publishesJunkScience.comandDemandDebate.com.
He is a junk science expert, and advocate of free enterprise and an adjunct scholar at the Competitive
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