Companies are opposing rollbacks on climate change regulations
Citing economics and competitive advantage, major firms argue against loosening government controls aimed at cutting carbon pollution
The cynical among us might assume that all businesses hate climate regulations and will do everything in their power to oppose them. But that’s not what happened when the U.S. Environmental Protection Agency (EPA) announced in late August its proposal to loosen regulations on methane emissions from oil and gas production — a potent contributor to rising global temperatures.
While smaller oil and gas companies and some lawmakers cheered the proposal, larger producers such as BP weren’t thrilled. BP America president and chairman Susan Dio wrote that “there is a clear business case” for keeping the methane regulations. “Simply, the more gas we keep in our pipes and equipment, the more we can provide to the market,” she explained.
BP isn’t alone in this mindset. “A lot of regulations, when businesses really get down to it, they find it helps them become better managed,” says Tensie Whelan, director of the New York University Stern School of Business’s Center for Sustainable Business. “You not only reduce pollution, but you also reduce your cost.”
That thinking is one factor in why some corporations now oppose some rollbacks on climate change regulations that are presented as being good for business. Below are other examples of companies challenging the idea that fighting climate change must come at the expense of profits.
Utilities Protest Energy-Efficient Light Bulb Rollbacks
The U.S. Department of Energy (DOE)’s decision in September to slow down the phase-out of higher-energy-consuming light bulbs was welcomed by the National Electrical Manufacturers Association, which has spent US$5 million since 2017 lobbying federal lawmakers to loosen what it sees as a costly and cumbersome regulation.
But dozens of major electric utilities, including Fortune 500 companies like Xcel Energy, disagreed. They argued in a joint letter to the DOE that weakening the light bulb rules, which by one estimate from the Natural Resources Defense Council would save the electricity equivalent of 25 large power plants, makes no economic sense.
“We know that energy efficiency improvements reduce the amount of infrastructure we need to build, improve the reliability of supply, and lower customer costs,” they wrote. The Alliance to Save Energy, an organization that includes environmental groups and energy companies like Exelon, is urging people to contact Congress to oppose the rollback.
Automakers Fight to Keep Fuel Efficiency Standards
When the White House said it wanted to freeze the fuel efficiency standard for new vehicles around 37 miles per gallon (16 kilometers per liter), California replied it would require automakers to meet the much stricter Obama-era standard of 54.5 miles per gallon (23.2 kilometers per liter) by 2025.
Companies like Honda, Ford, Volkswagen and BMW sided with California. There was a clear business case for their decision, reported the New York Times: “They fear that the aggressive rollbacks will spark a legal battle between California and the federal government that could upend their business by splitting the United States into two car markets, one with stricter emissions standards than the other.”
If enough vehicle manufacturers side with California, it could render the rollbacks effectively irrelevant.
They’re also making a longer-term calculus. Whelan says more than a dozen countries, including China, have committed in some way or are exploring ways to phase out combustion engine vehicles. Automakers will be “at a competitive disadvantage if they’re not starting to develop the technologies they need to deal with a changing world,” she says.
If enough vehicle manufacturers side with California, it could render the rollbacks effectively irrelevant and cut carbon pollution by up to 807 million metric tons (890 million tons) between 2021 and 2035.
(Editor’s note: On Wednesday, 9/18/19, the Trump administration announced it was revoking California’s right to set emission standards that differ from the rest of the country.)
Utilities, Tech Companies and the Clean Power Plan
In June, the EPA replaced an Obama-era plan to cut electricity sector emissions by nearly a third with a new policy that Vox writer Umair Irfan described as “drastically weaker.” The move won applause from coal companies like Peabody, which emerged from bankruptcy protection in 2017.
Yet in the years leading up to the decision, many power utilities argued in court against getting rid of the Clean Power Plan. Dominion Resources said the plan was effectively an acknowledgment of the wider global shift “toward additional renewable and natural gas generation in the power sector.”
“I think we’ll see companies continue to take that leadership role as government doesn’t.” –Tensie Whelan
Earlier this month, nine utilities serving more than 23 million people across the U.S. filed a legal challenge against the new weaker plan.
Utilities have been supported by major tech companies like Google, Amazon, Microsoft and Apple, which have increasingly sought to transition their data centers away from fossil fuels and argued in a blog post that “renewable energy makes good business sense for us all.”
Does Corporate Opposition Matter?
Parsing corporate motives can be difficult. “The companies saying this is going too far — this doesn’t mean they are not supporting deregulatory efforts. You have some companies saying this isn’t what they wanted, but they still didn’t want the Obama rules,” Tyson Slocum of the watchdog group Public Citizen cautioned recently to E&E News.
Another aspect to consider is corporations speaking out in a greenwashing campaign to make themselves look good to certain customers. Yet what we’re seeing may go beyond companies merely wanting to burnish their images at a time when increasing numbers of people are becoming worried about climate change. Advocating for strong, well-designed climate policy “will save them money, will improve reputation, which will reduce risk,” Whelan says. “I think we’ll see companies continue to take that leadership role as government doesn’t.”
Originally published at ensia.com on September 17, 2019.