Division of Labour: Big CarbonCap and Other Pigs at the Trough

January 28, 2007

Big CarbonCap and Other Pigs at the Trough

Kimberly Strassel nails the rent seeking companies ("Big CarbonCap" in her words) who came out last week for a cap-and-trade carbon reduction program:

And it happens that the cap-and-trade climate program these 10 jolly green giants are now calling for is a regulatory device designed to financially reward companies that reduce CO2 emissions, and punish those that don't.

Four of the affiliates--Duke, PG&E, FPL and PNM Resources--are utilities that have made big bets on wind, hydroelectric and nuclear power. So a Kyoto program would reward them for simply enacting their business plan, and simultaneously sock it to their competitors. Duke also owns Cinergy, which relies heavily on dirty, CO2-emitting coal plants. But Cinergy will soon have to replace those plants with cleaner equipment. Under a Kyoto, it'll get paid for its trouble.

DuPont has been plunging into biofuels, the use of which would soar under a cap. Somebody has to cobble together all these complex trading deals, so say hello to Lehman Brothers. Caterpillar has invested heavily in new engines that generate "clean energy." British Petroleum is mostly doing public penance for its dirty oil habit, but also gets a plug for its own biofuels venture.

Finally, there's General Electric, whose CEO Jeffrey Immelt these days spends as much time in Washington as Connecticut. GE makes all the solar equipment and wind turbines (at $2 million a pop) that utilities would have to buy under a climate regime. GE's revenue from environmental products long ago passed the $10 billion mark, and it doesn't take much "ecomagination" to see why Mr. Immelt is leading the pack of climate profiteers.

The next little rent seeking piggy is Philip Morris. From Thursday's WSJ:

From the point of view of the nation's largest cigarette maker, Philip Morris, the shift in power could be a blessing in disguise. That's because it could help ease the way for legislation to give the Food and Drug Administration new powers to control how cigarettes are made and marketed. That, ironically, could help Philip Morris maintain its current market domination.

Most tobacco companies are opposed to FDA regulation of cigarettes...

Philip Morris, however, has embraced the idea that the FDA should have broad powers over tobacco...

The company's rivals contend that new restrictions would hurt them more because their brands are much less known than the famous Philip Morris Marlboro brand. With marketing potentially dramatically curtailed by FDA regulation, they would have fewer ways to promote themselves. The result, they say, would be that Marlboro would keep its market share. Philip Morris USA's share of the retail cigarette market was 50.4% as of the third quarter of 2006. Competitors such as Reynolds American Inc.'s R.J. Reynolds Tobacco Co., which markets Camel and Kool cigarettes, gripe that FDA regulation is the "Marlboro Monopoly Act."

And then we have the Bush energy proposal tilted toward the Big Three automakers. From Thursday's WSJ (sub req):

President Bush's broad new proposals to change the nation's health-care and energy policies have an important but little-noticed common thread: White House aides hope they will boost the ailing American auto industry, whose pleas for help have largely been ignored by Washington in recent years.

The energy proposals -- crafted in a way that would erase some of the advantages enjoyed by the U.S. industry's Japanese competitors ...

Posted by E. Frank Stephenson at 03:38 PM