When I speak to people who are against cap-and-trade legislation they often mention that it will hurt competitiveness. They also argue that cap and trade will encourage U.S. manufacturers to move offshore to avoid the cost of carbon emissions. This was a major part of the political opposition to acting on emission. Former President George W. Bush said it was wrong to exempt poor nations such as China and India from Kyoto targets. But does cap and trade make the U.S. less competitive?

Companies who take action now become more efficient in the long run. This emphasizes that those who continuously improve are winners and those that do not are left behind. Renewable energy is a good example. Once you put up a solar panel it pays for itself giving you long-term advantages over your competitor.  The number one user of solar power is Germany!

You are also taking a risk that other countries don’t enact some form of cap themselves. This may already be occurring. India says ready to issue non-binding emissions cut and China’s Hu to unveil new climate proposals at UN summit. The biggest hurdle to international standards on carbon has been that the largest emitters where not setting limits. Well the largest emitters of greenhouse gases are China (22%), US (20%), EU (14%), Russia (6%), India (5%). The inclusion of China and India makes the U.S. stick out like a sore thumb.

Let’s start with cap without trade. I will use a simple example:

Chemical Co has a footprint that is 10,000 metric tons of CO2e over an established cap. The Chemical Company must invest $9 for each metric ton they reduce or $90,000.

Aluminum Co is also 10,000 metric ton of CO2e over the cap, but instead of investing just $90,000 to meet the cap they must spend $25 for each metric ton they reduce or $250,000.

Carbon Savings:                20,000 metric tons (10,000 metric tons from Chemical Co + 10,000 metric ton from Aluminum Co)

Cost to Economy :            $340,000 ($90,000 from Chemical Co + $250,000 from Aluminum Co)

With Trade:

Chemical Co reduces 20,000 metric tons for a cost of $90,000 investment.

 Aluminum Co buys 10,000 metric tons from Chemical Company for $15 a metric ton or $150,000.

Carbon Savings:                20,000 metric tons (from Chemical Co)

Cost to Economy:             $240,000 ($90,000 from Chemical Co + $150,000 from Aluminum Co)

Tax vs. Trade
The problem with a tax scenario is that it would be far more expensive for Aluminum Co to reduce and there is no incentive for Chemical Co to reduce beyond zero. 

Here are three reasons why cap and trade is better for the economy than a tax:

Lastly, we know where the money goes under cap and trade. In other words, there is a clear correlation to the money paid for reductions/offset projects and the reduction of greenhouse gases. Under a tax, it is less clear that the revenue goes to actual reductions.

Last week’s GreenBusiness Works Expo was true to its name—all “business.” It was refreshing to see so many green businesses and so much optimism. I guess that’s the benefit of working in a sustainable industry—sooner or later you know your product or service will be needed. The general feeling at the Expo was that everyone’s products and services would be needed “sooner.” I would venture to guess that the attendance at this year’s expo was up four-fold from last year. Stephanie Armistead should be commended for putting together such a comprehensive forum. When you get the likes of Interface, Chevron, Georgia Power and several state congressmen, you know you’ve hit a tipping point.

The Expo also included a Southern Solar Summit, which was a huge hit and many of the breakout meetings were standing room only. The big takeaway was “if Germany can do it, Georgia can do it.” We were reminded by three or four speakers that Germany, which gets about the same amount of sun as Alaska, is the number one user of PV solar, and Georgia lags behind New Jersey and N. Carolina. Hopefully, this message was not lost on the public officials in attendance.

I spent a lot of time at the RedBird LED display checking out their impressive LED display. I’m ashamed to say that I have not kept up with all the advances in LED lights. For example, I didn’t know there are now LED tubes that can replace T12 or T8 fluorescents (requires ballast removal). LED tubes are as elegant in design as they are efficient. The directional light they provide eliminates the need for expensive architectural fixtures.

The one product that impressed me the most was the thermal-solar-powered dehumidifier at the Hannah Solar display. Using desiccant crystals, moisture is taken out of air before it enters a standard HVAC system greatly reducing the load and energy needs. The hot “solar” water serves to dry the desiccant over and over. The system also has the benefit of cooling water before it reaches a hot water tank. Apparently, this is not new technology and has been used in Japan for many years.

Selfishly, the best part of the Expo was when VERUS’s very own Eric Taub and Keith Kantor, CEO of Service Foods, participated in a panel discussion on carbon. Keith’s is one of our clients and surprised us all when he announced that his sales rose 30% after Service Foods became Carbon Neutral early this year. Keith’s company should be commended for its green practices, which I am sure also contributed to its increase in sales. Keith coined a phase: “green is clean” and in the food industry “clean” is very important. Service Foods provides home delivery of all-natural food all over the country and it’s obvious that his customers appreciate his support of the environment.

We look forward to next year’s expo.