BUSINESS:

U.S.-Europe tension rises as PG&E splits from U.S. Chamber

Tensions between business groups in the United States and Europe on the direction of global climate negotiations came to a boil yesterday, just as a major California utility quit the U.S. Chamber of Commerce, complaining of the group's "extreme position on climate change."

At a U.S. Chamber-sponsored forum in Washington, European business leaders reinforced concern expressed by European diplomats about slow progress in the U.S. government's efforts to cut greenhouse gas emissions prior to the U.N. climate conference in Copenhagen this December.

"We are calling on the U.S. to take a lead," said Folker Franz, the senior adviser on environmental affairs for BusinessEurope, a Brussels-based business group that represents companies in the European Union. "Therefore, yes, we are calling on U.S. policymakers and also on U.S. industry to commit to emissions reductions. For us, ideally, this would translate into a cap-and-trade system."

The fissuring of consensus in the business community about how to move forward on a global and domestic climate policy was underlined by a letter to the U.S. Chamber from Pacific Gas & Electric Co. Its CEO, Peter Darbee, cited "fundamental differences" on the issue. According to a PG&E-sponsored blog, Darbee criticized the chamber for "taking an extreme position on climate change, which Darbee said does not represent the range of views among Chamber members."

Darbee criticized the chamber for threatening a high-profile trial, similar to the Scopes Monkey Trial, to challenge the science of global warming, and for the group's determination to dispute U.S. EPA's endangerment finding that set the stage for regulating carbon dioxide emissions.

PG&E is the latest of a handful of influential companies leaving business groups that were formed to help shape the policy debate and protect business community interests, but that have been accused of being too combative.

"The chamber's policy is not to comment on the status of our memberships," said chamber spokesman Matt Letourneau.

A preview of the lobbying at Copenhagen?

Business groups from major and emerging economies at the U.S. Chamber event yesterday asked for seats at the table during global negotiations aimed at reaching an accord on climate change. With a major U.N. climate summit being held this week in New York and with members of the G-20 developed economies heading to Pittsburgh next week, the business groups urged U.N. negotiators to adopt a "more realistic agreement" that promotes global free trade, safeguards intellectual property and strengthens public-private partnerships.

"The private sector already has experience and expertise in developing technologies that reduce emissions," said Karen Harbert, president and CEO of the U.S. Chamber's Institute for 21st Century Energy, and any U.N. accord should require "the full-scale engagement of the global business community."

But European angst that U.S. lawmakers are moving too slowly to curb carbon dioxide emissions, and that the United States is not playing a big enough leadership role on global warming, has become a palpable subset of the debates over a global treaty. The back-and-forth yesterday could well be a preview of the arguments and lobbying that will resonate in Copenhagen in December.

"In the face of intense pressure to find a solution, we cannot adopt a costly one that won't work," Rep. James Sensenbrenner (R-Wis.), speaking at the Chamber forum, told business leaders from the United States, Europe, Japan, Canada, Brazil, Australia, India and Kenya. "We are victims of our own affluence if we converge by jumbo jet to a modern city and agree to curb our economic growth." Sensenbrenner urged "cost-effective solutions that will reduce emissions while fostering global economic health."

A link between efficiency efforts and rising energy costs

BusinessEurope's Franz questioned Sensenbrenner's fidelity to cheap energy in the face of rising global carbon emissions. "The E.U. and Japan, for example, have faced high energy prices for some time," he said. "At the same time, those countries are the most energy-efficient countries in the world, which is something we should all strive for, so there is a link."

"The cap-and-trade scheme is the wrong way to go if we want to reduce global emissions," Sensenbrenner responded. "The only way we are able to reduce total worldwide emissions," he added, "is through the use of technology." Sensenbrenner and other members of the group said intellectual property rights are also critical to a U.N. accord.

Bernhard Welschke of the Representative of German Industry and Trade questioned Sensenbrenner's opposition to using the carbon price mechanism to cut greenhouse gas emissions. How, he asked, do nations signing onto a post-2012 U.N. climate accord provide incentives for clean technology if there isn't a price on carbon emissions, and without invoking protectionist rules or creating a "subsidy race" among governments?

"I have been a strong support for tax cuts and incentives in the United States," Sensenbrenner said. "There has got to be international recognition that the world is in this together in terms of the development of new technology. The linchpin on that is intellectual property rights."

During the two-day forum, Welschke and others sought to steer the discussion to energy efficiency and other measures that could take a bite out of high-carbon energy demand.

U.S. Chamber and Canadian business leaders urged the business community to "move from defense to offense" on climate issues. A Brazilian business official said more international public-private financing mechanisms for clean energy projects are critical to get the support of developing countries.

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