Cap'n'trade a business buster in several ways

Some in the media have reported in recent days about a handful of large utilities and the Mac and iphone maker Apple announcing they will drop their membership in the U.S. Chamber over the chamber's determined ways to derail the federal cap'n'trade regulation. Boiled down to its simplest form, cap'n'trade would tax high emission states like Kentucky and Indiana (see graphic) in a noble but misleading gesture to help the environment. Kentucky and Indiana get most of their electricity form burning coal in power plants; various studies draw different conclusions, but one says Kentucky will lose 21,000 jobs if cap'n'trade becomes law. Electric rates in Kentucky are expected to increase by at least one-third and possibly much more.

Business associations like chambers of commerce try to get their members "on the same page" over common issues. The problem is that what can be good for the "mom'n'pop" store may not be positive for a large corporation or vice versa. Indeed, while increased electricity rates would no doubt harm nearly all business—including the concentration of aluminum smelters in Western Kentucky—through higher power bills, some large utilities are shrewd and large enough to cut their own deals in the legislation; some utilities will make more money with cap'n'trade by selling emissions credits; hence, they have much to gain with cap'n'trade. And now, a company like Apple that likes to think of itself as "environmentally conscious" publicly distances itself from the U.S. Chamber. I don't believe Apple has any manufacturing facilities in Kentucky or Indiana.

Business interests are often diverse and cap'n'trade has become a good example of the difficult nature of getting all of them coordinated behind the same goal. My opinion is decidedly pro-business and pro-Kentucky on cap'n'trade. I'm all for "saving" the environment, but the legislation is in no way binding on other countries. Much of the developing world has shown no interest in enacting similar emissions limits. In other words, the U.S. could curtail its emissions while the rest of the world does not. I doubt "the environment" separates what the U.S. does vs. the rest of the world.

Secondly, electric rates will no doubt rise under cap'n'trade, especially in coal country such as Kentucky. Low power costs have been the state's one true competitive advantage in economic development for many years. Take that away and high energy consumers like manufacturers will have one big reason to locate elsewhere, perhaps overseas.