Tuesday, January 26, 2010

Business and Carbon Legislation

Many political pundits are saying that the election of Scott Brown of Massachusetts to the U.S. Senate will derail any climate/carbon/energy legislation this year.  I certainly can't prognosticate on that, but I don't think the conversation is dead. Sheila McNulty of the Financial Times pointed out a letter sent by 83 CEOs of U.S. businesses to President Obama urging the president to move quickly in pushing climate change legislation.

It might sound strange for business leaders to encourage the government to enact carbon restrictions, but their point is that it represents an opportunity for business to innovate and invest in new lines of business.  It's already happening in other countries. 

One of the first things I learned about the stock market is that the only thing the market hates more than bad news is uncertainty.  If there is not a clear direction - good, bad or otherwise - investors hold off in making decisions.  That paralysis is far worse than bad news, which the market just "prices in" and moves on about its merry way (a bizarre conceit, but that's another story). 

Many in the business world believe that there will be some legislative action on climate change and carbon regulation eventually, and it's better to know it now than put off the pain (or opportunity) until later.  In a fragile economy like ours today, well-crafted carbon reducing legislation with a reasonable implementation schedule could be a catalyst for job creation.  Carbon mitigation would just be another new industry for business to pursue. 

Given the bludgeoning that Congress took in its efforts to improve the health care delivery system and the fact that 2010 is an election year, I doubt it will be lead much of anything but play defense.  The president lost a fair amount of his mojo over the past year, so he'll also be guarding the goal.  It will be interesting to see if business actually does take the lead in this matter.

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