BUSINESS: U.S. export giants press for one global carbon accounting standard

Joel Kirkland, E&E reporter

The U.S. manufacturing sector can thrive under a global climate change agreement as long as it guarantees the participation of the world’s major polluting and carbon-emitting countries, said an executive at Caterpillar Inc.

“Different paths, different timelines, different objectives for different countries, but everyone’s got to participate before you’ll ever find a real balance in the manufacturing sector,” said John Disharoon, Caterpillar’s director of sustainable development.

Disharoon and executives from two other multinational companies, Dow Chemical Co. and logistics giant Deutsche Post DHL, agreed yesterday that even without a federal program in place to slow emissions growth, global companies need to slash energy use and pollution to remain competitive. As for United Nations-led climate negotiations, they said the U.S. government should demand a consensus on at least one fundamental issue: common accounting standards for greenhouse gas emissions.

“Emissions in China on Wednesday show up on the coast of California on Thursday or Friday,” Disharoon said. “You have to address all emissions worldwide, or major-emitting countries, and put us all on at least the same accounting standard.”

Devising a common approach to counting a nation’s contributions to the tons of carbon dioxide emissions into the atmosphere has been a real bugaboo for negotiators participating in U.N. talks. The United States and China remain deadlocked on the particulars of the Copenhagen Accord.

Major emitting countries signing on to the accord last December agreed to cut greenhouse gas emissions and submit to the same standards of transparency and verification of reductions. Embedded in that goal are the arcane details of measuring and accounting for industrial emissions in large, complicated economies.

A work in progress

Carbon accounting is still a work in progress. There is the U.N. process, but governments, academic institutions and software companies are also developing technology and standards for measuring emissions. This month, White House officials announced the completion of guidelines outlining how federal agencies should measure and report greenhouse gas emissions.

China and the United States clashed at this month’s most recent round of international climate negotiations in Tianjin, China, over how and to whom fast-growing economies should report their emissions. Chinese officials say U.N.-led inspections would infringe on Chinese sovereignty.

Meanwhile, U.S. officials maintain that China’s refusal to submit to an international reporting regime makes it impossible to adopt a binding global climate treaty. Observers of the process say the United States and China distrust each other’s promises to cut emissions.

“That means that a kilowatt of electricity or a ton of carbon reduced in California has got to be measured in the same way as a ton of carbon in Illinois or a ton of carbon in Shanghai,” Disharoon said at a Washington forum sponsored by the Consumer Energy Alliance. A global accounting system is needed, he said, so that multinational companies are treated equally in the context of global trade.

“The only way to do that is to do a price on carbon, and one that’s universal,” he said.

Caterpillar is major U.S. exporter that ships construction and excavation equipment all over the world. This year, it has already exported nearly $10 billion worth of equipment, and in the past three months announced plans to build large manufacturing facilities in Wujiang, China, and Victoria, Texas.

The company also has been an outspoken proponent of adopting a federal policy to cut carbon emissions. Until the start of this year, it had been a member of the U.S. Climate Action Partnership, a coalition of U.S. corporations and environmental groups advocating for steep emissions reductions through 2050.

But Caterpillar also took a lot of heat from the coal industry and others for joining U.S. CAP. Caterpillar joined BP PLC and ConocoPhillips in February and dropped out of U.S. CAP as prospects for action in the Senate dimmed. That month, Caterpillar turned its attention to carbon capture and storage, joining the FutureGen Alliance, a public-private partnership to build a zero-emissions coal-fired power plant in Illinois.

A way forward without climate law

The less government intervention in the markets the better, Disharoon said. “But for really big projects like this, it’s essential that Congress figure out some sort of market-based carbon price mechanism, whether it’s a carbon tax or cap and trade,” he said.

“We’ve thrown that out,” he continued, “but something that works in concert with global agreements, putting us on the right paths where we’re pulling in the same direction as opposed to hog fighting each other about what we’re going to call it.”

There are still ways forward without climate legislation, according to Peter Molinaro, a Dow Chemical lobbyist, and Roger Libby, head of DHL’s corporate public policy.

Focus on energy security, Molinaro said. It entails the same essentials needed to deploy technology to reduce carbon and pollution, particularly the use of alternative fuels and sources of electricity.

“I don’t think it’s over,” he said. “I think we’ll be sort of backing into a carbon policy. By pursuing energy security, we might end up saving people some money and finding the technology to reduce greenhouse gases.”

But Libby said a strong public-private partnership on major projects is critical. A government commitment to infrastructure development, for example, is needed to improve the efficiency of shipping by road and air. “There’s only so much private industry can do on its own,” he said. “We cannot expect all of the roads to be built by private investors.”