The U.S. Chamber of Commerce is beginning to bleed members over its staunch opposition to climate legislation intended to reduce the nation's global warming emissions.
John Rowe, CEO of one of the nation's largest electric utilities, announced the group's latest loss today: Exelon, a $19 billion company with 5.4 million electricity customers, will not renew its membership in the once-essential business group.
Exelon was the third utility in a week to announce it was leaving the Chamber, and one of a growing number of companies urging the business group's executives to change their tune on climate action. Another member, Nike, is under pressure from shareholders, who will be urging the company in a letter tomorrow to also dump the Chamber.
Rowe explained his support for climate legislation while announcing his company's intentions to leave the Chamber during the American Council for an Energy Efficient Economy national conference this morning:
"The carbon-based free lunch is over," the Exelon CEO said. "But while we can't fix our climate problems for free, the price signal sent through a cap-and-trade system will drive low-carbon investments in the most inexpensive and efficient way possible."
As a member of the U.S. Climate Action Partnership, Exelon helped U.S. Reps. Henry Waxman and Ed Markey frame the House-passed American Clean Energy and Security (ACES) climate bill. The utility also stands to gain from the extensive free emissions permits ACES would provide. A memo written in June by Bernstein Research for Exelon explains:
"If passed, John Rowe calculates the Waxman-Markey bill will add $700 to $750 million to Exelon's annual revenues for every $10 per metric ton (Mt) increase in the price of CO2 allowances. Such a revenue increase would contribute $0.67-$0.72 to earnings per share. Exelon estimates that the price of CO2 allowances, when the law takes effect in 2012, will range from $15 to $18/Mt, implying a positive earnings impact of $1.00 to $1.30 per share."
The U.S. Chamber, however, has been pouring its member-supported resources into fighting the EPA and ACES, arguing that capping emissions would kill jobs and hurt the economy. While studies do show job losses in high-emitting industries, they also show a net jobs gain as the energy economy is reinvented in a low-carbon mold.
The Chamber is firm in its conservative position, spelling out among its climate goals: "Defeat proposed measures that are economically disruptive of business and industry activities," and "Resist ill-conceived climate change policies and measures that could severely damage the security and economy of the United States."
Several members have spoken up about the chamber's position. But the high-profile defections didn't start until this month, when the Chamber called for a trial-like hearing on the science of global warming. Chamber executive Bill Kovacs declared it would be the "Scopes monkey trial of the 21st century."
Kovacs, the Chamber's vice president for the environment, technology and regulatory affairs, later said his analogy was inappropriate, but he kept up the argument:
"We don't think the evidence EPA set forth meets the legal criteria to support such a finding [that greenhouse gas emissions endanger the public health and welfare], and we think a judge would agree with us."
For California's PG&E, that was too much. The utility quit the group, citing irreconcilable differences over the Chamber's extreme position on climate change. PG&E CEO Peter Darbee said the position does not represent the range of views among Chamber members.
"We find it dismaying that the Chamber neglects the indisputable fact that a decisive majority of experts have said the data on global warming are compelling and point to a threat that cannot be ignored," Darbee wrote.
"In our opinion, an intellectually honest argument over the best policy response to the challenges of climate change is one thing; disingenuous attempts to diminish or distort the reality of these challenges are quite another."
"I fear it has forfeited an incredible chance to play a constructive leadership role on one of the most important issues our country may ever face."
New Mexico's largest utility, PNM, followed a few days later, announcing that CEO Jeff Sterba was quitting the Chamber's board of directors and letting PNM's membership expire at the end of the year.
"At PNM Resources, we see climate change as the most pressing environmental and economic issue of our time," the company said in a statement. "We have decided that we can be most productive by working with organizations that share our view on the need for thoughtful, reasonable climate change legislation and want to push that agenda forward in Congress."
Both Nike and Johnson & Johnson, as well as the three utilities, are members of the U.S. Climate Action Partnership, the business-environment coalition that helped write ACES.
Executives from several US CAP members are still on the US Chamber of Commerce board of directors, including Nike Vice President and General Counsel James C. Carter, Siemens CEO George Nolen, Alcoa CEO Klaus Kleinfeld, Dow Chemical Chief Sustainability Officer David E. Kepler, Caterpillar President Stuart L. Levenick, Deere & Company Vice President Charles R. Stamp, Jr., and Duke Energy CEO James Rogers. Duke made headlines this summer when it pulled out of the National Association of Manufacturers and the coal front-group American Coalition for Clean Coal Energy, which was connected to forged letters to Congress opposing the climate bill, but the power company remains part of the Chamber.
On Capitol Hill, the action revs up in Congress again this week with Sens. Barbara Boxer and John Kerry expected to release the Senate version of the climate bill on Wednesday.
UPDATE (Sept. 29): Nike shareholders Green Century Funds, Newground Social Investment and Basilian Fathers of Toronto each wrote to Nike today, urging the company to take a stand and leave the U.S. Chamber of Commerce. Green Century Equity Fund President Kristina Curtis wrote:
"We have been following Nike's responses to the Chamber's activities and were pleased to see that the company has publicly announced its disagreement with the Chamber on the specific issue of climate change. However, as a long-term shareholder of the company, we are dismayed that Nike has not taken a more aggressive stance despite this clear misalignment of its positions with those of the Chamber on climate. While we understand that companies join trade associations for many reasons, we firmly believe that Nike's publicly stated positions on climate, founding membership in BICEP, and strong sustainability reputation should compel the company to follow PG&E's and PNM Resources' lead. ... In Nike's own words, 'Just do it'."