November 29, 2006 4:00 AM PST

Supreme Court to consider climate change rules

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Smart money eyes climate change

July 10, 2006

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The legislative process is expected to gather input from large businesses, which are large carbon emitters and influential in the climate change policy decisions, the WRI's Wellington noted.

Corporations, as well as other countries, are putting pressure on the federal government to establish federal rules, rather than deal with a patchwork of state mandates, which can be more costly, he said.

Through various energy-saving initiatives, the information technology industry has also taken measures to lower power consumption. Power is a significant cost of operations, with some businesses spending nearly 20 percent of their IT budgets on electricity.

Consistent guidelines are important to businesses because they make large investments amortized over many years, Sun Microsystems' vice president of eco-responsibility David Douglas noted. A data center's servers are typically viewed as a 3-to-5 year investment, while generators on a data center are more like 10 to 20 years.

"What's most important is we get clear guidance from government on what the regulatory environment will look like for these periods. If it's very uncertain, it's hard to make decisions," Douglas said. "If CO2 (carbon dioxide) gets expensive, we might make a different set of decisions."

The Kyoto Protocol, which does not count the U.S. as a participant, sets emission reduction targets only through 2012.

The U.S. can stand to learn from Europe's experience in setting up a cap-and-trade program. The initial allocations of carbon emission credits--which can be given away or auctioned off--are extremely important, WRI's Wellington noted. Emissions limits that are initially set too low can result in a surplus of allowances, which decreases the value of these credits on trading markets, he said.

Putting a price on carbon emissions through a tax or cap-and-trade system can act in tandem with other regulations to promote cleaner forms of energy, said David Hullah, an associate at venture investment firm RockPort Capital Partners, which invests in energy-related companies.

"I expect to see (carbon-related regulations), and I think they'll have tremendous influence," Hullah said. "I strongly believe they can be a direct lever to use less energy."

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