Climate Bill Splits Industry Coalition

By STEPHEN POWER

WASHINGTON -- As Congress writes legislation to fight climate change, a prominent coalition in the debate is divided over the fine print.
The U.S. Climate Action Partnership, a broad group of businesses and environmental organizations, was instrumental in building support for capping U.S. emissions of greenhouse gases. Legislation to accomplish that goal recently passed the House and is now before the Senate.
But as lawmakers add provisions to win over colleagues, some USCAP members are withholding their support. They say the bill is too burdensome and contains provisions that have little to do with fighting climate change.
Caterpillar Inc., the Peoria, Ill., heavy-equipment maker and a founding member of USCAP, said it doesn't support the House legislation, citing several "problematic" provisions.
One calls for emissions standards on off-road machines like bulldozers. Others would impose tariffs on goods from countries that don't match U.S. efforts to combat climate change, and require contractors on some energy-related projects to pay employees at least the locally "prevailing wage."
Despite its criticisms of the House bill, Caterpillar said it supports "an environmentally effective, economically sustainable and fair climate-change program."
General Motors Co. also has problems with a number of the House bill's provisions, although spokesman Greg Martin said the auto maker supports the legislation's "general direction." Among the provisions it doesn't like is one authorizing the Transportation Department to require auto makers to produce vehicles that can run on methanol, or wood alcohol, a fuel not widely available.
Ford Motor Co. spokesman Mike Moran called that provision "troubling." He declined to take a position on the House bill, but said Ford would continue pushing for legislation "good for both the environment and the economy."
At least two other USCAP members -- ConocoPhillips and the U.S. unit of BP PLC -- said they don't support the House bill, on the grounds that it doesn't treat energy producers equally. The measure would initially give electric utilities roughly 30% of the government's emissions permits, while oil refiners would get 2%.
Although USCAP hasn't officially endorsed the legislation, it hailed the House vote as a "historic action" that puts the nation "on a clear path toward a long-awaited climate-change policy." Exelon Corp., Duke Energy Corp. and DuPont Co., among other USCAP members, supported the House's approval of the bill.
Jeff Sterba, chief executive of PNM Resources Inc., a New Mexico utility, said it is natural for companies to object to individual provisions and emphasized that USCAP's mission has been to build support for policy principles, not specific legislation.
Even USCAP members that have criticized the bill recently remain in the coalition, which has recommended that the U.S. limit greenhouse-gas emissions while giving away, at least initially, some permits to emit greenhouse gases.
Some lawmakers said the added provisions reflect priorities beyond simply cutting emissions.
If the methanol provision wasn't in the bill, "I wouldn't have supported it," said New York Democratic Rep. Eliot Engel. The legislation is "not just about reducing emissions" but also curbing dependence on foreign oil, he said.
House Majority Leader Steny Hoyer of Maryland said that "when the federal government helps fund new energy projects, it is only right that we ensure that the workers building them get fair wages."
Rep. Sander Levin, a Michigan Democrat, said the tariff measure helps ensure that U.S. industries "are not placed at a competitive disadvantage" to foreign rivals.
What's significant is that USCAP has demonstrated that industry and environmentalists can agree on a framework for addressing climate change, said Fred Krupp, president of the Environmental Defense Fund.
"It's very unusual for big corporations to raise their hands and say, 'We want to be regulated for something that we're not regulated for now,'" Mr. Krupp said. "When the history...is written, it will show USCAP to have played a very constructive role."—Ben Casselman in Dallas contributed to this article.
Write to Stephen Power at stephen.power@wsj.com