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Climate Debate Overlooks Small Businesses
Ben Block, 15 Jun 09

As the United States debates how it should tackle climate change, "Big Business" has generally received the most political attention.

In the United States, small businesses employ more than half the private workforce. They provide 80 percent of inner city jobs and 66 percent of rural jobs, according to the U.S. Small Business Administration
Small companies are mostly disengaged from the climate debate, businesses advocates say, yet environmentally conscious, small enterprises could become influential supporters of climate legislation.

"Small business has to be a strong constituency if this legislation is going to be passed," said Scott Hauge, president of Small Business California.
"If we are going to create the innovation, we are going to create the jobs, we are going to reduce energy use, there needs to be a concerted focus on small business."

World leaders will craft an international treaty to avoid the most catastrophic effects of climate change this December in Copenhagen, Denmark. Whether the United States can agree on climate change policy in the coming six months will heavily influence the outcome of the Copenhagen negotiations.

The Pew Charitable Trusts revealed last week that the U.S. clean energy economy - more than 68,000 companies that supply clean energy, energy efficiency, conservation strategies, and pollution mitigation technologies - created 770,385 jobs in 2007.

Many of these "green jobs" are small businesses, defined as an employer of 500 workers or less, according to The Center for Small Business and the Environment. In a report also released last week, the Center's Executive Director Byron Kennard said that the 27 million small businesses in the United States, which produce 51 percent of private sector output, are turning to environmentally beneficial services in greater numbers.

"These are not tree hugger prophesies. These are real businesses, taking real risks, creating real jobs," Kennard said. "Economically, politically, and socially as well, these green businesses are having a real impact."

Despite the growing contribution of small eco-entrepreneurs to the economy, no studies have measured how climate change legislation would specifically affect U.S. small businesses, Kennard said.

"Small business is always ignored," he said.

The U.S. House of Representatives is debating the American Clean Energy and Security Act, a bill that promises to reduce U.S. carbon emissions 17 percent by 2020 and 83 percent by 2050, compared to 2005 levels, through a national cap-and-trade system.

In addition to placing a price on carbon, which would benefit low-carbon businesses, the legislation would increase energy efficiency standards, establish national mandates for renewable energy, and boost clean energy research.

The current version allows industrial polluters - businesses that emit more than 25,000 tons of carbon annually (such as large electric utilities, natural gas distributors, and cement producers) - to receive about 80 percent of the cap-and-trade system's emission permits for free. The remaining would be auctioned, often to polluters. These funds are intended to assist consumers with higher energy costs, avoid deforestation in tropical countries, research clean-energy technologies, help developing countries adapt to climate change, and deploy clean energy-technologies worldwide.

The bill would also form a worker assistance and job training program, which supports reducing businesses' dependency on fossil fuels. The program would be funded with roughly 0.5 percent of the permit auction funds. Commercial buildings would also be entitled to some of the legislation's financial support for weatherization programs.

Scott Sklar, steering committee chair of the Sustainable Energy Coalition, a group of national and state-level business, environmental, consumer, and energy policy organizations that promotes increased federal support for energy efficiency and renewable energy, said the legislation's benefits for small businesses are too small to provide meaningful support. He criticized the bill for prioritizing large industry instead.

"I don't think any iterations of the [climate] bills I've seen so far support small businesses," said Sklar, president of The Stella Group, a renewable energy marketing firm. "The allowances are given to big business polluters for the most part."

Molly Brogan, vice president of public affairs with the National Small Business Association, said many of her members are supportive of addressing climate change, but they are also concerned that the cap-and-trade system would create a complicated regulatory burden. Without a reliable study on how the bill may affect small businesses, especially financially, the association has not formed an official position.

"We're having such a hard time figuring out if we like this bill because it's been so hard to know quantitatively and qualitatively how it will affect our members," Brogan said.

Michael Diegel, media director for the National Federation of Independent Business (NFIB), is concerned that in regions where energy costs may rise-particularly in coal-reliant Midwestern states-public utility companies and large-scale manufacturers may pass the price burden onto consumers, including small businesses.

"An NFIB member in Pennsylvania runs four athletic clubs and relies heavily on electricity and natural gas to power the heating-ventilating-air conditioning system and lighting the facilities," Diegel said in an e-mail. "His energy costs run about $600,000 a year. If it goes up 40 percent - $840,000 - he says his only choice will be to close his business."

California industries used similar arguments in an unsuccessful effort to derail the state's cap-and-trade bill. Upon realizing that small business owners were likely to support the legislation if businesses could improve their energy efficiency, legislators responded with a small business toolkit. The program guides businesses on how to reduce their energy costs (and therefore greenhouse gas emissions) through voluntary efficiency gains.

"By small business stepping up to give the voice to our position, we were heard," said Hauge, who helped pass the bill in 2006. "Big business was not aligned."

But Kennard said that without a better understanding of whether small businesses would receive immediate benefits or economic trouble, support for national climate legislation is unlikely.

"Small business owners are turned on to energy efficiency. They love green jobs," he said. "But cap-and-trade smacks of regulation. They get up and walk out of the room."

Ben Block is a staff writer with the Worldwatch Institute. He can be reached at This article is a product of Eye on Earth, Worldwatch Institute's online news service.

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