Climate Winners and Losers
Posted November 3, 2009 at 2:16 pm 
Filed in: As Senator Boxer and the Environment and Public Works committee (sans its Republican members, who have boycotted the session) mark up the Kerry-Boxer cap-and-trade bill, an influential new report describes the impact of carbon price of $15 per ton on oil and power companies, which account for around 40% of national emissions.
PointCarbon concludes that ExxonMobil – the nation’s largest emitter – will have to pay $5.9 billion annually, but nearly all of this will be passed through to consumers in the form of around 13 extra cents on a gallon of gasoline. The actual costs for ExxonMobil, Chevron, ConocoPhillips, BP and Royal Dutch Shell are in the $247 million to $355 million range.
In general, utilities will find the scheme more burdensome because their smaller revenues mean that the cost of carbon will take out a larger chunk of income, and tight regulation will prevent power companies from raising rates to compensate. Coal-dependent utilities will be the hardest hit, such as Duke and Southern Company. Companies with substantial renewable, nuclear and natural gas powered plants in their portfolios, like Exelon, will benefit from the bill. Exelon’s income may rise by $1.7 billion, in fact, while Southern Co. will have to pay $393 million in compliance costs.
As we examine the domestic corporate reckonings of climate change mitigation, it is also useful to consider how climate change may play out globally. The New York Times posted this graphic showing the largest emitters since 1850. Obviously, industrialized countries are responsible for the lion’s share of warming gases.
A World Bank analysis shows graphically climate change “losers.” The top axis, “Impact Vulnerability” indicates differential vulnerability to climate-related hazards (storms, droughts, floods) and sea-level rise. The left axis, “Source Vulnerability” indicates access to fossil fuels and renewable energy sources, options and the potential size of employment and income shocks following some form of carbon tax. High source vulnerability will make countries less likely to commit to carbon regulation, and high impact vulnerability will make countries more likely to commit to carbon regulation.
The United States, with only medium impact vulnerability (we might lose New York City and some corn production, but the whole country probably won’t flood) and high source vulnerability (we consume and produce vast amounts of fossil fuels) mean that we are, along with Russia and Saudi Arabia, among the least likely countries to support global carbon regulation or commit to serious reductions at home. Meanwhile, countries like China and India face a real conundrum – while their economic growth relies on ever-increasing coal and oil consumption, they will also face the direst impacts of climate change. As Copenhagen approaches, we can expect that these expected winners and losers of climate change will shape the larger framework of national commitments.
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