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Green Logistics: House signs off on Markey-Waxman energy legislation
Friday, 26 June 2009 00:00

WASHINGTON—The U.S. House of Representatives signed off on legislation earlier today that has the potential to have a profound impact on shipper supply chain operations and planning for years to come.

The legislation—introduced by Representatives Edward Markey (D. Mass) and Howard Waxman (DCalif.)— is entitled the American Clean Energy and Security Act of 2009. It calls for reducing emissions by 17 percent below 2005 levels by 2020, as well as:

  • a new low-carbon transportation fuel standard to promote advanced biofuels and other clean transportation fuels;
     
  • a focus on transportation efficiency, which would order the EPA to set emissions standards for locomotives and marine vessels and a requirement for states to establish goals for reducing global warming pollution from the transportation sector; and
  • authorizing the EPA to carry out the SmartWay Transportation Efficiency Program to increase highway trucking output and efficiency.

A report in the Wall Street Journal indicated the bill would impose the nation’s first limits on greenhouse gases linked to global warming and shift the country away from reliance on fossil fuels.

A component of the bill that has been met with some opposition due to the potential increased costs for businesses and consumers has to do with “cap and trade,” a form of emissions trading, which is used to control pollution by offering economic incentives in order to achieve reductions in emissions pollutants. Cap and trade would put limits on emissions from motor vehicles, coal-fired plants, and factories.

The U.S. Chamber of Commerce came out against the bill, saying that it fails to ensure that an adequate amount of renewable or alternative energy sources are developed and deployed to compensate for the bill’s declining cap on fossil fuel emissions.

And the American Trucking Associations said earlier this month that the bill threatens to significantly increase fuel costs and jeopardizes the economic viability of trucking companies. ATA First Vice Chairman Tommy Hodges recently told a Congressional Committee that provisions in the bill’s cap and trade program grant oil refiners two percent of the carbon allowances between 2014 and 2016 to help
mitigate refinery greenhouse gas emissions. Hodges said this amount is inadequate and will result in
major price increases for refined products.

If this bill becomes law, shippers will have to re-think their supply chains, which will require supply chain modeling to devise supply chains that are “lean as possible” to reduce transportation usage, noted Brittain Ladd, director of logistics and manufacturing at Cognizant Technology Solutions.

"A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials; transformation of these materials into intermediate and finished products; and distribution of these finished products to customers,” explained Ladd. “Therefore, every new regulation restricting the production of GHG will have a direct impact on supply chains, as supply chains are major contributors of GHG.

As more and more environmental regulations are implemented, [shippers] will be challenged to shorten their supply chains and introduce new technologies and business models in order to adhere to the new
regulations.”

Logistics Management, 6/26/2009