Carbon Taxation – Cap and Trade and Its Effect on the Cold Storage Industry
The government is currently attempting to pass a bill by Congress that sets a limit, or cap, on the amount of a pollutant that can be emitted into the ecosystem. Companies are issued emission permits and are required to keep up an equivalent number of allowances which represent the right to release a specific amount of carbon. The total amount of allowances cannot go beyond the cap.
Companies that need to increase their emission allowance must buy credits from those who pollute less. The move of allowances is referred to as the trade portion of the bill. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions. In theory, companies who reduce emissions will reduce pollution at the lowest possible cost to society.
While some cold storage warehouses function non-temperature controlled facilities, the ones that guarantee products stay at safe temperatures come with a price. Clearly, this is the safer option in storage warehousing because it helps prevent damage to items that require a controlled temperature. Many of the products and items stored may require some kind to climate control in order to keep in good condition.
The cap and trade bill could potentially put a heavier price on temperature controlled storage and warehousing facilities because they release a larger amount of carbon than those that do not. If this bill passes by Congress, many warehouse facilities may be forced to increase the prices they offer clients on storage, transportation and all offered supply chain roles. This bill could already have a negative effect on global agriculture as a whole, which makes workers in the cold storage industry apprehensive.
Cold storage facilities not only store goods, they transport them. Given the fact that the transportation sector is the second largest source of carbon emissions in the country, these businesses are leery of what effects this bill may have on their business. With cold storage and warehousing operations offering third party logistics roles, highlighting both local and global transportation sets, these warehouse operators may begin to fear the future of their business with carbon taxation in the form of cap and trade.
Although our economy is in a recession and we are cutting corners wherever possible, the cap and trade bill may not make it easy on businesses that rely heavily on natural environmental elements, such as carbon. When asked if people are in favor of such a bill being passed, over half of American’s agreed, stating that the ecosystem should be given priority already if it causes slower economic growth, business closings and job losses.