GE's Jeff Immelt: Global Warming 'Compelling'; Cap-and-Trade Most 'Effective' Way to Go
General Electric (NYSE:GE) is the parent company of the major media conglomerate NBC Universal, which owns media outlets NBC, MSNBC and CNBC. At times that has led to the lines between corporate advocacy and journalism being blurred.
That was certainly the case when GE's CEO Jeff Immelt appeared on CNBC's "Squawk Box" May 20 to discuss the White House meeting of President Barack Obama's 16-member Economic Recovery Advisory Board headed by former Federal Reserve chief Paul Volcker.
Immelt used his platform at CNBC to make the case for a cap-and-trade program to curb emissions - something Obama has called for and one Congressional committee is debating this week.
"There's going to have to be a price for carbon," Immelt said. "In some way, shape of form, you're going to have to create some certainty. You have to make technology your friend in this debate. But we sit here today Becky, I think about things like global warming. We've been on this for four or five years."
Immelt contended he wasn't an environmentalist, despite criticism that his networks' have patterns of promoting the green agenda. Immelt told "Squawk Box" the science surrounding man-caused global warming was "compelling" and that it was only a matter of time before something will be done about carbon emissions.
"I think the science, as a CEO I'm not an environmentalist - just purely as a CEO that has to make a payroll - things like that," Immelt continued. "The science is compelling, so it's a question of when and not if there's going to be something done on carbon. Give us some certainty and let's go."
The General Electric CEO said he favored a cap-and-trade system to regulate carbon emissions versus a carbon tax.
"Look, I've said it - there's got to be a price for carbon," Immelt said. "I've come to the conclusion that cap-and-trade is the most effective way to create a market and go. There's going to be people that argue for taxes. But, I - I just think cap-and-trade is the more practical approach. But let's debate all that stuff, but let's get it done."
"Squawk Box" co-host Becky Quick cited a May 19 op-ed by David Sokol that appeared in The Washington Post. Sokol warned a cap-and-trade system would create a complex system of derivatives susceptible to the same sort of asset bubble blamed for the current economic malaise. Immelt argued cap-and-trade could work effectively based on the system in place regulating sulfur dioxide stemming from the Clean Air Act.
"Look, we uh, we had in a smaller scale, we had a market for sulfur dioxide that worked fairly effectively," Immelt argued. "Uh, you know again, I think it is the one thing that can gel NGO's business together is a cap-and-trade system to create a market. Is it going to be perfect? No."
Immelt also maintained that with current obstacles to building coal plants in the United States, U.S. energy policy needs revamping anyway.
"But let's - let's be really honest with each other right now," Immelt said. "We have a policy, we just don't know it. The last 40 coal plants haven't been permitted in this country. We're not leading in the core technologies. You know, we're the worst of all worlds. So, let's have the debate, create certainty. The one thing business guys hate is uncertainty. And in energy today, that ought to be the market we stake out to lead, create certainty, to create incentives for small business, big business, wherever you want to and let's go."
Austan Goolsbee, a former campaign flack now serving on the Council of Economic Advisers and staff director and chief economist of Obama's Economic Recovery Advisory Board, joined Immelt in the CNBC segment. Goolsbee called for cooperation between the private sector and the federal government for the sake of the green agenda.
"Here's a case where government policy with the private sector working together is the only way that it really can get done," Goolsbee said. "And looking at it internationally too, it's got to be done in an international context, so the U.S. isn't the only one passing these rules. But we've fallen behind in this. This is a place where the government's energy policy could be used in a way that would help American business and thus far you know, has been less so we're trying to push that today in this meeting."