Letter Urges Caterpillar to Withdraw from Climate Action Partnership

Published July 1, 2007

The following letter was sent in June by numerous private citizens and public policy organizations to James W. Owens, CEO of Caterpillar, Inc., urging him to withdraw Caterpillar from the U.S. Climate Action Partnership (USCAP), which the firm joined in January 2007.

USCAP advocates the creation of a cap-and-trade system to reduce carbon emissions. Its membership includes Environmental Defense, the Natural Resources Defense Council, National Wildlife Federation, World Resources Institute, and Nature Conservancy.

David Ridenour, vice president of the National Center for Public Policy Research, spearheaded the letter campaign. In an interview for this story, Ridenour said, “Caps on carbon emissions would be enormously costly to consumers, especially the poor. A recent study by the [Congressional Budget Office] found that a cut in carbon emissions of 15 percent would cost Americans in the lowest quintile of income distribution about double what it would cost Americans in the top quintile, as a percentage of income.”

Dear Mr. Owens:

You recently acknowledged that excessive regulations harm Caterpillar’s bottom line, noting in your 2006 Annual Report to Stakeholders that Caterpillar’s on-highway truck engine business would drop significantly in 2007 due to new [federal government] emissions regulations.

That’s why we were astonished to see that Caterpillar had joined the United States Climate Action Partnership (USCAP), which seeks to establish a cap-and-trade system for carbon emissions. If such a system is established, many of the industries upon which Caterpillar depends would be harmed.

As you may know, the Congressional Budget Office reported in April that the oil, gas, and coal sectors–industries upon which Caterpillar depends for sales–would be particularly hard hit by the establishment of a cap-and-trade system.

For example, a cap designed to reduce emissions by 23 percent would result in a 54 percent devaluation of coal stock value and a 40 percent decline in coal production. Do you think a 40 percent reduction in coal production is likely to boost or reduce your sales to this industry?

Other Caterpillar customers will be affected, too. How many sales will you be making to farmers if they can make more money from sequestration than from harvesting crops?

Let’s be clear about the objectives of some of your coalition partners. The Natural Resources Defense Council, National Wildlife Federation, and Environmental Defense have a long history of opposing the very industries that are Caterpillar’s best customers, often through expensive litigation.

Rather than help deliver your loyal customers to the legal sharks of the environmental movement, Caterpillar should help them fight the onslaught of unnecessary emissions caps and regulations that would harm them.

We ask that you immediately withdraw from the United States Climate Action Partnership.

The undersigned represent a diverse group of grassroots property rights organizations, think tanks, taxpayer action groups, farmers, ranchers and miners–some of which are current Caterpillar customers.

If Caterpillar can’t be loyal to its customers and consumers, perhaps there’s no reason to be loyal to Caterpillar.

[Signed by more than fifty organizations and individuals]