Cap and Trade Rules
Tech Ttitans Energized by Obama's Forecast

By Carolyn Lochhead
San Francisco Chronicle
March 27, 2009

Silicon Valley tech titans came away in
high spirits this week from meetings with White House officials and
congressional leaders, a sharp contrast to the darkening mood on Capitol
Hill about whether the president's ambitious agenda can be implemented.

Still, money from the $787 billion economic stimulus bill passed last
month could take considerable time to trickle down to the ground. Some
programs, such as high-speed broadband investments, are not expected to
hit full stride until 2011. The executives warned officials that the
credit crunch has hit hard in the valley, drying up venture capital and
new stock offerings. They said some startup biotechnology and biofuels
companies are running with just six months or less in cash reserves.

But the overall message was much in sync with President Obama's. "We need
to come out of this downturn with an economy that the future can be based
on, and both clean technology and more traditional high-tech are a core
part of that," said Chris Kelly, chief privacy officer for Facebook,
headquartered in Palo Alto. "We've been a great job-creation engine for
America, and we believe we can be again."

The group of 100 executives, part of the TechNet and Information
Technology Industry Council trade groups, have major entree to Democratic
powerbrokers in Washington. They met with White House economic chief
Lawrence Summers, Obama confidante Valerie Jarrett and other top
administration officials along with leaders of both parties in the House
and Senate, including House Speaker Nancy Pelosi, D-San Francisco.

Silicon Valley has billions of dollars at stake in the clean energy
initiatives in both the stimulus and Obama's broader budget, which is
moving through House and Senate budget committees this week. The valley
sees clean energy as the next technological frontier, with as much
potential as the information revolution of the 1990s.

But much of the new investment today is coming from the government, led by
Obama's drive to make clean energy development a top priority along with
health care. The technology industry got many of its priorities included
in the stimulus measure, including tens of billions of dollars in such
items as a new "smart" electrical grid and favorable tax treatment for
solar and other alternative energy.

Firms ready for challenge

Ralph Hellmann, chief lobbyist for the Information Technology Industry
Council, said money from the stimulus has not filtered down, given the
many regulations and requirements that government agencies need to follow
before even putting projects out to bid. But he was optimistic that the
administration is moving quickly.

"Our feeling is this is going to take time to move through," Hellmann
said. "It's going to take not years, but months, and many of our companies
are raring to go."

But the increase in funding for a raft of technology projects, from
high-risk research to transportation, is enormous. Government funding for
broadband, for example, will rise from $300 million last year to $7.2
billion over a span of 10 years.

Congressional leaders told the group that the House expects to move on a
controversial global warming bill early this summer, and the Senate could
follow shortly after.

Two California Democrats, Sen. Barbara Boxer, chairwoman of the Senate
Environment and Public Works Committee, and Rep. Henry Waxman of Los
Angeles, chairman of the House Energy and Commerce Committee, told the
group they are committed to moving legislation this year.

'Cap and trade' setback

But fierce resistance among Democrats dealt a blow Wednesday to Obama's
controversial "cap and trade" idea - which the administration hoped would
raise more than $600 billion in revenue - when the House and Senate budget
committees refused to include the plan in a special filibuster-proof
procedure known as "reconciliation."

The cap-and-trade idea is considered critical to reducing greenhouse gas
emissions. The government would limit overall emissions and then auction
off permits to companies for the emissions they produce, creating a market
that would raise huge sums for the government while reducing greenhouse gases.

The idea has drawn ridicule from Republicans who denounce it as an energy
tax that would hit all consumers and violate Obama's pledge not to raise
taxes on the middle class. It has also sowed fierce divisions among
Democrats. Some on the left fear it would hit workers too hard and kill
prospects for an economic recovery. Regional clashes have also emerged
between Democrats representing states that either produce coal or whose
utilities depend on it and those in states such as California that are
more worried about global warming.

Environmental clout

California tech companies will have to take a stand on the climate debate
because environmentalists need their clout in the lobbying war. Waxman
said he plans to move a bill out of his committee by Memorial Day.

"We aren't the big emitters and producers. Those debates are with the
utilities and others," Hellmann said. "But it's going to be hard to be a
major player on energy without weighing in on cap-and-trade. They let us
know we can't sit on the sidelines."


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