From the WSJ
Both companies may figure they can afford a U.S. carbon tax because most of their manufacturing is done outside the U.S. Apple has an enormous "carbon footprint" of some 10 million annual tons of emissions to make and use its power-hungry gadgets. But nearly all of those products are made in China and other Asian countries where there are no carbon limits and aren't likely to be any time soon, if ever. According to calculations based on Apple's emissions figures, were the company to manufacture in the U.S., the Boxer-Kerry bill pending in the Senate would hit Apple with carbon taxes between $43 million and $108 million a year.
Nike, meanwhile, makes most of its shoes and apparel in 700 contract factories in countries such as South Korea and Vietnam—which also won't sign up for the Boxer-Kerry energy tax. The larger point is that neither Apple nor Nike would pay as much under a cap-and-trade bill as, say, the maker of Bobcat excavators in Bismarck, N.D., or your average Midwest natural gas utility. Green virtue is easier when someone else is paying for it.
Yet even this self-interested calculation is likely to be short-sighted for both companies. Since climate change is a global issue, green activists won't stop their carbon pursuit at the U.S. border. It wouldn't be long after cap and trade passed in the U.S. that Nike and Apple were pressured to move their manufacturing out of countries that haven't signed Kyoto II. That would threaten their production lines and cost structure, with potential damage to sales and competitiveness.
And if the companies fail to relocate, the next anticarbon lobbying policy step will be a carbon tariff against products made in China or Vietnam and sold in the U.S. A carbon tariff is already part of the House cap-and-trade bill and is gaining currency among Congressional protectionists, most recently Senator Lindsey Graham (R., S.C.). As companies that import nearly all of their products, Apple and Nike would be especially vulnerable. We wonder if Messrs. Cook and Parker thought through any of this before committing their employees and investors to this crusade. . . .
Labels: Environment, GlobalWarming