Cap-and-trade support hinges on economy: survey

NEW YORK (Reuters) - U.S. manufacturers would be much more likely to support cap-and-trade legislation to limit pollution if they believed the industrial economy was about to improve, according to a survey.

Opposition to the legislation to cut U.S. emissions of greenhouse gases, which suffered a delay in the Senate on Thursday, is strongest among industrial executives who are pessimistic about the U.S. economy, according to the survey commissioned by accounting and consulting firm Baker Tilly Virchow Krause, which represents many Midwestern manufacturers.

The telephone survey, conducted last month, found 55 percent of those bearish on the economy were strongly against the cap-and-trade system. That strong opposition dropped to 30 percent among those who are bullish about the economy.

Overall, 59 percent of manufacturers opposed the plan, in which companies would be required to buy credits for pollution they emit, while 32 percent were in favor, with large companies slightly more likely to be in favor than small ones. About a quarter of those surveyed are publicly traded.

U.S. business leaders prefer delaying legislation that would mean higher costs while they cope with the ongoing recession, said Brad DeNoyer, manufacturing industry leader at Baker Tilly.

"Manufacturing right now is working on razor-thin margins, so any additional costs will make the difference between being profitable and unprofitable," DeNoyer said.

HIGHER COSTS

Most of the 300 senior manufacturing executives polled said they would pass on the higher costs to their customers, and most would delay new capital investments.

"There's a general sense that something ought to be done," DeNoyer said. "Our clients are telling us they want to make sure that it doesn't cost too much and that the timing is right."