16 march 2009

Financial crisis a turning point in lobbyists' fortunes
By Joshua Chaffin

Financial Times March 16 2009

Late last year, when the European Union's landmark climate bill was nearing its legislative conclusion, Avril Doyle, the MEP who was overseeing one of its most contentious elements, complained about being besieged by lobbyists.

If Ms Doyle's lament was an exaggeration, it was a small one. For, unlike other MEPs, she took the novel approach of recording every lobbyist who paid a visit while she served as raporteur for the part of the bill that revamped the EU's emissions trading system. The tally came to 168.

Ms Doyle's logbook is just one illustration of the determined effort by lobbyists to shape a sprawling piece of legislation - an effort that most observers agree was wildly successful. Carmakers managed to roll back deadlines for emissions reductions. Energy and engineering companies won a commitment for billions of euros in funding to build carbon capture and storage facilities - controversial technology to bury greenhouse gases that many environmentalists oppose.

The biggest victory came in the emissions trading system. After much complaint, they managed to water down a central element of the bill that would have forced companies to spend tens of billions of euros to acquire annual carbon permits at state-run auctions. Instead, European manufacturers of bricks, cement, glass, steel and other manufacturers will receive most of their permits for free.

Philippe de Buck, director general of Business Europe, the Brussels-based business lobby group, takes issue with the notion that companies will receive "free" permits since they will still have to meet certain emission benchmarks in order to be exempt from auctioning. Nonetheless, he is not shy about acknowledging an all-out lobbying blitz by his constituents. "Our involvement and the involvement of our member ogranisations has never been as huge as it was for the climate package," he says, calling the legislation "the most important dossier for the future of our industry".

The campaign, according to Mr de Buck and other observers, was characterised by its breadth. Business groups were able to mobilise vast numbers - from corporate executives to trade unions and hired lawyers and lobbyists - and then use them to push on all levers of the government simultaneously. "We were able to change their minds, step by step. It was not easy," he says.

Indeed, the campaign did not get off to a galloping start. Even Mr de Buck noted the scepticism with which many MEPs greeted his group's presentations. But a big turning point was the full-blown economic and financial crisis in late September. It appeared to tune politicians' ears to previously-ignored complaints from companies such as BASF, the German chemicals maker, that the costs of the proposed legislation would force them to move manufacturing facilities outside the EU.

"Business was not very successful until the start of the crisis," recalled Joris den Blanken, a policy specialist at Greenpeace. "But they really used the crisis to gain some momentum after it became clear that the banks were collapsing."

Perhaps the biggest coup for business lobbyists, according to Mr den Blanken, was their ability to sway Angela Merkel, the German chancellor. In March 2007, Ms Merkel was hailed for her ability to rally European leaders behind the climate package when Germany held the EU presidency. Yet, under intense domestic pressure, she became one of the main advocates of granting free emissions permits to industry.

It is matter of debate whether the lobbying effort represented a legitimate expression of business' interest or a demonstration of undue political influence. "I can assure you we faced a strong counter-lobby from NGOs," Mr de Buck says.

Money enabled business groups to hire the legions of lawyers and lobbyists. Unlike in Washington, DC, however, corporations could not turn their financial advantage into political contributions, the lifeblood of American politicians.

"I think it's far more balanced than in the States," says Richard Corbett, a socialist MEP. Ultimately, Mr Corbett argued that it was incumbent on lawmakers to sift through and balance the arguments of lobbyists on all sides of an issue, saying: "Of course you listen to the car industry... but you are also listening to scientific evidence and environmental groups."

Whether policymakers can successfully do that is already being tested again as business groups and environmentalists gear up for an international conference in Copenhagen in December, aimed at crafting a global climate deal.

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