U.S.: Untangling U.S. Climate Change Legislation
Authored by Tim L. Peckinpaugh (Washington, D.C.)
As the historic climate change conference in Copenhagen comes to a close, much of the world’s attention will return to the U.S. Congress, and whether comprehensive climate change legislation will be enacted as a sign of American resolve to tackle this vexing issue.
The dramatic story unfolding in Copenhagen highlights the intricate politics that permeate the climate change issue. These same politics will be on display again when the Congress returns to grapple with climate change “cap and trade” legislation next year.
To recap, the House of Representatives has already done the deed by approving a massive climate change and clean energy bill last summer. The House legislation, dubbed the Waxman-Markey bill (HR 2454), passed by a razor thin and mostly partisan margin of 219-212. It establishes an elaborate cap and trade system to reduce greenhouse gas emissions over the next 40 years, and provides for various mandates and incentives for the production and use of carbon-free energy sources.
The Senate has drafted similar legislation in two parts: a clean energy bill and a cap and trade bill. Both bills have been approved by their respective committees. The energy bill sponsored by Senator Jeff Bingaman (D-NM), S. 1462, is a bi-partisan bill approved by the Energy & Natural Resources Committee, which includes a renewable energy standard and various incentives to promote clean technologies. The cap and trade bill sponsored by Senators Barbara Boxer (D-CA) and John Kerry (D-MA), S. 1733, was approved by the Environment & Public Works Committee after a highly partisan and contentious process in which the Republicans refused to participate.
Now these bills are ready for Senate floor consideration. Like the healthcare debate that has consumed the Senate floor since Thanksgiving, 60 votes (a 3/5th majority) will be necessary to pass the cap and trade portion of the comprehensive legislative package. At this juncture, most observers (including many Democrats) agree that there are not 60 votes in the Senate for the Boxer-Kerry cap and trade bill. The reasons for this are many and strike at the very core of the climate change politics on display in Copenhagen.
The first concern is that restrictions on greenhouse gas emissions will impose economic costs in the form of higher prices on carbon-based fuels. Many Senators are reluctant to support any legislation that has economic consequences, especially with the economy struggling to recover and a double-digit jobless rate.
The second concern is regional equity. Senators representing states dependent on carbon fuels, such those that mine or burn coal, are concerned that their constituents will pay a disproportionate share of the costs stemming from climate change restrictions. These Senators need to be persuaded that a cap and trade system will not impose an unfair burden on their states just because of the type of energy they produce or consume.
A third concern relates to the mechanics of cap and trade. With the memories of the sub-prime financial meltdown still fresh, some Senators fear that creating a new and complex market to trade carbon credits is fraught with potential gaming and even abuse. The House-passed cap and trade system has also been roundly criticized for giving away up front too many free credits to utilities and carbon producers to curry political support.
The combination of these concerns, along with a healthy dose of partisan politics punctuated by the increasingly polarizing healthcare debate, has rendered the Boxer-Kerry bill essentially DOA on the Senate floor. So, if the Senate is to proceed in the illusive effort to cobble together a coalition of 60 votes to pass climate change legislation, a new approach is probably needed. At least two alternative legislative proposals have been presented.
The first alternative proposal is an energy production bill being brokered by Senator Lindsey Graham (R-SC) with help from Senators Kerry and Joe Lieberman (I-CT). Graham’s proposal marries greenhouse gas emission reduction targets with a more aggressive campaign to develop domestic energy resources, particularly nuclear power (the largest source of carbon-free energy), clean coal, and offshore oil and gas. Graham has put himself at odds with most in his party by being prepared to accept a modified cap and trade program, provided it also features some consumer protections and expanded energy production to reduce dependence on unreliable foreign supplies.
The second alterative is a “cap and dividend” proposal advanced by Senators Maria Cantwell (D-WA) and Susan Collins (R-ME). This bi-partisan approach gets credit for its simplicity (it’s only 39 pages of legislative text compared to over 1,000 pages for the cap and trade bills). It would set up a pure auction in which producers and importers of fossil fuels, not emitters like utilities, would have their emissions capped and only they could participate in an auction to allocate carbon permits. Revenues generated by the auction would be split two ways: 75% to the public to help defray higher energy costs and 25% to support energy efficiency and developing new clean energy technologies.
It will likely take one of these proposals, or perhaps a combination and other fresh approaches, such as a straightforward carbon tax, to break the impasse in the Senate to allow consideration and passage of climate change legislation. Even then, it will be a slog in winning approval in the Senate of any meaningful climate legislation, especially on the heels of the marathon Senate healthcare debate and as next year’s November elections approach.
Finally, if the 60 votes aren’t there for climate change legislation, the Senate may proceed separately with the Bingaman clean energy bill with its incentives and mandates to promote renewables and energy efficiency, most of which can probably pass next year and be signed into public law.
