The Politics of Climate Change Legislation
Authored by Tim L. Peckinpaugh (Washington, D.C.)
With this spring’s passage of landmark healthcare legislation and the likely enactment this summer of the financial reform bill, the White House is looking for a third legislative victory with the passage of comprehensive climate change and clean energy legislation. Much like horse racing, however, the odds of achieving this legislative trifecta are exceedingly small.
Climate change is a vexing legislative issue that has become increasingly complex and politically problematic. The failure to produce a binding agreement at the Copenhagen conference late last year highlights the intricate politics that permeate the climate change debate. These same politics have largely stymied Congress and the White House in moving forward on “cap and trade” legislation.
Status
To review, the House of Representatives already approved 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 would establish an elaborate cap-and-trade system to reduce greenhouse gas emissions over the next 40 years, and would provide 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 bipartisan bill approved last summer 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 last fall by the Environment & Public Works Committee after a highly partisan and contentious process in which the Republicans refused to participate.
Both bills have been ready for Senate floor consideration for months. Yet, there’s been no action on the Boxer-Kerry cap-and-trade bill because most observers (including many Democrats) agree that there are not 60 votes in the Senate, which is usually required to move any meaningful bill. The reasons for this are many and strike at the very core of climate change politics.
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 still struggling to recover and a near double-digit jobless rate.
The second concern is regional equity. Senators representing states dependent on carbon fuels, such as 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 subprime mortgage 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 as the November midterm elections near, rendered the Boxer-Kerry bill essentially dead on arrival on the Senate floor. So, if the Senate were to proceed in the elusive goal to cobble together a coalition of 60 votes to pass climate change legislation, a new approach was needed. Such an alternative proposal was earnestly pursued for months by a trio of Senators: Kerry, Lindsey Graham (R-SC), and Joe Lieberman (I-CT).
The Kerry-Graham-Lieberman proposal (or "KGL") married the 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 valiantly put himself at odds with most in his party by being prepared to accept a modified cap-and-trade program, provided it also featured some consumer protections and expanded energy production to reduce dependence on unreliable foreign supplies. KGL was packaged in national and energy security terms, not environmental terms, to attract Republican votes.
On the eve of the bill’s unveiling in late April, Graham pulled out, leaving the bill without a Republican sponsor. Graham expressed concerns that the political milieu in the Senate had been poisoned by the clumsy efforts to advance controversial immigration reform legislation ahead of climate change. Others speculated that Graham was feeling the political heat as it appeared that no other Senate Republicans were prepared to stand with him in support of KGL.
Undaunted, Kerry and Lieberman pushed ahead without Graham and released their 987- page bill, entitled the American Power Act, in May. The bill was faithful to the production-oriented climate change proposal that Graham helped craft, with a few provisions inserted to respond to the offshore drilling accident in the Gulf of Mexico.
Prospects
In the Senate, the climate change debate for this year now hinges on whether the Kerry-Lieberman bill (now "KL") can muster 60 votes for passage. The Environmental Protection Agency ("EPA") and the Department of Energy ("DOE") will release an economic modeling of the bill during June, which means it should be ready for Senate floor action in July.
The unfolding oil spill in the Gulf also shines the political spotlight on energy policy, which should provide heightened impetus for Congress to act. In fact, Majority Leader Harry Reid (D-NV) has directed the committees of jurisdiction to provide their legislative proposals on oil spill liability and mitigation and response measures by the end of June so that they can proceed with Senate floor consideration after July 4. However, despite the favorable politics and push to develop oil spill legislation and the strong and personal backing from President Obama, the Kerry-Lieberman bill still faces the same difficult obstacles as the original Boxer-Kerry bill.
The first obstacle is the compressed calendar. The Senate has many other “must do” priorities, such as spending, tax, and jobs bills, as well as a Supreme Court nomination. With the Senate on recess during most of August and the November election fast approaching, there is not much time to debate climate change.
Second, the Kerry-Lieberman cap-and-trade proposal is complex and has not been fully vetted. In some respects, it’s even more complicated than the House-passed bill because it imposes individual caps on three sectors: utilities, industry, and transportation.
Third, the whole climate change debate, and especially the cap-and-trade methodology, has become increasingly controversial. More Americans question the science on global warming and opponents of cap-and-trade have, for the moment, largely won the public relations battle.
Fourth, the legislation does not enjoy bipartisan support. Graham’s departure is very costly, because without him, there is no visible Republican support in the Senate for the Kerry-Lieberman bill. Given the current party composition of the Senate, a partisan proposal is not going to clear the 60-vote hurdle.
Finally, the timing is wrong. Many members are rightfully fretting their reelection prospects, especially on the heels of tough votes taken to pass healthcare. The last thing the Senate Democratic leadership and the White House want is to ask moderate Democrats to “walk the plank” again by supporting a climate change bill.
Despite these dismal prospects for passing the Kerry-Lieberman climate change bill, there are some options. For instance, Senators Maria Cantwell (D-WA) and Susan Collins (R-ME) have proposed an alternative “cap and dividend” proposal. This bipartisan approach, which gets credit for its simplicity (it’s only 39 pages of legislative text), would set up a pure auction with revenues generated returned mostly to the public. While the cap and dividend bill is getting some renewed interest as a bipartisan group of Senators have asked DOE to model its impact, it is simply too late to advance the bill this year, but perhaps the cap and dividend concept can become a fresh and viable option to the old cap-and-trade model next year.
Another option is a straightforward carbon tax, which many economists argue is the best way to put a price on carbon to encourage the production and use of clean, non-carbon emitting energy. Yet, given the current political environment, any proposal featuring taxes will likely face entrenched opposition from Republicans and some moderate Democrats.
Another legislative option is to proceed with the Bingaman clean energy bill, with its incentives and mandates to promote renewables and energy efficiency, most of which can probably pass the Senate this year. While the Bingaman bill enjoys bipartisan support, proponents of comprehensive climate change legislation may not support moving it separately for fear that without it being used as a sweetener, passage of cap-and-trade or other stand-alone restrictions on carbon dioxide (CO2) will not be politically viable. Others, however, have advocated using the Bingaman clean energy bill as alegislative vehicle to respond to the Gulf oil spill crisis and permit it to be amended on the Senate floor with climate change proposals, such as the Kerry-Leiberman bill.
A final option if Congress is unable to pass climate change legislation is for EPA to regulate greenhouse gas emissions. The agency has already started to review proposed rules that impose restrictions on major emitters of CO2, such as coal-fired plants and certain energy-intensive manufacturing. EPA regulation would be extremely controversial and would likely be challenged by the Congress and in the courts. For instance, a privileged resolution offered by Senator Lisa Murkowski (R-AK), disapproving of EPA’s regulation of greenhouse gas emissions, fell just four votes short of passing the Senate on June 10. In addition, any climate change regulations finalized by EPA will likely trigger lawsuits that may be tied up in the federal courts for years.
