Cap and Trade Will Not Pass in 2010 But Climate Bill is Still Alive

Scenarios: Climate Change Options for Congress in 2010

January 25, 2010

Reuters - When U.S. President Barack Obama delivers his State of the Union address on Wednesday, he is expected to promote alternative energy as a way of tackling global warming problems and creating more domestic jobs.

But climate change legislation is facing serious difficulties in Congress, where many politicians do not want to cast votes on legislation that some fear could eventually raise energy prices on the heels of a severe economic recession.

Also, with the November congressional elections coming into focus, lawmakers are keeping a close eye on public opinion polls, some of which show support is sinking for a climate bill this year.

Following are some possible scenarios for the legislation that aims to mandate industry reductions in U.S. greenhouse gas emissions, which are blamed for global warming:

CAP AND TRADE BILL WILL NOT PASS THIS YEAR

Some prominent Senate Democrats already have predicted that comprehensive climate control legislation, such as cap and trade, will not pass this year.

A new poll by the Pew Research Center for the People and the Press says that only 28 percent of those surveyed now list global warming as a top priority this year. That's down from 38 percent in 2007.

Dealing with domestic energy problems was listed as a top domestic priority by 49 percent, down from 60 percent a year ago, according to the Pew poll.

Under cap and trade, utilities, oil refineries and factories would be required to reduce their emissions of greenhouse gases over the next 40 years. Companies would have to obtain permits for each ton of carbon dioxide they emit and those permits would be traded on a regulated exchange.

Failure to pass cap and trade would disappoint traders and banks looking to bring a $1 trillion financial mechanism to fighting climate change.

The House of Representatives narrowly passed a cap and trade bill in June, but it has stalled in the Senate.

With the election of Republican Scott Brown to the Senate, Democrats hold 59 of the 100 votes in the chamber, and Republicans have 41. The bill needs 60 votes to overcome procedural hurdles that could block passage.

Brown, who replaces the late pro-cap and trade Senator Edward Kennedy, campaigned against the plan.

Depending on how the November elections go and how the U.S. economy is performing next year, environmentalists could try to pass a climate bill in 2011.

CLIMATE BILL STILL ALIVE

Senator John Kerry is trying to write a compromise bill that would have cap and trade, or some other carbon-reduction mechanism, and couple it with expanded domestic oil and gas drilling and more federal aid to expand the nuclear power industry.

Kerry is working with independent Senator Joseph Lieberman and conservative Republican Senator Lindsey Graham to find a bill that could pass the Senate this year.

The legislation also might preempt the Environmental Protection Agency from developing complicated carbon emissions regulations.

The three senators met last week with officials of the U.S. Chamber of Commerce, which opposed the House-passed bill.

The business lobbying group particularly didn't like a provision allowing tariffs on some energy-intensive goods that are imported if foreign countries do not do their part on climate change. The chamber argues the provision would spark trade wars.

NARROWER BILL

If Kerry fails to find a compromise bill, Democrats might push a narrower bill requiring more use of alternative energy sources, such as solar and wind power, without mandatory reductions in carbon dioxide emissions.

Environmental groups would have a hard time supporting the expanded oil and gas drilling and more help for nuclear power without imposing mandatory caps on carbon.

EPA REGULATION

The Environmental Protection Agency is threatening to regulate carbon emissions if Congress won't.

Regulations could go forward as early as March. But a barrage of lawsuits is expected from opponents, which could delay action.

President Barack Obama would rather have Congress act on a bill that could provide more protections for industry while also accomplishing more comprehensive pollution control. He's using the threat of EPA regulation to encourage lawmakers.

Meanwhile, Republican Senator Lisa Murkowski is threatening legislation to strip EPA of the power to regulate.

COPENHAGEN ACCORD SUFFERS

The political turmoil in Washington over passing a climate change bill is not expected to help international efforts to tackle global warming. In December, the Copenhagen Accord, barely hammered out under U.N. auspices, set a January 31 deadline for nations to submit new goals for reducing carbon emissions.

That becomes more dicey if confidence is shaken by the inability of the United States, the developed world's largest carbon emitter, to take concrete action.