Climate Bills and a Green Economy

Deal Nearing on Senate Climate Bill: Lawmaker

March 18, 2010

Reuters - The Senate is close to wrapping up talks ahead of introducing a compromise climate change bill, said a top Democratic lawmaker who discussed ideas with industry groups on Wednesday.

"We're planning to button up our efforts somewhere I hope next week," Senator John Kerry told reporters after meeting with a coalition that represents automakers, forestry and paper companies, Big Oil, steel, mining, electricity and others.

Kerry is working with Republican Senator Lindsey Graham and independent Senator Joseph Lieberman on a bill to require U.S. industry to cut emissions of carbon dioxide and other greenhouse gases associated with global warming.

Indicating there was still work to be done, Kerry said:

"We're trying to build support as we develop (bill) language."

Bruce Josten, an executive vice president at the U.S. Chamber of Commerce, left Wednesday's meeting with the three senators and told reporters:

"They're being very constructive; they're trying to figure out how to make this work for the American economy."

The measure will not take the exact approach of legislation approved by the House of Representatives in June, and by the Senate Environment and Public Works Committee in November. This would set an economy-wide "cap and trade" direction to reducing carbon pollution.

Kerry said that while "a lot of language is there" to craft legislation, "we don't have a full outline" yet of a bill.

PRICE COLLAR AND FUEL FEES

The climate bill has been stalled in the Senate and supporters have missed several informal deadlines for producing and passing a bill.

Under cap and trade, companies would face limits on the amount of carbon pollution Washington would let them emit. Those limits would become stricter over the next 40 years, when supporters want an 80 percent reduction from 2005 levels. Also, required pollution permits could be sold on a regulated market.

The three senators also talked about pollution reductions of 17 percent by 2020 below 2005 levels, a goal President Barack Obama has embraced.

The Chamber of Commerce, which says it represents more than 3 million U.S. businesses of all sizes, is staunchly opposed to U.S. Environmental Protection Agency regulation of carbon dioxide.

The three senators said on Wednesday the bill would pre-empt the EPA from regulating the gases, said a source with knowledge of the meeting.

The EPA is ready to issue final regulations as early as March 31 for automobile carbon emissions. That would clear the way for expanding regulations to smokestack emissions, although the agency prefers Congress tackles that problem.

Instead of an economy-wide cap and trade, the three senators are aiming to impose the market system initially on power companies, which contribute about 40 percent of carbon emissions.

The senators are "talking about allowances for that sector that are built around pollution-reduction targets and prohibiting price spikes," Josten said.

Power plants would face emissions limits starting in 2012 while big manufacturers and energy-intensive industry would not face limits until 2016, the source said.

The senators presented an eight-page outline to the industry groups but took it back at the end of the meeting, he added.

The bill would also include a hard price collar that would keep carbon prices between $10 and $30 a ton. Any polluter emitting below 25,000 tons a year would not be regulated, the source said.

As for a possible oil industry tax, the senators discussed a fee on fuels linked to the market price of carbon. The fee would be visible to consumers at petroleum pumps and on airline tickets, the source said. [See Obama May Raise Taxes on Fuel to Meet Carbon Emissions Reduction Goals - Americans May Experience Gas at $7 a Gallon.]

A tax at the oil refinery level that would not be as visible to consumers has also been discussed by the senators.

Once a bill is put together, the Congressional Budget Office will analyze the potential costs to the federal government and the economy. EPA also is expected to conduct a six- to eight-week analysis of the bill before it could be debated on the Senate floor, possibly in June.

Cap-and-Trade Plan in Compromise Climate Bill

March 15, 2010

Reuters - A compromise climate control bill that could be sketched out next week in the Senate will be anchored by a "cap and trade" plan for reducing carbon dioxide emissions from utilities such as power plants, a key senator said on Monday.

"That's not to say there are not some details left to be resolved with utilities but the overall approach is that," the senator said during an interview with Reuters.

Under cap and trade, companies would have to obtain permits for every ton of carbon dioxide and other greenhouse gases they emit. The number of permits would steadily decline during the next 40 years and companies could trade those permits on a regulated financial market.

In a bid to rally support for passing a climate change bill, former President Bill Clinton will address Senate Democrats on Tuesday at their weekly luncheon, according to a leadership aide.

Even if legislation to tackle global warming by mandating carbon pollution reductions for the first time is unveiled, it is unclear whether such a bill will pass during this election year.

After a compromise Senate bill is crafted, the Environmental Protection Agency is expected to take several weeks to analyze the economic impact of the proposals. If that goes well, Senate Majority Leader Harry Reid could try to schedule a debate and vote on the bill by mid-year.

The EPA says it will move to regulate carbon pollution on its own if Congress fails to pass legislation.

Democratic Senator John Kerry has been working with Republican Senator Lindsey Graham and independent Senator Joseph Lieberman on a climate bill that they hope will attract the support of at least 60 of the Senate's 100 members.

They have been working behind closed doors for months now, meeting with corporate lobbyists, environmental groups and undecided senators from states where coal, a major source of emissions when burned, is important in the local economy.

But any climate control bill likely would raise energy prices as the country is forced to move to using more expensive alternative power sources, such as solar and wind. And that could make for a difficult vote for senators facing re-election during the current tough economic times.



SECTOR BY SECTOR

In an interview with Reuters, the senator said:

"There's more certainty about cap and trade for utilities" than how the government would mandate carbon pollution reductions from other sectors, such as transportation and manufacturing.

A bill passed last June by the House of Representatives would set an economy-wide cap and trade program, including power companies, oil refineries and factories. Emissions would decline by 17 percent by 2020, from 2005 levels under the House bill. Senators are looking at a similar target, which the Obama administration has embraced.

But an economy-wide cap and trade program did not appear to have enough votes to pass the Senate.

Instead, senators have been looking at a possible oil industry tax to help control carbon emissions in the transportation sector. Some senators from heavy manufacturing states have been pushing for a delay in carbon emission requirements for factories before moving to a cap and trade program or other mechanism.

The Senate compromise bill, which the senator said could be outlined sometime next week, will "be different ways to deal with different sectors. It's a step-by-step sectoral approach," the senator said.

Many Republicans, who oppose government mandating emissions reductions, have called cap and trade nothing more than "cap and tax." As a result, and because cap and trade is difficult to describe, senators have been looking for different names for the program [see U.S. "Cap and Trade" Rebranded "Pollution Reduction"].

"We probably won't use the word 'cap and trade'" in the legislation, the senator told Reuters.

If the United States manages to enact a domestic carbon-control law this year, it could boost the outlook for international talks set for late November in Mexico on a global warming pact to replace the Kyoto Protocol that expires in 2012.

States Sue EPA to Stop Greenhouse Gas Rules

March 19, 2010

Reuters - At least 15 U.S. states have sued the Environmental Protection Agency seeking to stop it from issuing rules controlling greenhouse gas emissions until it reexamines whether the pollution harms human health.

Florida, Indiana, South Carolina and at least nine other states filed the petitions in the U.S. Circuit Court of Appeals in Washington, D.C. on Thursday, states said.

They joined petitions filed last month by Virginia, Texas and Alabama.

The Obama administration has long said it would attack greenhouse gas emissions with EPA regulation if Congress failed to pass a climate bill. [See Historic EPA Finding: Greenhouse Gases Harm Humans.]

The EPA is set to issue regulations later this month that would require autos and light trucks to increase energy efficiency. That would trigger rules on large emitters like power plants requiring them to get permits showing they are using the best technology available to reduce emissions.

The state petitions call for the EPA to reopen hearings on the so-called "endangerment finding" the agency issued last year declaring the emissions dangerous to people.

"If EPA doesn't reopen the hearings we will move forward to try to stop them from regulating greenhouse gases," said Brian Gottstein, an assistant to Virginia's Attorney General Kenneth Cuccinelli.

The states have complained that the EPA relied too heavily from reports by the U.N.'s climate science panel which included information that exaggerated the melting of Himalayan glaciers.

The EPA said it was confident it would withstand legal challenges on the issue.

"The question of the science is settled," spokeswoman Adora Andy said. The science "came from an array of highly respected, peer-reviewed sources from both within the United States and across the globe, and took into consideration hundreds of thousands of comments from members of the public, which were addressed in the finding," she said.

Allison Wood, a lawyer at Hunton & Williams, said the suits could push some lawmakers to support the climate bill if they oppose EPA regulation and the legislation preempts the agency from taking action.

About the same number of states support the EPA. In January, 16 states including New York and California asked the court for permission to support the EPA in industry lawsuits seeking to stop the agency from regulating the gases from stationary sources like power plants and factories.