Climate Bills and a Green Economy

Senate Climate Bill Stuck in Limbo for Now

May 18, 2010

Reuters - The compromise climate change proposal unveiled last week in the Senate is in legislative limbo, its fate apparently uncertain until at least next month.

The plan by Democratic Senator John Kerry and independent Senator Joseph Lieberman to reduce U.S. carbon dioxide emissions that contribute to global warming is not the subject of any committee hearings; it's not being debated on the Senate floor; it's not even been formally introduced.
At a weekly luncheon that Democratic senators hold on Tuesdays to talk politics and policy, the nearly 1,000-page draft proposal was barely mentioned, according to senators who attended this week's closed-door meeting, the first since its unveiling.

Senate Majority Leader Harry Reid told reporters that during the week of June 14, he hoped to gather all 57 Senate Democrats and two independents "where we will just talk about nothing but energy."

By then, the Environmental Protection Agency and Energy Information Administration could be done, or nearing completion, of an economic analysis of the Kerry-Lieberman bill. The two senators hope the studies will boost prospects if they show minimal negative impact on the U.S. economy from gradually shifting U.S. energy sources from fossil fuels like coal and oil to wind, solar and biomass.
2010 PROSPECTS SLIM?

In the meantime, many senators are questioning whether a climate change/energy development bill will see the light of day in the Senate this year.

"My feeling is it's not going to be coming up this year, but if it does I will dig into it at great depth," Senator Carl Levin told Reuters.

The Michigan Democrat wants tight prohibitions against states developing a patchwork of carbon-reduction plans, something the automakers in his state would abhor. Instead, he wants a national policy on cutting carbon emissions, which Kerry-Lieberman would set.

Eileen Claussen, president of the Pew Center on Global Climate Change, which has fought hard for a climate bill, said during a speech at the Brookings Institution,

"I would never say there is no chance of getting it this year, but I think the chances are painfully small."

Independent Senator Bernie Sanders of Vermont questioned whether there will be 60 votes in the Senate in support of a climate bill, the minimum needed to overcome procedural hurdles Republicans are sure to mount.

"By the time you get to the 60th vote, that person is going to be very heavily influenced by the coal, oil, nuclear power industry," Sanders said.

Kerry and Lieberman argue that there are plenty of new incentives for those industries in their bill -- from billions of dollars to help the coal industry research ways to make coal-burning cleaner, to tax and loan incentives for more nuclear power capacity and even more offshore oil drilling.

Kerry reiterated on Tuesday that the huge Gulf of Mexico oil spill that began on April 20 "should also drive a serious national dialogue and a debate on legislation this year to advance our nation's clean energy future."

Senator Robert Casey of Pennsylvania, where there are worries that a climate bill could mean the loss of jobs in the coal industry, said it's too early to abandon a global warming bill and pivoting to a narrow bill that would just require utilities to use more alternative energy.

"I think a serious discussion about that is premature," Casey told reporters. But he wants assurances that a comprehensive climate bill will help workers in communities hit by job losses.

Casey said that once "the spotlight is fully or substantially on climate change, you might see some shifting" by Republicans. So far, not one has signed onto passing the Kerry-Lieberman bill this year.

The Pew Center's Claussen said failure by Congress to finish legislation this year would be a blow to international climate control talks and that without a domestic law, "the ability of the U.S. to lead is almost nonexistent."

U.N. climate negotiators are next scheduled to meet May from 31 to June 11 in Bonn, with sentiments running high that a new global treaty will not be struck by year's end.

Global Cap and Trade Decades Off, U.S. Unveils Plan

May 12, 2010

Reuters - A grand vision of a global carbon market to limit greenhouse gas emissions may be decades off as U.S. senators unveiled a climate bill on Wednesday, facing tough Republican opposition.

But far from being dead, national and regional cap and trade schemes are emerging as a possible patchwork successor to the international Kyoto Protocol on global warming, whose present round ends in 2012, in the absence of workable alternatives.

Some policymakers outside Europe have downgraded their ambition for a new global treaty or protocol following a disappointing U.N. summit in Copenhagen in December.

Cap and trade schemes aim to limit greenhouse gases by issuing to industry a certain quota of tradable emissions permits, following a five year old European Union model.

Such schemes are emerging as an imperfect, international system for limiting carbon emissions after Kyoto, said Kjetil Roine, manager of carbon market research at Point Carbon.

U.S. legislation similar to the EU scheme would unite U.S. and EU climate diplomacy, said MIT economist Denny Ellerman.

"That changes the game, it starts to look like a global system," he said.

DELAYED

One important factor is timing. Cash-strapped governments are struggling to convince voters, industry and political opponents to implement carbon cuts in the wake of recession.

U.S. democrat and independent senators unveiled on Wednesday a long-awaited climate bill, which included a limited cap and trade scheme and off-shore oil drilling.

Experts say the bill may not pass Congress before 2013, after the next presidential election, at the earliest.

"I think there will eventually be a cap and trade scheme in the United States," said Harvard University's Robert Stavins.

Japan faces a rocky path to launching an emissions trading system after the government approved legislation in March that was vague on how a scheme would limit emissions.

Another important question is whether such schemes link, or have similar rules and carbon prices: an important factor for powerful industry lobbies worried about competitiveness.

The draft U.S. scheme only applies carbon caps to power plants initially, while the EU also binds factory emissions.

Climate Group policy analyst Mark Kenber thought separate schemes could start to join into a global carbon market by about 2020. Ellerman said that date could be further out, at 2030.

Regional cap and trade schemes could start to converge over a 10-year period, said James Cameron, vice-chairman at Climate Change Capital, which has $1.5 billion assets under management, including $1 billion in carbon markets.

WHAT ELSE?

Emissions trading is far from commanding consensus support. Controversies in the EU scheme include a recent 5 billion euro ($6.35 billion) tax fraud.

"Advocates still believe it's all we've got," said British environmental campaigner Jonathon Porritt, from the sustainable development group Forum for the Future.

"My view is that you will see countries move to trading schemes in the first instance, but these won't cut emissions fast enough," said Porritt, who preferred a global carbon tax, for a more definite penalty over volatile carbon prices.

"In the end we need a common EU policy on this (tax) and that could send a very strong signal to the rest of the world."

A new British coalition government on Wednesday proposed a carbon price floor, where utilities would pay a tax if prices under the European cap and trade scheme fell below a certain level, combining the two approaches.

Policies to support renewable energy such as wind and solar power have been effective driving investment, but do nothing to drive industrial efficiency.

"You need to develop the carbon market for the long-term, and these short-term (clean energy) incentives for the next five to ten years," said Mark Fulton, head of research at Deutsche Bank Climate Change Advisers.