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Waxman and Markey Zig

When it comes to climate bills, Representatives Henry Waxman (D-CA) and Ed Markey (D-MA) have their hands on the throttle. They are chairs of the Energy and Commerce Committee and the Energy and Environment Subcommittee, respectively, and so any climate bill must pass though them before reaching the House floor.

Last week started off impressively when Reps. Waxman and Markey unveiled a much anticipated discussion draft of the American Clean Energy and Security Act.

This bill would cap greenhouse gas pollution (GHG) more quickly than President Obama’s similar proposal by calling for a 20 percent reduction of 2005 levels by 2020 instead of Obama’s 14 percent. Both plans would reduce GHG emissions by 80 percent by 2050.

Other provisions in the Waxman-Markey bill include:

  • a 25 percent national renewable electricity standard,
  • grid modernization,
  • energy efficiency
  • clean transportation,
  • green jobs measures, and
  • $1.1 billion per year in research, development, and demonstration projects for carbon capture and storage (CCS) technology.

That last measure is a direct attempt to get support from Congressional members from coal states since without CCS, coal will be a major loser in a climate bill, and without support from the those states, a climate bill is likely to be DOA.

Notably, the Waxman-Markey draft does not address what is arguably the most controversial aspect of cap-and-trade legislation: how pollution allowances are to be distributed. It’s an issue that threatens to fracture the alliance between corporations and environmental groups calling for market-wide cap-and-trade legislation. Corporations generally favor having the allowances simply distributed without fees to keep costs low; most environmental groups prefer auctioning them off to encourage faster emissions reductions. Obama’s proposal would have all of the allowances auctioned, much to the consternation of companies like DuPont and Duke Energy, which have been strong proponents of cap-and-trade. (For more, see the U. S. Climate Action Partnership.) Waxman-Markey avoided the controversy by punting on the whole issue at this point in the game.
What are the next steps? According to Waxman, we can look forward to subcommittee hearings in April; in May the full committee will begin markup. Meanwhile, the president has endorsed the bill.

Thune Leads a Senate Zag

On the same day that Waxman and Markey’s bill raised hopes for climate legislation in this session of Congress, senators did their best to dash them.

As part of the Senate’s budget negotiations, Senator John Thune (R-SD) inserted a measure that would prohibit climate change legislation from increasing electricity or gasoline prices. The non-binding amendment passed by a vote of 89-8. Huh? This does not prohibit certain kinds of climate legislation; it effectively blocks all legislation on climate change.

We can lower emissions of carbon dioxide (CO2), the major greenhouse gas pollutant, by either:

  • “putting a price” on carbon to discourage the use of coal and oil, or
  • adding yet-to-be-perfected pollution control devices to remove carbon dioxide from effluent steams and storing it somewhere (i.e., CCS).

Either option will increase electricity and gasoline prices, at least temporarily. So, on the basis of the Thune resolution, climate legislation is not to be. (And by the way, without legislation to discourage demand for gasoline, gas prices will eventually go up. The difference will be that the dollars will flow overseas rather than stay at home.)

The perplexing thing about this vote is that so many senators who are on record favoring climate change legislation (including some who’ve supported such bills in the past) voted yes on this resolution.

Boxer Maneuvers a Zig Back

Seeking to limit the damage from Thune’s measure, Senator Barbara Boxer (D-CA) inserted language into the budget resolution requiring that legislation “relating to clean energy technologies not increase electricity or gasoline prices or increase the overall burden on consumers.” (Italics added.) This measure passed 54 to 43.

The Boxer insertion makes climate change legislation tenable as long as the government provides revenues to consumers to offset the extra costs of energy purchases. One way to do this is through revenue-neutral legislation where income to the federal government, for example from the auction of allowances, is returned to taxpayers in the form of a tax rebate or reduction in payroll taxes. (Both the Waxman-Markey bill and the Obama proposal have provisions to offset at least some of the extra costs to consumers in this way.)

While the Boxer resolution was a good catch for those favoring climate legislation, the vote sends an ominous message. Only 54 voted in favor — shy of the 60 needed to pass climate legislation now that the president’s efforts to include cap-and-trade legislation in the budget provisions have been axed. After all this, it would appear that passage of a climate bill is still very much in question.