OUTLOOK ’10: Prospects for US climate bill are chilly

24 December 2009 20:00  [Source: ICIS news]

WASHINGTON (ICIS news)--Although the prospect of climate change legislation remains worrisome to US chemical producers and a broad range of other manufacturers, congressional passage of a cap-and-trade bill in 2010 looks increasingly unlikely.

In late June 2009 the US House narrowly approved its 1,200-page climate change bill, HR-2454, with a 219-212 vote that just barely squeaked past the minimum 218 votes needed for passage.

In the Senate, the Committee on Environment and Public Works approved in early November a parallel bill, S-1733, in a 10-1 vote that was boycotted by all Republican members of the panel. The one no-vote was by a Democrat member of the committee.

Although President Barack Obama had wanted Congress to pass a climate bill in time for the early December UN climate summit in Copenhagen, by mid-November it was clear that there was no chance of quick Senate passage.

Senate Majority Leader Harry Reid (Democrat-Nevada) announced that further consideration of the Senate’s climate bill would be put off until early in 2010 and the second session of the 111th Congress.

The climate change legislation remains in considerable trouble in the Senate, facing total opposition by the chamber’s Republican members and - of greater concern to Reid and other congressional Democrat leaders - deep scepticism among a dozen or more Democrat senators.

To push such a controversial bill such as climate change through the Senate, 60 of the chamber’s 100 senators must agree to stop debating the matter and submit it to a simple majority vote on the Senate floor.

Along with two independents that typically vote with them, Senate Democrats technically command a 60-vote majority in the upper chamber and in theory could stop endless debate - called a filibuster - on their own.

But along with near unanimous Senate Republican opposition to climate change, the proposed cap on and sharp reductions in US industrial emissions of greenhouse gases has nothing near full support among the chamber’s Democrats.

Although generally supportive of the need for climate change legislation - the belief that man-made global warming threatens dire consequences unless reversed - many Democrat senators are nonetheless very troubled by the potential for huge energy cost increases and job losses among their constituents.

Ten Senate Democrats, representing states heavily dependent on coal as an utility fuel or for mining jobs, sent a letter to President Barack Obama earlier in 2009 saying they “would find it extremely difficult to support” a climate bill unless it provided protections for coal-fired power generation and manufacturing jobs in their states.

They want a climate change bill to include, among other things, a so-called border adjustment - actually a tariff - on US imports of goods from foreign countries that do not impose on their industries emissions reductions similar to those sought by the Senate bill.

Such a tariff, designed to offset in part the competitive disadvantage that emissions cuts would impose on US manufacturing industries, is opposed by Obama and almost certainly would be ruled illegal under World Trade Organization (WTO) rules and is not thought likely to survive in a final Senate climate bill.

So, with at least half of the Senate members - 40 Republicans and ten or more Democrats - already opposed to the climate bill or deeply worried about its heavy cost burden on voters, the measure was on thin ice even before climate-gate.

Climate-gate is the name given to the scandal caused by release of thousands of e-mails and other documents hacked from online computers at the Climate Research Unit (CRU) at the University of East Anglia in the UK.

The e-mails and other stolen documents indicate that CRU scientists and colleagues elsewhere may have cooked their data, hid or destroyed contrary information and sought to silence dissenting views of scientists sceptical of anthropogenic global warming.

While environmentalists dismissed the leaked e-mails as inconsequential, the CRU data scandal has been widely reported and has strengthened global warming scepticism in the general public and among scientists.

At the very least, senators on the three or four other Senate panels that are to take up the climate bill in early 2010 are now confronted with the possibility that the very science underlying the climate change legislation is suspect or even bogus.

That will make things all the more difficult for Democrat senators from coal-producing states or states heavily dependent on coal-fired electricity to power their constituent industries and voters’ homes.

Even the advocates of climate change legislation, including Obama, concede that a federal cap-and-trade mandate will trigger significant increases in energy costs.

With the science underlying anthropogenic global warming at least questionable, it will be hard for many senators to vote in favour of much higher energy costs for their constituents - especially with national elections looming next November.

In addition to doubts raised by climate-gate, the Obama administration may have inadvertently given senators yet another reason to put off any vote on the climate change bill.

On 7 December, the Environmental Protection Agency (EPA) announced its “endangerment finding” on carbon dioxide (CO2) and other greenhouse gases, ruling that they pose a threat to human health and the environment because they contribute to global warming and consequently must be regulated by the agency.

Although announced on the anniversary of the Japanese attack on Pearl Harbor, the EPA action came as no surprise, having been first proposed in April 2009. 

But the EPA announcement may well have put a torpedo or two into the Senate climate bill.

While clearly intended to give the Obama administration a public relations victory at the Copenhagen climate summit that opened on 7 December, the EPA move also was meant to prod Congress into moving forward speedily to complete passage of a climate bill.

Both Obama and EPA administrator Lisa Jackson have repeatedly said they would prefer comprehensive congressional action on climate change rather than agency enforcement - the latter widely viewed as a potential disaster for US industry and the broader economy.

In theory, fence-sitting senators had better get on board with the climate bill or be blamed for the economic chaos and devastation that EPA enforcement of its carbon restrictions likely will bring.

Ironically, it is possible that the EPA endangerment finding might have the opposite effect on those many senators that are uneasy about voting for cap-and-trade.

Writing in the Wall Street Journal, columnist Kimberly Strassel suggests that the EPA threat to enforce carbon reductions all by itself gives fence-sitting senators enough political cover to abandon the climate change issue entirely, at least for the 2010 election cycle.

“Hurrah!  It’s the administration’s problem!” she wrote.  “No one can say Washington isn’t doing something; the EPA has it under control. The agency’s move gives Congress a further excuse not to act.”

Jackson and the White House may have recognised the potential for a political backfire in EPA’s endangerment finding, sensing that they may have inadvertently left Congress off the hook. 

Just days after the endangerment finding was announced, Jackson declared that EPA’s decision to regulate CO2 and other emissions “is not a substitute for congressional action”.

American Petroleum Institute (API) president Jack Gerard, himself a former congressional aide and widely regarded as a top Washington lobbyist, predicted in September ’09 that the Senate would not approve a cap-and-trade climate bill in the face of broad popular opposition.

The American Chemistry Council (ACC) shares that view as well.

ACC spokeswoman Jennifer Scott said the council “does not believe that cap-and-trade legislation will get passed in 2010”.

“We feel quite confident that concerns about economic challenges and weakness in the US manufacturing sector will delay action for at least another year, beyond 2010,” she said.

So too goes the thinking at the National Petrochemical & Refiners Association (NPRA), where the association president, Charlie Drevna, says that the EPA endangerment finding might have been a misguided attempt by the White House “to coerce industry to dash to Capitol Hill and plead for legislative action”.

“It’s nearly impossible to predict what may happen in Congress,” Drevna said, “especially when factoring the convergence of an economy in turmoil with the advent of an election.”

But he does not think it looks very good for cap-and-trade in the Senate.

“The potential repercussions at the polls that passing climate legislation could produce will surely be part of any ‘at-risk’ senator’s calculus,” he added.

Given that “many other senators are most concerned about the overall impact of such legislation, it’s hard to imagine the rationale that would lead to passage and enactment of all-cost, no-benefit legislation that would only serve to further harm our nation’s consumers, jobs, economy and energy security,” Drevna said.

Bill Allmond, vice president for government relations at the Society of Chemical Manufacturers and Affiliates (SOCMA), said he agrees that “recent developments in the climate change debate couldn’t have come at a worse time for supporters of legislation in Congress, particularly in the Senate”.

“The fact is, the forecast for climate change legislation is mostly cloudy at best,” Allmond said, noting that the Senate has been wrapped up almost entirely in its effort to pass health insurance reform.

“Additionally, ‘climate-gate’ has occurred, which has given critics something to shout about,” he added.

Allmond also holds that EPA’s effort to prod fence-sitting senators with its endangerment finding will prove to be a misfire.

Noting that EPA proposed its endangerment finding in April 2009, and no one really expected the agency to back off and abandon the proposal, he said the 7 December formal announcement was a foregone conclusion.

“EPA’s endangerment finding was largely expected, so its impact on Congress is minimal,” Allmond said.

As do others, Allmond believes the 2010 election year will make many in Congress even more wary of climate change issues.

In fact, he said, the Senate’s leading advocate of cap-and-trade, Senator Barbara Boxer (Democrat-California), may stand well back from climate change legislation in 2010.

Allmond noted that Boxer, chairwoman of the Environment and Public Works Committee and co-author of the Senate climate change bill, “is up for re-election next year, and time she could have spent navigating this bill through the chamber will likely be used on other matters - not the least of which will be ensuring re-election”.

Boxer’s re-election prospects in California are not certain. Respected analysts say that California voters are only “leaning” toward Boxer now, but that may change when her Republican opponent is selected in the June 2010 state primary election.

More vulnerable than Boxer is Reid, whose bid for re-election in Nevada is considered a toss-up at best by analysts.

Both of those leading Senate Democrats may grow increasingly cool toward global warming issues - especially a steep energy tax - as the November 2010 election draws nigh.

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