EEI's Kuhn Outlines Views on Climate Bill

EEI President Tom Kuhn cited the partisanship in Washington and the closeness to the November elections as reasons that there were only modest chances that climate change legislation would clear Congress this year. Kuhn, who appeared on the Platts Energy Week broadcast on Sunday, along with Mark Crisson of the American Public Power Association, emphasized that "if you're going to have a price on carbon, and I think we need to if we're going to move forward, I think cap-and-trade is the best way to go."

Crisson said he was skeptical about cap and trade because there were insufficient emission allowances for utilities: "While it's failed to gain support, I wouldn't necessarily say it's off the table or dead," he said. "But this may provide an opportunity to explore other options."

Wrote Platts: "President Barack Obama last week continued to call on Congress to pass climate-change legislation, and Senator John Kerry, Democrat-Massachusetts, a leading advocate of such a measure, indicated he may try to rekindle the issue in a lame-duck session following the November congressional elections. Kuhn and Crisson also agreed that legislation on climate change, with provisions to mitigate the impact of emissions reductions on consumers, remains preferable to regulation by the Environmental Protection Act under the existing Clean Air Act."

Rep. Waxman Says CO2 Limits Could be Added to Senate Energy Bill

Rep. Henry Waxman, D-Calif., offered the possibility of adding CO2 emissions limits to whatever energy legislation the Senate might pass when the House and Senate bills were reconciled in conference, E&E News PM reported. Waxman was quoted as saying: "The Senate will have to get its act together and, I hope, pass an energy bill. Then we'll talk to them and figure out what the final product would be."

Wrote E&E News PM: "Some cap-and-trade advocates see a House-Senate conference as the last remaining possibility this year for legislating greenhouse gas emission limits. But that approach is still seen as a long shot."

Sen. John McCain, R-Ariz., said climate and energy legislation would probably not be considered during the lame duck session after the November elections. McCain was quoted as saying: "No Republican would support such a thing when we make significant gains in both House and Senate. If I had my way, and I think our leadership agrees to a large degree, we would make sure that the government continues to function and then take up all these issues in the new Congress."

Journal, Post Examine Failure of Kerry-Lieberman GHG Bill

The Wall Street Journal and the Washington Post, in editorials published today, focused on climate legislation. The Journal said the failure of the Senate to pass the Kerry-Lieberman legislation marked a "landmark defeat" for the green lobby and Senate Majority Leader Harry Reid, D-Nev. According to the Journal, the "bill went down for lack of Democratic votes, in particular those from Midwest coal and manufacturing states. Voters in those states have figured out that cap and tax is a redistributionist exercise from the carbon-dependent heartland to the richer coasts."

The Journal said cap and trade, at "enormous economic cost, would do little to reduce global carbon emissions. To the extent that it reduces growth, it would make the world less able to cope with the consequences if temperatures do rise. The richer the world, the more resources the world will have to adapt and ameliorate bad effects."

The Washington Post found irony in the "death of climate change legislation" because of the two government reports released shortly after Reid opted not to submit Kerry-Lieberman to a vote. The studies "underscore the overwhelming scientific case for global warming--and go out of the way to repudiate skeptics." After mentioning details from the reports, the Post said that many "climate-change skeptics will simply dismiss these reports as more evidence of a sprawling conspiracy instead of what they really are: yet more affirmation of the risks humanity runs if it continues to pump carbon into the atmosphere."

Sen. Lieberman Gives Climate Bill Minimal Chance in 2010

Sen. Joe Lieberman, I-Conn., said there was a minimal chance for cap-and-trade climate change legislation to move in the Senate in the rest of 2010, E&E News PM reported. Although Lieberman said "there's certainly long-term life" for the proposal, "for the short term, it's standing in place." He noted the possibility of having it "come back in some form during the lame-duck session," but acknowledged that the legislation would still require a 60-vote majority to clear a filibuster.

Sen. John McCain, R-Ariz., predicted the Republican Party would "make significant gains" in the November election, and he indicated that its members would resist any attempt to pass a climate bill before the new Congress. Looking ahead to that Congress, Lieberman predicted that industry "may well be so upset by EPA regulation [of GHG emissions] that they'll come to Congress regardless of the party allocation in Congress and really plead for a legislative response that is more balanced and longer term so they have predictability in what they do."

Businessweek Columnist Examines Congressional Inaction on Climate

In a Businessweek column, Eric Pooley, deputy editor of Bloomberg Businessweek and author of "The Climate War: True Believers, Power Brokers, and the Fight to Save the Earth," writes that the Senate inactivity on climate and energy issues "cedes" the U.S. energy race to China. Pooley calls a cap on carbon emissions from the electric power sector and a national renewable electricity standard the two "most powerful clean energy provisions" that have been debated and which should be in legislation this year.

Wrote Pooley: "For years, business leaders from General Electric Chief Executive Officer Jeff Immelt to venture capitalist John Doerr have warned that if America failed to pass a comprehensive climate-and-energy bill, the country risked losing the clean energy race to China -- sacrificing the jobs of the future in a timid, ill-fated effort to preserve the jobs of the past. Now those warnings are coming true."


While the stalemate on the carbon cap was likely a partisan discourse, Pooley states: "The disappearance of the renewable energy standard, however, was a shock. Both the House and Senate have passed RES bills in the past, yet it has never become law. With elections looming, this may be the last chance for years to set the rules of the road for energy investment."


Pooley noted that utility CEOs such as Lew Hay of Next-Era Energy, Ralph Izzo of PSEG, and Jim Rogers of Duke Energy "have all said they are ready to invest in clean energy just as soon as Congress establishes a carbon cap that creates a clear, steady price signal for dirty fuel--in effect, pricing in some of the social costs of carbon pollution that have never been part of America's energy bill."

Lacking a better idea, Pooley wrote that there are a variety of alternative steps that Congress could take, based on trial balloons that have been floated: "One such idea is a Green Bank that would leverage Treasury Department money for low-interest loans to projects that can’t attract conventional financing because their path to profitability is too long." Kenneth Berlin, a Green Bank proponent and cap-and-trade supporter who heads the environmental practice at Skadden, Arps, Slate, Meagher & Flom, was quoted as saying: "I don’t know if it really amounts to a Plan B; It's more like Plan D, but it would be far, far better than nothing."

The Economist: GHG Emissions Caps Could Fall to EPA, States

According to The Economist, the energy legislation currently before the Senate shows that Senate Majority Leader Harry Reid, D-Nev., "having earlier abandoned as hopeless an effort to limit America's emissions of greenhouse gases through a 'cap-and-trade' scheme, is proposing nothing more substantial than subsidies for home insulation and trucks that run on natural gas."

Republicans' opposition to cap and trade, which they have called an energy tax, derives from the correct conclusion that energy bills would go up if a price were put on carbon, The Economist wrote. Their opposition could be even stronger after the November elections. Coal-state Democrats remain unenthusiastic, the American public appears to be losing interest, and President Barack Obama's involvement has been detached, despite his campaign statements and his work at the United Nations climate talks last year in Copenhagen.

Nonetheless, the administration has opened other paths: Should legislation fail, EPA has indicated its intent to regulate GHGs. Federal agencies have discretionary power to set fuel-efficiency and appliance-efficiency standards. And states could continue setting their own standards. Nicholas Bianco and Franz Litz of the World Resources Institute estimated that emissions could be cut 13 percent by 2020 using just existing state and federal laws.

But piecemeal regulations would leave confusion and uncertainty. "That may leave big energy firms regretting their opposition to cap and trade. As one old utility hand puts it, 'There's a sense of ruefulness in the industry.' It is widely shared," wrote The Economist.

Atlantic Examines How Climate Legislation Failed in Senate

Several critical mistakes helped kill climate change legislation in the Senate, wrote Atlantic blogger Brian Goldsmith. According to Daniel Lashof, director of the Natural Resources Defense Council's Climate Center, one element was losing control of the message after climate change legislation passed the House: "Democrats were not prepared, and we [in the environmental community] didn't do enough to explain, why this was good policy."

A second reason was a less than forceful response to Climategate. Senate leaders--and President Obama--had other issues on their mind. Environmental Defense's Tony Kreindler was quoted as saying: "It should be self-evident we haven't seen the level of engagement by the president necessary to seal the deal."

Losing the support of Sen. Lindsey Graham, R-S.C., was devastating. Kreindler said that a lack of support outside the Senate played a part: "We were close with the utilities, not with the manufacturers ... these agreements are important not because of special interest politics and the influence of big money but because having everyone at the table helps make policies that are durable and effective."

If an energy package fails to pass before the August recess, said Goldsmith, senators could try to pass a utility-specific CO2 cap in September, they could go for a comprehensive bill in the lame-duck session after the November elections, or they could wait until the next Congress and attempt to get a carbon cap through.

For now, said Goldsmith, the legislation put forward by Senate Majority Leader Harry Reid, D-Nev., has the support of most environmental leaders. He said the legislation would not "take off the table incentives to approve cap-and-trade at a later date--given that none of the pollution credits and industry subsidies in Waxman-Markey carried over to the Reid bill."

Inquirer Says GOP Successfully Blocked Passage of Climate Bill

The Philadelphia Inquirer, in an editorial published today, said the Senate "wilted" on climate change issues as Senate Republicans "successfully blocked passage of any significant climate-change legislation" this year." While the Inquirer noted that the bill had its faults, proponents sought to have it "stuffed with goodies" to mitigate the impact on the fossil-fuel industries. "But," the Inquirer said, "the biggest piece of candy turned rancid" and efforts were made to curtail offshore energy exploration in the aftermath of the oil rig disaster in the Gulf of Mexico.

Wrote the Inquirer: "Senate Democrats are pushing a more modest climate bill defining BP's liability for the spill and tightening energy-efficiency standards. Missing will be the controversial plan to reduce carbon emissions through a cap-and-trade program. The House narrowly passed cap-and-trade in June, with eight Republicans voting for it. But the Senate never voted on its bill, which means House Republicans who voted yes have nothing to show for braving to cross the aisle."

Sen. Reid Introduces Energy Bill Without Climate Provisions

Senate Majority Leader Harry Reid, D-Nev., has introduced energy legislation that included oil spill liability provisions and $5 billion for the Home Star energy-efficiency program but failed to propose any climate change policies, Reuters reported.

Reid acknowledged that "this bill does not address every issue of importance to our nation's energy challenges, and we have to continue to work to find bipartisan agreement on a comprehensive bill to help reduce pollution and deal with the very real threat that global warming poses."

An informal Time magazine poll of Senate staffers found a majority did not expect the Senate to pass the bill before the August recess. Utilities and environmentalists continued work on principles for utility-only GHG emissions limits, with Duke Energy, Exelon and Dominion Resources taking part in a working group for negotiations, ClimateWire reported. Exelon Senior VP David Brown said the group was "focused on getting something done this year" and will continue working for climate change legislation. Brown predicted that after 2010, "the politics probably don't improve" on the issue, and yet "the urgency to get some clarity for the utility industry only increases."

President Obama was quoted as saying of Reid's bill: "I want to emphasize it's only the first step and I intend to keep pushing for broader reform, including climate legislation."

- Related stories appeared in the Dallas Morning News, Associated Press, and Los Angeles Times.

Western Climate Initiative Issues Cap-and-Trade Design Plan

The Western Climate Initiative released its plan to institute a GHG emissions cap-and-trade program in January 2012 that would cut 2005 emissions levels 15 percent by 2020, the Associated Press reported. The program would include California, New Mexico, Quebec, Ontario and British Columbia, all of which were preparing their own emissions rules.

Platts reported that the program would auction emissions allowances four times yearly with a single round of bidding and allowances awarded on a lowest winning bid, uniform price basis. Additionally, a reserve price will be set, a reserve of allowances will be made available if prices rise past a specified level, and allowance purchase limits will be applied to prevent market manipulation. The coalition said its design was a "starting point" for members to take part in the cap-and-trade program rather than a "model rule" governing the program.

Blame Game Dominates Editorials About Energy Bills

Editorials on the Senate's failure to produce a comprehensive energy bill sought to pin the blame on both parties. The Dallas Morning News wrote today in an editorial: "Heaping blame on Republicans in this case is easy and reasonably justified. But Democrats managed to hammer a few of their own nails in the coffin of a comprehensive energy bill."

Senate Majority Harry Reid, D-Nev., "couldn't bring himself to put passing this legislation at the top of his to-do list." The five keys to a good energy bill, the Morning News wrote, included: a meaningful cap on GHGs that divides the costs between consumers and polluters; aggressive mandates for renewable energy sources, such as wind and solar; a clear path for a new generation of nuclear power plants; requirements for automakers to increase fuel efficiency and improve emissions controls; and a road map for utilities to better develop a smart grid that reduces energy consumption.

The Bangor Daily News wrote today in an editorial that Reid was "more concerned about his re-election than legislation to reduce America’s dependence on oil from volatile and hostile parts of the world. Republicans are more interested in defeating Democratic ideas than providing businesses with a predictable energy future. The White House was content to let Democratic leaders craft and shepherd legislation through Congress to deal with energy and climate change and never got involved, even when it was clear that direction and support were needed."

However, the Salt Lake Tribune posed, in an editorial published today, a different point: "When are Republicans in Congress, particularly in the Senate, going to accept responsibility for failing to deal with climate change and its potentially devastating effects, a looming catastrophe caused primarily by the United States' gluttony for fossil fuels?"

The Charleston Post and Courier wrote in an editorial that America's "long-term energy prices are bound to soar even higher if we don't intensify our efforts to develop alternative energy and conserve fuel and electric power."

Op-Eds Examine Benefits, Drawbacks of Cap-and-Trade Proposals

Op-eds continue to tackle the question of cap and trade. Andrew C. Revkin wrote on the Dot Earth blog posted by the New York Times that the Breakthrough Institute research on cap and trade had "encountered serial failure because it doesn't address the main barrier to the widespread deployment of clean energy technologies: the technology-based price gap between new clean energy and mature fossil fuels." Revkin stressed that "this moment demands a fundamentally new strategy designed to overcome the inherent political obstacles to carbon pricing and simultaneously achieve the primary objective upon which our climate future hinges: making clean energy cheap in real, unsubsidized terms."

Sen. Ben Nelson, R-Neb., wrote in the McCook Daily Gazette that because all electricity in Nebraska was provided by public utilities, which lack investor funding, cap and trade was "essentially a tax on carbon that is emitted from a variety of sources, including coal-fired power plants that provide most of the electricity we use in Nebraska." Nelson wrote that if such legislation "were to pass, it would significantly increase utility rates in Nebraska which would damage our economy. That would mean much higher electricity bills for homeowners, for businesses and for farmers who depend on reasonable electricity rates for irrigation."

In an op-ed published by Roll Call, former EPA Administrator and ex-New Jersey Gov. Christine Todd Whitman, who co-chairs the Clean and Safe Energy Coalition, and Thomas D. Peterson, president and CEO of the Center for Climate Strategies, wrote of the three keys to the coalition's "Policy Roadmap for Clean Energy." They were: "Enact policies to take control of America’s energy security; Ensure access to financing for clean energy projects;" and "Increase investment in clean energy jobs."

Cap-and-Trade Approach Said to Be Powerful in Energy Legislation

In an op-ed published by the Boston Globe today, Harvard Kennedy School professor of business and government Robert Stavins and Richard Schmalensee, economics management professor at the Massachusetts Institute of Technology, wrote that opponents of cap and trade "should resist demonizing market-based approaches to environmental protection and reverting to pre-1980s thinking that saddled business and consumers with needless costs." Sometimes, they wrote, the approach had been effective, as with phasing out leaded gasoline and reducing emissions linked to acid rain.

Stavins and Schmalensee wrote: "Virtually all economists agree on a market-based approach to reduce carbon dioxide emissions. Some favor carbon taxes combined with revenue-neutral cuts in distortionary taxes, whereas others support cap-and-trade mechanisms -- or cap and dividend, with revenues from auctioned allowances refunded directly to citizens. Conventional approaches advanced as painless alternatives -- a plethora of standards, special-interest technology subsidies, and tax breaks -- won't do the job, and will be unnecessarily expensive. While we are struggling to revitalize the economy, we simply cannot afford to turn our backs on markets and impose unnecessary costs on businesses and consumers."

States, Regions May Take Lead on Energy, Climate Policies

With climate legislation failing to get traction in the Senate, sources said states and regions could take primary responsibility for changes in the energy industry and in developing climate change policies, ClimateWire reported.

For example, regulated utilities in the Southeast were seen as uniquely likely to build new nuclear plants in the absence of U.S. GHG emissions limits. Exelon Chairman and CEO John Rowe was quoted as saying: "I just don't think nuclear has a chance in a pure marketplace without a carbon price" that could leave nuclear out of unregulated markets in the Northeast, Texas and elsewhere.

So far, 29 states and the District of Columbia have renewable requirements and about the same number are rolling out smart meter programs. The Edison Foundation found that 17 states offered energy-efficiency incentives and another eight were considering incentives. However, regional GHG emissions pacts in the Northeast, Midwest and West were seen as vulnerable to changing political landscapes that could remove the support needed for their continuation.

D.C. Utility Commissioner Richard Morgan was quoted as saying: "It feels like we really do need a national program to limit carbon emissions. That would be far better than a series of state efforts. Until and unless we do, the state and regional efforts are about all we've got."

President to Hold Bipartisan Meeting Today on Climate, Energy

The Wall Street Journal today reported that Congressional Democrats are looking to use a bipartisan meeting with President Obama on Tuesday to leverage a clear solution to energy and climate efforts on Capitol Hill.

Energy & Environment reported today that even if the Senate passed a watered-down version of climate and energy legislation before the mid-term elections, the House-Senate conference committee could end up revisiting everything, including a cap-and-trade program, during a subsequent lame duck session. Wrote the newsletter: "Even if they do not enact cap and trade, Democratic leaders could use a conference to ratchet up the climate regulations past what the Senate agreed to and beyond what Democratic House centrists want."

Sens. Joseph I. Lieberman, I-Conn., and Bernie Sanders, I-Vt., have expressed reservations about leaving so much work to the conferees. Sanders was quoted as saying: "Members of the Senate have their views as to what constitutes a strong bill, and they're going to want to be heard on this." The policies that could be radically revised during a conference, the newsletter reported, include oil spill liability, stricter drilling regulations, a renewable energy standard, sharing offshore drilling royalties with states, nuclear plant loan guarantees "and the big one -- a price on carbon."

A question that adds more uncertainty is what bill Senate Majority Leader Harry Reid, D-Nev., would bring to the Senate floor. One possibility is that he would add climate provisions to a legislative response to the oil spill on the assumption that the latter would have to pass or he could add the oil spill provisions to an energy-only bill. If Reid went with the latter strategy, it would present a problem for conservative Democrats who would rather vote on an energy bill after the elections, even though they might want to go home in November with a credible bill to stop future oils spills.

- Related story appeared in the Wall Street Journal's Washington Wire.

Sen. Byrd's Death Could Complicate Senate Climate, Energy Battle

The death yesterday morning of Sen. Robert C. Byrd, D-W.Va., could make Senate passage of climate and energy legislation more complicated, even though he was not necessarily going to vote for it, Greenwire reported. Wrote Greenwire: "Byrd's support for a Senate climate bill was far from certain since he had long questioned action to curb greenhouse gas emissions. But his recent actions had signaled that he may have endorsed a climate bill if it had come to the floor this year."

In 2009, Byrd urged the coal industry to participate in forging climate legislation and earlier this month he voted against a resolution put forward by Sen. Lisa Murkowski, R-Alaska, to prevent EPA from issuing GHG regulations. Daniel Weiss, senior fellow at the Center for American Progress Action Fund, was quoted as saying: "He's played a very constructive role in trying to build support for comprehensive clean energy and global warming legislation."

The appointment of Byrd's replacement falls to West Virginia Gov. Joe Manchin, an avowed opponent of cap-and-trade legislation. Manchin told the Associated Press that the appointment would be a significant because of the effect on climate legislation and the mining debate.

Greenwire quoted Andrew Wheeler, a former Republican staff director for the Environment and Public Works Committee, as saying: "Most West Virginia politicians oppose climate change legislation, so I don't think it's a stretch to assume that Senator Byrd's successor will also oppose climate change legislation." Byrd's death also leaves Democrats a vote short of being able to stop a Republican filibuster of financial reform legislation, Grist reported.

- Related stories also appeared in the Los Angeles Times, New York Times, Wall Street Journal, and Washington Post.

Roll Call Op-Ed Says Legislation Preferable to EPA Regs to Cut GHGs

In a commentary published by Roll Call, Peter Fox-Penner and Richard Schmalensee considered two pathways toward reducing GHG emissions: Legislation or EPA regulation. Former DOE official Fox-Penner heads the Brattle Group and is author of "Smart Power: Climate Change, the Smart Grid, and the Future of Electric Utilities." Schmalensee is a professor of economics and management at Massachusetts Institute of Technology and directs the MIT Center for Energy and Environmental Policy Research.

Should the regulatory way win out, they wrote, "new, efficient plants are disadvantaged relative to old, inefficient plants, and the latter are thus encouraged to stay in operation as long as possible, continuing to emit greenhouse gases for free while new sources must pay to clean them up." Under EPA standards based on the best available control technology, they explained, there would be "no incentive for continued research and development or investments in technologies to beat the standard." And, since existing sources of emissions would remain in operation, GHGs would not be reduced significantly.

Climate legislation, they argued, would "represent an enormous improvement" over the EPA's way, which would omit using "markets to seek out the cheapest solutions, stimulate innovation, and reward efficiency." Though the several climate bills at play in the Senate would not solve all GHG-related problems, "they are steps in the right direction. It would indeed be regrettable if Members of Congress, who universally prefer carbon markets over command-and-control regulation, could not enact a bill that spares us such regulation and begins to solve the climate problem."