U.S. Democratic leaders say they plan to push a
climate-change bill in the new year as a central
tool for economic recovery, but the financial crisis
may have arrested the political momentum necessary
to pass such legislation.
Despite both presidential contenders having named
climate-change legislation as a top priority and
Democrats forecast to win larger majorities in the
Senate and the House, a bill that would force energy
costs up and create trillion- dollar wealth transfers
may be a hard sell when the economy's in a recession.
"This crisis puts the nail in the coffin for climate
change, at least until all of the problems in the
economy are worked out," said Bill Kovacs, vice
president of the U.S. Chamber of Commerce's division
for environmental and regulatory affairs.
Spurred on by pressure from within their environmental
base, however, Democratic leaders say investment
in clean energy infrastructure would not only generate
domestic growth but also stem the outflow of hundreds
of billions in petrodollars that currently exacerbates
the nation's trade deficit.
"When we address the threat of unchecked global
warming by investing in clean energy technologies
and reducing our dependence on foreign oil, we also
have a recipe for economic recovery," Sen. Barbara
Boxer, D-Calif., head of the environment committee
responsible for climate legislation, told Dow Jones
"A comprehensive economic recovery plan would incorporate
a program of investment in clean energy technology
paid for by revenues from a cap on global- warming
emissions," said Dan Lashoff, director of the Climate
Center at the Natural Resources Defense Council,
which has strong ties with Democrats on Capitol
Earlier this year, the Senate failed to pass a
bill that would cap greenhouse- gas emissions in
an effort to limit the impact of human-generated
emissions on climate change. Under the bill, polluters
would have to hold allowances for the right to emit
greenhouse gases into the atmosphere. Companies
that had trouble staying within limits would have
to buy additional allowances, while companies that
found ways to reduce emissions could sell excess
allowances. The effect would be to penalize polluters
and reward companies that find ways to operate with
more energy efficiency or fewer emissions.
Senate Majority Leader Harry Reid, D-Nev., House
Speaker Nancy Pelosi, D- Calif., and Sen. Boxer
all say the legislation is still a top priority.
All told, the bill would cost - and generate for
some industries - $6 to $8 trillion over the several-decade
lifetime of the program.
Given the current economic crisis in the U.S. and
forecasts for flat or negative growth over the next
several quarters, the Democratic leaders are casting
the legislation as an essential tool for recovery.
"A climate-change bill generates a lot of revenue
and that money will stimulate the economy and create
new jobs." said House Speaker spokesman Drew Hammill.
Jim Manley, a spokesman for Reid, agreed: "We can
and must design it to create jobs while reducing
The Past Looking Forward?
The history of the bill sheds light on the political
sensitivity of the matter and also may reveal the
prospects for another vote in an ongoing financial
crisis. In June, Sen. Reid pulled the bill off the
floor after coming up a dozen votes shy of what
was needed to pass the legislation. Many pointed
to the meteoric rise in oil, natural gas and gasoline
prices as the cause of the failed vote. "When faced
with the inconvenient truth of the bill's impact
on skyrocketing gas prices, very few senators were
willing to even debate this bill," Sen. James Inhofe,
R-Okla., ranking member of the environment committee,
said at the time of the vote.
Now, Inhofe sees the "financial realities" making
it much more difficult for an aggressive, economy-wide
climate bill. "I believe the current financial difficulties
will only reinforce the public's concerns about
any climate-change bill that attempts to increase
the costs of energy and jeopardizes jobs in the
near term," he said.
Richard Cortright, managing director of Standard
& Poor's utilities and infrastructure group, said
the issue has been diluted in importance compared
with the economic crisis, and will likely be delayed
for at least a year. Add to that the lobbying fight
over the allocations, distribution of wealth and
who bears the biggest emission burdens, "It's going
to be a slugfest as it is, without the recessionary
background on top of everything," he said.
Climate Bill Leverage
Tony Kreindler, a spokesman for the Environmental
Defense Fund, said the conventional wisdom that
the climate bill is temporarily a bust may prove
to be wrong. He said that with a Congress that aims
to pass an expensive economic stimulus package and
two presidential candidates favoring funneling billions
for clean and secure energy supplies to protect
the climate and wean the country away from its dependency
on imports, "The billion dollar question is where
the billions will come from."
The climate-change bill, he said, could be the
vehicle that pays for those investments without
adding more debt to the government deficit.
Auctioning allowances, as Democratic presidential
candidate Sen. Barack Obama, D-Ill., proposes, could
generate $150 billion a year for clean-energy industries,
although it would tax emitting industries such as
coal-fired generation, which produces much of the
nation's power, as well as the petroleum sectors,
which provide for the bulk of the economy's transportation
needs. Those costs, of course, would ultimately
be borne by the consumer, meaning higher energy
"One could certainly see the new president and
the Congress taking an integrated approach that
leverages a cap on global-warming pollution to invest
in economic growth," said Kreindler.
There are several other factors putting pressure
on Congress to act: a new rule drafted by the Environmental
Protection Agency that would regulate greenhouse
gases under the Clean Air Act and an international
ministerial meeting in Copenhagen, Denmark, in December
Many lawmakers fear that regulation under the Clean
Air Act may be too onerous and wouldn't be as economically
efficient - or congressionally controlled - as a
cap-and-trade program developed on Capital Hill.
Also, one of the biggest challenges to creating
a domestic emissions program would be trying to
encourage other polluting nations to enact similar
caps so as to prevent competitive disadvantages.
If the U.S. were to have a climate-change law to
bring to the table at the Copenhagen talks, it could
have the leverage to encourage countries such as
China and India to set stricter emission levels.
And while Rep. John Dingell, D-Mich., chairman
of the House Energy and Commerce Committee, signaled
a climate-change debate is likely in the new year
- publishing a discussion draft of a more lenient
cap-and-trade bill than the Boxer proposal - few
Washington insiders believe environmental groups
and the ardent supporters of a strong cap such as
Boxer, Pelosi and Rep. Ed Markey, D- Mass. would
be willing to compromise.
-By Ian Talley, Dow Jones Newswires; 202-862-9285;