Economics of climate change in forefront

Senate panel takes up bill, setting stage for fight over estimates

For a decade or more, the political battle over climate change has been fought largely over the validity of the science of global warming. But Tuesday, as the Environment and Public Works Committee opened its first hearing on a Senate climate change bill, those concerns took a rear seat to a different issue: the potential economic impact of climate change.

And the scene was set for a battle over best estimates.

The shift, which has taken place everywhere from the U.S. Chamber of Commerce to the most liberal environmental groups, has prompted an array of competing studies aimed at predicting what will happen if the United States comes up with a means of charging industries for creating the emissions linked to global warming. The answer to that question is based on complex calculations projecting years into the future -- the interpretation of which is influenced by each side's underlying beliefs. And it promises to define the debate on Capitol Hill for the next several months.

"Ultimately, members of Congress must be able to explain the impact their vote will have on monthly electric bills and a gallon of gasoline," said Jason Grumet, president of the Bipartisan Policy Center, a centrist think tank. The administration gave a nod to the economic trade-offs Tuesday when it sharply narrowed the number of facilities that would be subject to new emission-control rules.

The global warming debate, which used to feature abstruse academic discussions about carbon atmospheric concentrations and how warm it was during the Medieval Warm Period, now centers on projected electricity prices and how many windmills will be running years from now. The evolution reflects how, in the midst of an economic downturn, the cost-benefit analysis of acting on global warming might be the question that matters to most lawmakers.

Economics dominated Tuesday's hearing. Sen. Lamar Alexander (R-Tenn.) compared a bill that aims to reduce pollution by making businesses pay for it with buying fire insurance.

"I have no problem with the problem. I have a problem with the solution," he said. "But I'd buy insurance that worked. I wouldn't buy insurance that's so expensive I couldn't pay my mortgage or my hospital bill."

Dan Weiss, a senior fellow at the liberal Center for American Progress, said the Senate is divided into three groups: those who are unlikely to support a climate bill, those who are and the influential people he calls fence sitters. "The senators who are undecided on global warming are very focused on the cost of cleanup and the impacts on important industries in their state."

That includes lawmakers such as Sen. Lindsey O. Graham (R-S.C.), who said in an interview Monday, "We need to come up with a package that makes environmental policy better business policy."

In anticipation, groups on the left and the right -- as well as government outfits such as the Environmental Protection Agency and Congressional Budget Office -- have issued a spate of analyses projecting the costs and, sometimes, the benefits of congressional climate legislation. But the fine print in many of these projections reveals that they are based on assumptions that could easily turn out otherwise, meaning lawmakers will have to take a leap of faith about how a cap-and-trade program -- which would control pollution by providing economic incentives to reduce emissions -- might affect the economy.

Senators from both parties, however, spoke during Tuesday's hearing as if they had the answer. Sen. John F. Kerry (D-Mass.) devoted most of his nearly half-hour testimony on the bill that he co-wrote with the panel's chairwoman, Sen. Barbara Boxer (D-Calif.), to "the economic opportunities that stare us in the face" under a cap-and-trade system.

Referring to an EPA analysis that predicts the bill could cost a U.S. household 30 cents a day, Boxer said: "For 30 cents a day, we will put America in control of our own energy future and take a stand for home-grown American energy rather than foreign oil from countries who don't like us. For 30 cents a day, we will protect our kids from dangerous pollution."