Correction to This Article
This column incorrectly said that Sen. Richard G. Lugar (R-Ind.) is retiring. Lugar is not retiring and is not up for reelection this year.

Congress worked out health care. Is climate change next?

By Steven Pearlstein
Friday, April 16, 2010

Six weeks ago, it looked as if there was no chance that Congress would approve climate change legislation this year.

The bill that had passed the House was so long, so complicated, so punitive to the coal-dependent Midwest economy, involved so many political compromises and so much money to be redistributed by the federal government, that it became the whipping boy of choice for conservative politicians and commentators.

Passage of health-care legislation, however, may have changed all that.

Democrats and their liberal supporters saw how much good could be accomplished by not allowing the perfect to be the enemy of the good. And Republicans and the business lobby were reminded of the concessions they could have won but didn't by their decision to abandon bipartisan compromise and instead try to kill the legislation altogether.

Now, thanks to the heroic efforts of two dogged senators -- Democrat John Kerry and Republican Lindsey Graham -- and the quiet support of the White House, there looks to be a 50-50 chance the Senate will pass a simpler and more moderate version of a bill this year that would begin to substantially reduce carbon emissions in the United States.

Many in the environmental community have come around to Kerry's view that this is the best shot they are going to have anytime soon at passing comprehensive energy and climate change legislation. And parts of the business community have come around to Graham's view that they can't afford another decade of uncertainty over regulatory issues, particularly with an activist Democrat in control of the regulatory agencies, just as they cannot afford to alienate an entire generation that has a keen interest in the environment and doesn't look kindly on their intransigence.

At this point, it's a bit of a stretch to call this a bipartisan compromise -- the bill that Kerry, Graham and independent Joe Lieberman are expected to introduce a week from Monday is likely to have no other Republican as an initial co-sponsor. But its terms have been crafted to appeal to a handful of Republican senators who, either out of personal belief or political necessity, are eager to find themselves on the right side of history.

They include: retiring senators such as George Voinovich of Ohio and Richard Lugar of Indiana, whose Midwestern states would fare even better under the Senate bill than the House-passed version; Judd Gregg of New Hampshire, who will surely like all of the goodies for the nuclear power industry included in the bill; Susan Collins of Maine, whose idea for rebating to consumers money collected by the government through the sale of carbon-emission rights to electric utilities and oil refiners is a central feature of the Senate compromise; and Scott Brown of Massachusetts, the newbie senator who so far has lived up to his promise to be an "independent" Republican.

Although the Senate bill retains the cap-and-trade structure of the House bill, it would apply, at least initially, only to electric power producers, with other manufacturers coming under the regime after 2016. The oil and gas industry would be handled under a separate regime that requires refiners to buy emissions permits for all the carbon contained in the gasoline or other fuels they sell -- in effect, a fee or tax on carbon. The amount of the fee would be determined by the price at which carbon emissions allowances are bought or sold by utilities on open exchanges. And while the fee would almost certainly be passed on to consumers in the form of higher fuel prices, most of it would be rebated through payroll and other tax credits. By paying more for energy and less for taxes, the idea is that Americans will use less energy and wind up with roughly the same amount of money to spend on everything else.

While there are still some details to be ironed about, there is a good chance that the bill will gain the support of oil giants BP, Shell and ConocoPhillips, along with major electric utilities and industrial corporations. There's even a chance the U.S. Chamber of Commerce and the American Petroleum Institute, heretofore implacable foes of climate legislation, will take a neutral stand on the Senate bill now that so many of their concerns have been addressed and so many of their members find the measure acceptable.

Most major environmental groups, meanwhile, got a pep talk Thursday at the White House from Chief of Staff Rahm Emanuel and other administration officials. Many of them have misgivings about nuclear power and increased oil and gas drilling, and they are particularly grumpy about provisions that would preempt stricter state environmental standards or curb the powers of some federal regulators. There is also disappointment that the Senate bill offers fewer subsidies for wind, solar and other renewable energy sources. In the end, however, most environmentalists will support the Kerry-Graham compromise.

As with health care and financial regulation, these accommodations should put the lie to the idea that the White House and Democratic leaders are embarked on radical crusades and unwilling to engage in bipartisan negotiation and compromise. And the truth is that, through this process, they have come up with a better bill as a result. In the end, if Congress is unable to do something about global warming, it won't be because of the opposition of "special interests," but rather because of ideological zealots and Republican partisans who are determined to deny Democrats another victory, even at the cost of a planetary environmental disaster.

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