U.S. Election-Year Pressures Might Sink Carbon Caps

By Simon Lomax
(c) 2010 Bloomberg News
Tuesday, July 13, 2010; 12:00 AM

July 13 (Bloomberg) -- U.S. lawmakers might be too focused on elections in November to approve legislation this year that charges power plants and other industrial companies a price for releasing carbon dioxide into the atmosphere, said Senator John Kerry, a leading advocate of the pollution-cutting plan.

The U.S. Senate, which is expected to take up an energy bill within weeks, has "very little time" left this year to debate legislation, Kerry, a Massachusetts Democrat, told reporters in Washington yesterday.

Lawmakers face "a lot of pressures, including election pressures, and we're just going to have to kind of be realistic" about which energy proposals can win enough votes to become law this year, he said.

Kerry has led an effort to revamp cap-and-trade legislation that stalled in the Senate after narrowly passing the U.S. House last year. Under cap-and-trade, power plants, refineries and factories buy and sell a declining number of government-issued pollution allowances to cut back carbon dioxide and other greenhouse gases scientists have linked to climate change.

Kerry said he hasn't given up hope of adding carbon caps to the energy legislation that Senate Majority Leader Harry Reid, a Nevada Democrat, plans to bring up before lawmakers leave Washington in early August for a month to campaign in their home states before November's elections.

Reid has said the bill will respond to the BP Plc oil spill in the Gulf of Mexico and boost "clean-energy" alternatives to fossil fuels like coal and oil. Kerry has led a group of Democrats in arguing that alternative energy will benefit most from a revamped version of the House cap-and-trade bill.

Other Democrats, including North Dakota's Byron Dorgan, are supporting a plan without carbon dioxide limits that would require utilities to buy more electricity from renewable sources like wind turbines and toughen energy-efficiency standards.

Dorgan told reporters yesterday that the carbon market created by cap-and-trade legislation is the wrong way for the U.S. government to bring down greenhouse gases.

"I don't support cap-and-trade," Dorgan said.

With the "very limited time left" to debate legislation this year, lawmakers should instead try to pass a bill that includes the renewable-electricity and energy-efficiency mandates, both of which will help reduce U.S. greenhouse gas emissions, Dorgan said.

President Barack Obama supported the House cap-and-trade bill and in a June 2 speech said the Senate should also pass legislation that puts "a price on carbon pollution." Obama later said in a June 15 speech from the Oval Office that he's also open to "other ideas" that would make the U.S. economy less dependent on fossil fuels.

Many Republicans have said House and Senate cap-and-trade proposals would amount to a national energy tax. Some Democrats have also criticized the climate-change measures as having the potential to drive up energy costs and cost jobs as the U.S. economy emerges from the worst recession since the Great Depression.

Kerry, who has already offered to scale back the cap-and- trade proposal in a bid to win more support from Democratic and Republican senators, has said consumers would be shielded from higher energy costs under his plan. He's also said government limits on carbon dioxide will create jobs by spurring investment in new energy technologies that cut pollution.

Kerry said yesterday he'll keep pressing for carbon caps to be included in this year's energy legislation and "we'll see where we come out." Still, Kerry said he's also willing to support other clean-energy proposals.

"I'm very optimistic that we can pass something here that deals with energy and gets us started in the right direction, and if that's the best we can do, that's the best we can do," he said.

The renewable-electricity and energy-efficiency mandates supported by Dorgan and other Democrats are part of a bill that cleared the Senate Energy and Natural Resources Committee last year. The committee's chairman, New Mexico Democrat Jeff Bingaman, has also examined scaling back a U.S. cap-and-trade program to cover power plants at first.

Bingaman has proposed cutting power-plant emissions 17 percent from their 2005 level by 2020, according to a discussion draft of his proposal, compared to the 17 percent cut from most sectors of the economy under previous House and Senate climate- change bills.

Under his plan, factories could voluntarily join the cap- and-trade program, which would start in 2012. The minimum price for pollution allowances, each representing one metric ton of carbon dioxide, would start at $10 each with a maximum of $25.

Bingaman has said he doubts there are enough votes for a scaled-back cap-and-trade proposal to pass the Senate this year.

The discussion draft was written in April, Bill Wicker, Bingaman's spokesman, said in an e-mail. While it has been updated since then, the energy committee chairman "still has no immediate plans to introduce a sector-specific bill" that caps carbon dioxide emissions, Wicker said.

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