WHITE HOUSE STILL WANTS CLIMATE CHANGE FIGHT

U.S. ready to assume leadership on carbon – White House
Timothy Gardner (w/David Gregorio), 7 April 2009 (Thomson Reuters)
and
Dems help ban reconciliation vote on climate change
WalterAlarkon, April 1, 2009 (The Hill)
and
White House May Postpone Auctioning Emissions
Juliet Eilperin, April 8, 2009 (Washington Post)

SUMMARY
Despite a parliamentary setback that might have doomed climate change legislation for this year, Nancy Sutley, chair of the White House Council on Environmental Quality, says the Obama administration remains committed to getting a cap&trade law through Congress and intends to assume a leadership role in the world's fight to cut back greenhouse gas (GhG) emissions.

A few days later, John P. Holdren, director of the White House Office of Science and Technology Policy, said the President might agree to postpone auctioning 100% of the emissions allowances in its cap&trade proposal if a deal would move emissions reduction legislation forward.

President Obama wants to see the U.S. on track to cut emissions 14% from 2005 levels by 2020 and 80% by 2050. The administration has already begun moving aggressively toward its goals. To achieve a doubling of emissions-free New Energy capacity in the next 3 years, it allocated $40+ billion of the stimulus bill funds to New Energy and Energy Efficiency spending. The Obama Environmental Protection Agency (EPA) recently announced a mandatory emissions-reporting system for large GhG emitters.

Sutley affirmed the administration’s ambitions and Holdren said Cabinet-level officials are beginning to formulate a set of guiding principles which will inform the fight over climate legislation even as pundits and commentators were pronouncing such legislation a lost cause (for now) because of a procedural vote in the Senate.

By a vote of 67-31, the Senate voted to prevent the use of reconciliation to get climate change legislation through the Senate as an amendment to the budget bill. 41 Republicans and 26 Democrats voted to prevent using reconciliation. Though restricted from use on anything but budget matters except to break rare gridlocks, reconciliation is a parliamentary ploy that circumvents the filibuster by bringing a bill to the Senate floor with a pre-designated limit on debate.

Because reconciliation is now ruled out, climate change legislation and the cap&trade system it will include must now win a filibuster-defeating 60 votes to get through the Senate.

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Senator Lamar Alexander (R-Tenn.), chairman of the Senate Republican Conference and an outspoken opponent of cap&trade, called the defeat of reconciliation the "biggest vote of the year."

Though cap&trade probably has a simple majority of more than 51 votes, the 41 Republicans who voted to exclude reconciliation will surely block reaching the 60-vote total and there are a handful of conservative Democrats who may be forced to stand against cap&trade if polls show their constituents believe the lies being told about its costs.

Given these complications, the administration may not be able to find a way to get climate change legislation through the Senate before the December world summit in Copenhagen at which the international post-2012 agreement on action against global climate change will be finalized. Without a U.S. climate change law, Obama’s representatives at Copenhagen may find it very difficult to play a decisive leading role.

Opponents to cap&trade describe it as a veiled tax, say it will dramatically raise ratepayers' utility bills and take advantage of recent investment market failures to propagandistically raise terror about emissions market complexities.

The Obama administration contends cap&trade will be revenue-neutral and Sutley says it can be effectively regulated by the Federal Energy Regulatory Commission (FERC) or the Commodity Futures Trading Commission (CFTC).

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Democratic senators who voted against the use of reconciliation and thereby subjected cap&trade to the filibuster: Max Baucus (Mont.), Evan Bayh (Ind.), Mark Begich (Alaska), Michael Bennet (Colo.), Jeff Bingaman (N.M.), Robert Byrd (W.Va.), Bob Casey Jr. (Pa.), Kent Conrad (N.D.), Byron Dorgan (N.D.), Dick Durbin (Ill.), Russ Feingold (Wis.), Kay Hagan (N.C.), Amy Klobuchar (Minn.), Herb Kohl (Wis.), Mary Landrieu (La.), Carl Levin (Mich.), Blanche Lincoln (Ark.), Claire McCaskill (Mo.), Ben Nelson (Neb.), Mark Pryor (Ark.), Jay Rockefeller (W.Va.), Debbie Stabenow (Mich.), Jon Tester (Mont.), Mark Warner (Va.) and Jim Webb (Va.).

The group in the White House formulating principles to guide negotiation on climate change legislation: Presidential assistant on energy and climate change Carol M. Browner, chair; Holdren; the secretaries of Agriculture, Commerce, Energy, Housing and Urban Development, Interior, and Transportation; the heads of the Environmental Protection Agency, White House Council on Environmental Quality, National Economic Council, Council of Economic Advisers and Office of Management and Budget.

Many economists believe cap&trade can be revenue neutral and fair. (click to enlarge)

COMMENTARY
The U.S. dropped out of the process that led to a formal international emissions reduction agreement between 183 of the world’s nations when the Senate overwhelmingly rejected (95-0) ratifying the 1997 Kyoto Protocol. The Clinton administration tried to revive it. The Bush administration did not.

Signatories to Kyoto. (click to enlarge)

Opponents to participation in Kyoto have maintained the U.S. must not commit itself to emissions cuts if emerging economic rivals such as China and India do not also do commit to emissions reductions. China and India put growth ahead of climate change concerns but could be perusaded to reconsider if the U.S., their chief trade rival but also their biggest trade partner, also did so.

With the Democrats capturing a 58-vote majority in the Senate and some moderate Republicans joining them in favoring a cap&trade system as a market-oriented means of cutting GhGs, there was hope for passage of potent climate change legislation in this session of Congress.

House leaders Congressman Henry Waxman (D-Calif), chair of the powerful House Energy and Commerce Committee, and Congressman Ed Markey (D-Mass), chair of the Energy subcommittee, recently unveiled ambitious energy and climate change legislation that includes a cap&trade system and more aggressive GhG reductions than those proposed by the President. The bill is expected to win majority approval later this spring.

The Waxman/Markey bill has generated a new wave of opposition to cap&trade from those who disdainfully describe it as a tax and promise it will drastically raise ratepayers’ utility bills. President Obama admits cap&trade will increase utility bills but argues his budget will make it revenue neutral by returning to taxpayers a tax credit much bigger, from the proceeds of auctioning emissions allowances, than the increased power costs.

In order to maximize the revenues generated by his cap&trade system, the President has consistently said he would auction 100% of the emissions allowances. A compromise might make it more possible for a cap&trade system to get through the Senate but still generate enough revenues to make the system equitable. Anything less than a 100% auction, however, will be viewed by hardline environmentalists as a sellout to big emitters.

The President, being a pragmatic politician, might be willing to make such a "sellout" for the short-term and make back losses in the mid- and long-term by ratcheting down hard on emissions caps.

Those who assert that cap&trade is just a disguised tax and that a tax is a simpler approach to the problem forget that a tax does not have a cap attached and therefore does not guarantee emissions reductions.

Refusing to participate with the 183 Kyoto signatories in cap&trade would also make it almost impossible for the Obama representatives to reach an emissions-reduction agreement with China and India, where rapidly growing GhG emissions are the really serious obstacle to reversing global climate change.

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The Waxman/Markey bill does not specify details on the emissions allowance auctioning and the President's willingness to negotiate on the point is in pursuit of a law that would be the foundation of the U.S. effort in Copenhagen to win an agreement from emerging economies like China and India.

Those who oppose cap&trade and those who oppose the President's willingness to compromise on auctioning must offer a better way to put the U.S. in a position to lead countries like China and India to emissions restrictions.

QUOTES
- Keith Trent, chief strategy, policy and regulatory officer, Duke Energy Corp.: "The cap is what makes the system's environmental integrity, and you can't exceed that cap because you need an allowance to do it."
- Nancy Sutley, chair, White House Council on Environmental Quality: "The administration is signaling to the rest of the world that the United States is ready to assume leadership in helping to bring the world together and reduce our greenhouse gas emissions and protect the planet…"
- Senator Mike Johanns (R-Neb), sponsor, anti-reconciliation measure: "It really did get to the very substance of what the Senate is about. That is that on complicated issues, it often requires 60 votes…There are huge economic consequences to cap-and-trade legislation…It will impact everybody."
- White House spokesperson: "[The vote on reconciliation is] one indicator that this will be difficult and that the polluting industries are well-organized, supported by a phalanx in the Republican Party, and that is always a challenge…But I don't think we learned anything new today."

From NationalWildlife via YouTube.

- John P. Holdren, director, White House Office of Science and Technology Policy: "The idea, obviously, is to end up with a bill that reflects both the thinking of Congress and the administration, a bill that the president can sign...Whether you get to start with that or get there over a period of time is something that's being discussed."
- Ben LaBolt, White House spokesman: "[President Obama] said during the campaign that his preferred approach was 100 percent auction to create incentives for companies to reduce their greenhouse gas emissions…Members of Congress are looking at a variety of policy options to help us make that transition, and the administration will be flexible during the policymaking process as long as those larger goals are met."