Low Carbon Act Gains Support

U.S. utility executives and labor bosses came out in force recently to support a Senate climate change bill that some believe stands the best chance for becoming law, or at least lays the legislative groundwork for a fused bill with stronger standards.

The Low Carbon Act of 2007 has garnered bipartisan and industry support as a moderate way to cut carbon dioxide emissions without damaging the economy, though is likely to face tough opposition from both environmentalists and legislators seeking more stringent measures and Republican skeptics.

Flanked by the chief executives and union heads that helped to author the bill, lead sponsor Sen. Jeff Bingaman, D-N.M., said at at the bill's launch that his legislation is a balanced, pragmatic approach without a severe financial burden.

"The cap-and-trade approach that we're proposing will achieve environmental results at lower costs than other regulatory approaches will, while stimulating the deployment of advanced energy technology," said Bingaman, chairman of the Senate Energy and Commerce Committee. He said he hopes the bill will be reported in the environment committee after the August recess and, if passed, could get floor time this fall.

The bill seeks to cut 2030 carbon dioxide emissions back to 1990 levels by capping the amount of greenhouse gases that industries such as oil producers, gasoline refiners and coal and natural gas-fired power companies emit. Allocations - or rights to permit - can then be bought or sold, according to whether polluters have a credit or deficit of allocations based on their emission levels. Aides say it would create a carbon-trading market worth $10 billion to $20 billion year, a rough picture of the cost to cut emissions - or at least pay for the right to pollute.

Central to Bingaman's plan is syphoning off revenue from the allocations that industries would be required to buy to fund clean-coal, efficiency and advanced energy technologies. That, Bingaman said, builds a bridge to a low carbon economy.

It also provides a safety valve fundamental to the bill's effort to ease pressure off the economy that allows emitters to buy "Technology Acceleration Payments" worth $12 a ton of carbon dioxide in the first year of the program, 2012. After that, the TAP fee will increase 5% a year above the rate of inflation.

The proposed measure also meets a concern that most legislators agree is key - addressing climate change will require global involvement - through a package of import-policy carrots and sticks. If other countries - such as China, now the biggest carbon dioxide emitter in the world, and fast-growing, coal-burning India - are deemed to be making inadequate efforts to cut emissions, the president could require carbon tariffs on imports of certain products from those countries.

Environmentalists criticize the bill's emission-reduction targets, its safety valve designed to prevent economic meltdown, and say the proposed measure is too friendly to utilities and fossil-fuel industries. Proponents say it is the only practical way to address global warming.

"This is a rational response that won't sink our economy," said Republican co-sponsor, Sen. Lisa Murkowski of Alaska. "If Congress is ever going to pass legislation to regulate carbon, that final bill is probably going to look a lot like the measure introduced this morning," she said.

Another co-sponsor Sen. Arlen Specter, R-Pa., was optimistic about getting support for the bill with the phalanx of CEOs and union bosses behind him. "We have a coalition...and the political muscle working with a moderate bill to get it done," he said.

"It avoids abrupt harm to the U.S. economy by providing adequate time for domestic industries to transition," said Richard Trumka, secretary-treasurer of the American Federation of Labor and Congress of Industrial Organizations.

Trumka was joined by officials from the United Mine Workers of America, the International Brotherhood of Electrical Workers and the United Auto Workers. The CEOs for the country's biggest power producers, Exelon Corp. (EXC), Duke Energy Corp. (DUK), and American Electric Power Corp. (AEP) also said they were fully behind the bill.

With mine-union backing and its provisions to provide incentives to clean-coal technology, the bill could garner strong support from many of the 25 coal-state Democrats.

But Bingaman admitted, "Clearly, it's a heavy lift to get this through."

The first, and perhaps one of the biggest hurdles for the bill, however, will be to get through the legislative panel of authority, the Environment and Public Works Committee chaired by Sen. Barbara Boxer, D-Calif. Boxer has her own more stringent proposal without a safety valve. Sen. Dianne Feinstein, D-Calif., another influential member of the committee, has proposed a stiff cap-and-trade version that focuses on utilities.

Sen. James Inhofe, R-Okla., is the ranking member of the committee who has said he'll never vote for a cap-and-trade bill, as he's skeptical that climate change is a reality.

Given the controversial nature of the bill, political insiders say a 60-vote margin will be necessary for any climate-change legislation that makes it to the floor. Adding to the legislative obstacles, President George W. Bush has promised to veto any cap-and-trade proposal.

It will also face a strong opposition from environmental lobbying, though some portions of the bill could be used by Boxer to craft a bill that she tries to pass out of her committee.

"The targets in the bill are not strong enough to meet our need to avert climate change and the safety valve would undermine the targets further," said Dave Doniger, director of climate change at the Natural Resources Defence Council.

Doniger thinks Boxer will try to fuse a bill with tougher targets without a safety valve, but including allocations incentives for advanced technologies. That, he says, could draw away some support by Democrats in coal-producing states.