Utilities-Only Cap May Be Last Hope for Carbon-Pricing Legislation

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Wednesday, June 30, 2010 at 6:00 am

Sens. Joe Lieberman (I-Conn.) and John Kerry (D-Mass.), the authors of a comprehensive climate bill, speak to reporters after they and other key senators met with President Obama on Tuesday. (epa/ZUMApress.com)

If President Obama hoped that his meeting with key senators on Tuesday would produce anything resembling a consensus on energy legislation, he came away disappointed. Democratic leaders emerged from the meeting expressing their grudging willingness to compromise further — provided some sort of emissions limits are put in place — while Republicans continued to hammer emissions controls as an “energy tax.”

[Environment1] But the events of the day may have brought some clarity to a point that has gradually emerged over the past two weeks: If the eventual energy bill is to include a price on carbon, it’s likely to affect the utilities sector only.

Sen. Olympia Snowe (R-Maine), a moderate Republican without whose support energy legislation stands virtually no chance of passing the Senate, issued a statement after the meeting expressing hesitation on an economy-wide carbon cap — a provision many scientists consider essential to efforts to fight global warming.

“On the complex and difficult question of curbing greenhouse gas emissions, there is no consensus at this time,” Snowe said. “From my perspective, I’ve long asserted that placing a price on carbon will send the appropriate signals to entrepreneurs that would unleash the innovation to position America as a global clean energy industry leader. However, today we are in different and perilous economic times. … We cannot afford economy-wide approaches to carbon reduction that could cost consumers another 18 cents per gallon of gasoline in this struggling economy or subject our manufacturing sector to unnecessary regulations when they’ve already reduced their emissions by five percent below 1990 levels.”

Her solution? “I believe that one possibility is to more narrowly target a carbon pricing program through a uniform nationwide system solely on the power sector which is the sector with the most to lose from the EPA regulations and it’s also the sector in which businesses actually make decisions today based on prices 20 to 30 years in the future.”

It’s hardly a new idea. Two weeks ago, White House Chief of Staff Rahm Emanuel proposed a utilities-only cap as a possible compromise solution. And last week, Duke Energy CEO Jim Rogers, the most vocal advocate for climate legislation in the electricity industry, co-authored an op-ed in Politico in which he expressed openness to a carbon price for utilities alone — provided other sectors eventually follow.

“It’s time for all of us — politicians, business leaders and environmentalists — to put wishful thinking aside, establish realistic goals and develop a consensus for legislation that can be passed this year,” he wrote, along with Pew Center on Global Climate Change president Eileen Claussen. “If that means capping emissions from the utility sector first — so be it.”

But they added, “Electric utilities may be willing to go first. But they are not going to be willing to go alone.”

Exactly how other sectors would be added remains unclear.

“Some climate bills have featured a sort of Phase Two,” said Marchant Wentworth, deputy legislative director of the Union of Concerned Scientists, where other sectors are phased in “four, five, six years down the road.”

But Wentworth was skeptical that a utilities-only bill would be able to pass a Senate where Republican opposition to climate legislation has grown increasingly intense.

“Is there something unique about a utility-only bill that gets you more support in the Senate than a comprehensive bill?” he asked. “Can you get to 60 [votes] on utility-only? No.”

Still, for all the disappointment among environmentalists over the repeated compromises Democrats have made on climate legislation to win over moderates, some argue that a utilities-only cap would achieve most of the goals of an economy-wide carbon pricing scheme. The question now is whether Democratic leaders in the Senate can muster 60 votes for even a weakened bill to overcome a Republican filibuster.

The answer may be in the president’s hands — at least according to Senate Majority Harry Reid.

“I think it’s pretty clear we have to do something,” Reid said last week. “The question is, what do we do? Now, a lot of that depends on what the White House is going to do to help us get something done.”

Sen. Jeff Merkley (D-Ore.), a leading voice for strong climate action, thinks Obama took an important step in that direction in the meeting Tuesday.

“He didn’t lay out a recipe, but he made it clear that a price on carbon is a very powerful instrument,” Merkley told The Washington Post. “He said it’s a very important tool and one we should thoroughly explore. … He made a point of raising carbon pricing a number of times. I dont think he would have done so if that wasn’t very important to him.”

But the president himself equivocated on the need for a price on carbon following the meeting.

“The President told the Senators that he still believes the best way for us to transition to a clean energy economy is with a bill that makes clean energy the profitable kind of energy for America’s businesses by putting a price on pollution — because when companies pollute, they should be responsible for the costs to the environment and their contribution to climate change,” the White House said in a statement. “Not all of the Senators agreed with this approach, and the President welcomed other approaches and ideas that would take real steps to reduce our dependence on oil, create jobs, strengthen our national security and reduce the pollution in our atmosphere.”

The diversity of opinions on energy legislation notwithstanding, Obama remains optimistic about the prospects of a bill.

“The President is confident that we will be able to get something done this year,” the White House said.

Follow Aaron Wiener on Twitter


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