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Lieberman-Warner Climate Bill 'Running into Resistance'
November 27, 2007

Posted By Marc Morano - Marc_Morano@EPW.Senate.Gov - 12:44 PM ET  

Lieberman-Warner Climate Bill 'Running into Resistance'

The Lieberman-Warner global warming cap-and-trade bill continues to meet growing opposition. In a November 19 article, Bloomberg News called efforts to promote the bill a "vain pursuit," and weighed in with a breakdown of the growing "resistance" the bill faces.  (For more details of how the bill is losing momentum, see here)

The bill "is running into resistance from an unlikely collection of environmental activists, big oil and coal companies, labor unions and Congress's sole socialist. Some opponents say the measure doesn't go far enough; others say complying with it would cost too much and put U.S. businesses at a competitive disadvantage. The fight threatens to scuttle the first legislation mandating emissions cuts to be approved by a congressional subcommittee," reported the Bloomberg News article by Daniel Whitten and Kim Chipman. 

The article quoted Ralph Izzo, chief executive officer of Newark, New Jersey-based Public Service Enterprise Group Inc., owner of the state's largest utility, stating: "I think there's less than a 20 percent chance that anything will happen in this Congress on climate change."

The article warned of a "customer revolt" from rising energy prices.

Excerpt: Duke Energy Corp. Chairman Jim Rogers criticizes the measure for a different reason: He says the bill is unfair to utilities that use coal, which accounts for more than 50 percent of all power and is one of the biggest sources of carbon emissions. Duke, the third-largest U.S. producer of power from coal, said in a statement Nov. 15 that the bill would cause its customers' electricity bills to rise by as much as 53 percent in 2012.

"It will have a disproportionate, adverse effect on large regions of the U.S. that would make it difficult to get passed and it could lead to a customer revolt in terms of the high price from the carbon tax," Rogers, 60, said in an interview. Robert Baugh, head of the Industrial Union Council of the AFL-CIO, the largest U.S. labor group, says the bill would cost jobs by giving a competitive advantage to foreign companies that aren't subject to similar restrictions. He also criticizes the measure for creating a speculative market for credits. "This is not the stock market or a commodities market, nor should it be treated as such," Baugh told Boxer's committee last week.

The article concluded by quoting Democratic Senator Mark Pryor of Arkansas saying: "I would rather we go slow and get it right than do something quickly and have a lot of unintended consequences."

Link to Bloomberg News Article:

Full Text of Article Below:

Bloomberg, 19 November 2007

Climate Bill Proving Vain Pursuit as Lobbies Roil U.S. Congress

By Daniel Whitten and Kim Chipman

Nov. 19 (Bloomberg) -- When Senate Environment Committee Chairwoman Barbara Boxer, Republican Senator John Warner, the nation's largest environmental groups and General Electric Co. join forces to push a U.S. cap on global-warming emissions, it should be an unbeatable team. Not in the 110th Congress.

The alliance is running into resistance from an unlikely collection of environmental activists, big oil and coal companies, labor unions and Congress's sole socialist. Some opponents say the measure doesn't go far enough; others say complying with it would cost too much and put U.S. businesses at a competitive disadvantage.

The fight threatens to scuttle the first legislation mandating emissions cuts to be approved by a congressional subcommittee. The bill backed by California Democrat Boxer, 67, would create a potential $300 billion carbon-trading market and press the Bush administration to soften its opposition to stricter emission rules at global climate-treaty talks in Indonesia next month.

"I'm worried," says Ralph Izzo, chief executive officer of Newark, New Jersey-based Public Service Enterprise Group Inc., owner of the state's largest utility. "I think there's less than a 20 percent chance that anything will happen in this Congress on climate change."

Izzo is among business leaders including GE Chairman Jeffrey Immelt who want Congress and President George W. Bush to set federal rules for the carbon-dioxide emissions that cause global warming, so they can make business plans and start profiting from carbon trading and the sale of non-polluting technologies.

An Opportunity

The scientific evidence and increasing public awareness of climate change are giving both Republicans and Democrats an opportunity to move a carbon-capping measure through Congress. Boxer's panel plans to take up the legislation next month, setting up a possible vote by the full Senate next year. It passed a global-warming subcommittee last month.

"We cannot afford to do nothing," Boxer said at a Nov. 8 hearing.

Bush has so far opposed mandates on reducing global-warming pollution, saying such rules would harm the economy. He also opposes any emissions caps unless China and other developing countries adopt similar restrictions. The U.S. and China are the world's largest emitters of greenhouse gases.

Meanwhile, some environmentalists and lawmakers complain that the bill, sponsored by Virginia's Warner and Connecticut Senator Joe Lieberman, an independent who votes with the Democrats, doesn't do enough to discourage companies from emitting greenhouse gases.

Free Credits

The legislation would allocate free emission credits to each industry; companies that emit more gases than their credits allowed could buy additional credits from others.

The bill calls for the free credit allowances and the cap level to be gradually reduced, starting in 2012 and ending in 2050. By 2036, three-quarters of all emissions permits would be sold in an auction.

"That's much too long a period to allow people to emit greenhouse gases for free," says Senator Bernie Sanders of Vermont, a self-described socialist elected as an independent who votes with the Democrats. Sanders, 66, who voted against the measure in the subcommittee, says any legislation needs to include deeper emissions cuts.

The bill's opponents also say free credits will distort the fledgling market, citing a similar program begun in the European Union in 2005 that initially resulted in a glut of credits that drove prices so low that companies had little incentive to cut emissions.

Wind Power

FPL Group Inc., Florida's biggest utility owner and one of the nation's biggest investors in wind power, says the measure awards too many free allowances to the largest polluters. Juno Beach, Florida-based FPL has asked that any legislation also give it credit for its investments in non-polluting energy production.

Duke Energy Corp. Chairman Jim Rogers criticizes the measure for a different reason: He says the bill is unfair to utilities that use coal, which accounts for more than 50 percent of all power and is one of the biggest sources of carbon emissions.

Duke, the third-largest U.S. producer of power from coal, said in a statement Nov. 15 that the bill would cause its customers' electricity bills to rise by as much as 53 percent in 2012.

`Customer Revolt'

"It will have a disproportionate, adverse effect on large regions of the U.S. that would make it difficult to get passed and it could lead to a customer revolt in terms of the high price from the carbon tax," Rogers, 60, said in an interview.

Robert Baugh, head of the Industrial Union Council of the AFL-CIO, the largest U.S. labor group, says the bill would cost jobs by giving a competitive advantage to foreign companies that aren't subject to similar restrictions. He also criticizes the measure for creating a speculative market for credits.

"This is not the stock market or a commodities market, nor should it be treated as such," Baugh told Boxer's committee last week.

The companies that stand to gain from the measure include GE and Dow Chemical Co., which both sell energy-efficient products that would be in heavy demand in a carbon-constrained economy.

Fairfield, Connecticut-based GE said earlier this year that it plans to spend $1.1 billion in 2007 researching cleaner jet and locomotive engines, wind turbines and coal technologies.

`Good for Us'

"We think aggressive regulations are good for us," Lorraine Bolsinger, vice president of the program, said in September. "We want to see that $1.1 billion this year turn into billions and billions of products in further years."

The measure also has the backing of prominent environmental groups such as the 1.2 million-member Natural Resources Defense Council and Environmental Defense, both based in New York, and the Washington-based Wilderness Society.

"This isn't our perfect bill," says Larry Schweiger, president of the Reston, Virginia-based National Wildlife Federation. "But it's a bill that's moving and we need to move quickly."

Still, the forces arrayed against the legislation may be enough to keep it from getting the needed votes in the Senate. Washington-based Friends of the Earth led a campaign with 30 smaller environmental groups to block Boxer's bill, arguing that almost $1 trillion in free allowances would be given to polluting industries like oil, coal, and natural gas, the very industries joining them in opposition to the legislation.

Elections

Tyson Slocum, director of energy programs at Public Citizen, a Washington-based consumer-advocacy group, says he is betting that the 2008 elections will bring in a new president and more Democratic lawmakers, who together will push more far-reaching changes.

"We are not going to see climate change become law until we get a new presidential administration and changes to the composition of the Congress," Slocum says.

Adds Democratic Senator Mark Pryor of Arkansas: "I would rather we go slow and get it right than do something quickly and have a lot of unintended consequences."

Copyright 2007, Bloomberg

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