The Senate launched a marathon week of climate bill hearings this morning with strong indications from a key Democrat that the legislation will have to be watered down to gain enough votes to pass.
Sen. Max Baucus (D-Mont.), chairman of the influential Finance Committee, said he was concerned about the costs involved, the lack of preemption of the Clean Air Act, and the depth of the bill's mid-term greenhouse gas reduction target — 20% below 2005 levels by 2020, compared to 17% in the House-passed version.
"Montana, with our resource-based agriculture and tourism economies, cannot afford the unmitigated effects of climate change, but we also cannot afford the unmitigated effects of climate change legislation," Baucus told his colleagues during the Environment and Public Works Committee hearing.
Pennsylvania Democrat Arlen Specter echoed his concerns, talking about the impact higher energy prices would have on coal-reliant states.
Much of the discussion on the newly proposed Clean Energy Jobs and American Power Act (CEJAPA) boiled down to two sets of choices that split the committee:
1. Pay now to begin slowing climate change despite the tough economy, or put off paying until later when the damage is done and the costs are much higher;
2. Invest in a clean energy future, or stick with fossil fuels that seem cheap for now but carry long-term consequences.
The Republican side of the committee was clear in its opposition to the "pay now" and "leave fossil fuels behind" choices.
Several Republican members (the committee splits 12-7, Democrats to Republicans) repeated the party line that the bill would kill jobs, despite Democrats citing reports to the contrary. The Senate bill is modeled closely on the House-passed American Clean Energy and Security (ACES) bill, which an analysis from the University of California, Berkeley, determined would create a net gain of at least 918,000 jobs by 2020 and boost GDP by an additional $39 billion to $111 billion.
Sen. George Voinovich (R-Ohio) argued another angle, that the caps were unrealistic in terms of the technology available. However, Energy Secretary Steven Chu, among a lineup of Cabinet members testifying, disagreed.
Renewable energy is already expanding, from wind and solar farms to geothermal and tidal power to fuel made from algae, and energy efficiency alone can go a long way to reducing greenhouse gas emissions, Chu said. He sees carbon capture and storage being deployable on a wider scale in eight to 10 years, and nuclear plants going up within a decade.
"When the gun sounded on the clean energy race, the United States stumbled," Chu said. "If we don't choose to lead in the development of this new technology, China and other countries will."
The Senate bill makes room for federal support for nuclear power, an important element for several undecided senators. It also provides incentives for polluters to develop carbon capture and storage capability; plans for a cap and trade system to lower greenhouse gas emissions; and provides funding for research and development, among other things. The offsets and giveaway of pollution allocations to carbon-intensive industries follow the House's blueprint.
Unlike the House bill, though, the Senate version doesn't handcuff the EPA by preventing the agency from regulating greenhouse gas emissions under the Clean Air Act.
That's important, environmental groups say. The current version of the Senate bill would set performance standards for new coal-fired power plants, but not for the nation's fleet of aging power plants — typically the worst polluters. With no EPA oversight, energy companies would have perverse incentives to keep those old plants operating.
However, Baucus and several other senators on the fence on the climate bill, including Alaska Republican Lisa Murkowski, are pushing for the climate bill to preempt the Clean Air Act on the grounds that the law rather than regulations would give American companies a clearer understanding of the ground rules. Baucus warned that pushing the bill through the committee without trying to reach some consensus could set the legislation up for failure on the Senate floor.
A leading concern for those Democrats and a few Republicans who remain undecided on the bill is doing anything that might raise costs for their constituents.
At last week's climate hearing in the Senate Environment and Natural Resources Committee, another Democrat, Sen. Byron Dorgan of North Dakota, talked about the costs and challenges facing rural America under a cap and trade system.
"How do you reduce the emission of CO2 and do it in a way that doesn't cause chaos in the country in terms of economic circumstances of families?" he asked. "In North Dakota, we use twice as much fuel as the average New Yorker. We have to drive twice as far to go to the next town.
The EPA's preliminary analysis of CEJAPA, sponsored by Sens. Barbara Boxer (D-Calif.) and John Kerry (D-Mass.), estimates the average cost to families to be 22 cents to 30 cents per day, about the same as the House bill.
"Are there some costs? Yes, sir," Kerry testified at today's hearing. "But almost every study does not factor in the impact of energy efficiency, or the impact of technology. And most important, none of them factor in the cost of doing nothing. That's far more expensive."
The Environment and Public Works Committee is taking the lead on the Senate climate bill, and Boxer, its chairwoman, expects to begin marking up the legislation in early November. Other Senate committees are dealing other sections of the climate and energy legislation, such as a national renewable electricity standard.