House Energy Panel Clears Climate-Change Bill on Mostly Party-line Vote

May 21, 2009 07:00 PM

via a special arrangement with Informa Economics, Inc.

Major hurdles ahead in House, and especially in Senate

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

A controversial climate-change bill (HR 2454), which faces a rocky road ahead in the House and an even steeper uphill climb in the Senate, where it needs 60 votes to overcome a filibuster, cleared one hurdle Thursday evening, passing the House Energy and Committee Committee by a mostly party-line 33-25 vote.

Four Democrats voted against the bill -- Reps. Mike Ross of Arkansas, Jim Matheson of Utah, Charlie Melancon of Louisiana, and John Barrow of Georgia. Those four Democrats are members of the fiscally conservative Blue Dog Coalition. Ross said the bill needs to have a broader definition of biomass as a renewable resource. “While I agree with the intent of this bill, I cannot support its current approach which lacks certain provisions that protect rural areas — like Arkansas — that do not have the same renewable energy sources as places like California.”

One Republican, California Rep. Mary Bono Mack, supported the legislation because, she said, the bill would level the playing field for California, which already has some of the nation’s most aggressive controls on greenhouse gases.

Background on legislation.The nearly 1,000-page measure would cap emissions at 17 percent below 2005 levels by 2020, 42 percent below in 2030 and 83 percent below in 2050. It creates a cap-and-trade system in which a company could buy pollution allowances from another business in lieu of meeting its obligation to reduce emissions. The bill contains some safeguards to make sure consumers are not hit with higher utility bills.

The measure also would require 15 percent of the nation’s electricity to come from renewable sources including wind, solar, biomass and geothermal by 2020. An additional 5 percent in energy savings would have to come through greater efficiency. States could petition to meet a standard for 12 percent renewable use and 8 percent from efficiency.

Waxman said he intends to hold at least one hearing on how pollution credits would be allocated under the bill.

The strategy used to get it out of the Energy panel. To woo more Democrats to back the bill, Energy Chairman Henry Waxman (D-Calif.) and Ed Markey (D-Mass.), chairman of the Subcommittee on Energy and Environment, agreed to lower emissions caps and renewable fuel standards. Their proposal gives away, for several years, nearly 85 percent of the emissions allowances for free to utilities, manufactures, oil refiners, and other industries to help business transition to the new requirements.

Republicans argue the proposal will increase energy costs for already-strapped consumers and push energy-intensive, trade-sensitive industries like steel, aluminum, and paper abroad to less-regulated countries.

Next steps. House leaders have not announced a schedule for bringing the measure to the floor, although Majority Leader Steny Hoyer (D-Md.) has indicated it could come up in June or July. “I believe there’s support on the Republican side of the House for this bill,” Markey said. The bill co-sponsors said tonight they’d like to have a bill ready for President Barack Obama’s desk and an international climate summit in Copenhagen by the end of the year.

Before House floor action can occur, eight other committee chairmen who share jurisdiction over the legislation must consider the bill, notably the Ways and Means Committee because of its revenue-raising proposals. (The panels will only take up bill sections under their jurisdiction.) Besides Ways and Means, other panels with jurisdiction include Foreign Affairs, Financial Services, Education and Labor, Science and Technology, Transportation and Infrastructure, Natural Resources, and Agriculture.

Farm-state lawmakers are wary. House Agriculture Committee members, led by Chairman Collin Peterson (D-Minn.), have expressed major differences with the pending bill. Peterson said Thursday that the House bill is “an urban-dominated bill" that "is going no place in the Senate.” Peterson is particularly concerned about the Environmental Protection Agency (EPA) proposing to count international land-use toward calculating the climate-impact of using corn-based ethanol. Waxman's committee defeated an amendment from Rep. Lee Terry (R-Neb.) that would have eliminated the requirement that an EPA lifecycle greenhouse gas analysis for ethanol had to take into account possible international deforestation.

Peterson has also noted concern expressed by some Ways and Means panel members that a carbon market would lead to widespread speculation and manipulation that will adversely affect commodity and financial markets. "I'm not for Wall Street having anything to do with carbon ... because you can't trust them," Peterson said, according to CongressDaily. He promised that 45 or so other House Democrats share at least some of these concerns, particularly regarding ethanol.

Peterson wants to add language that would require USDA approval before the EPA could move forward. “We have been bankrupted three times over my lifetime in the ethanol industry,” Peterson said.

Peterson also criticized the measure's provisions to allow businesses to comply by funding special projects that reduce or sequester emissions; for example, by planting trees on farmland. Half of these would have to be international projects such as preserving rain forests, which Peterson called a “non-starter."

A list of agriculture groups have sent letters to Congress expressing opposition to or serious concerns about the Waxman/Markey climate change and energy legislation. “As it becomes clearer the extent of damage this bill will cause to agriculture without providing any benefits, more and more farm groups are writing to encourage their Members of Congress to oppose this bill,” said Rep. Frank Lucas (R-Okla.), ranking member on the House Ag Committee.

Among the groups opposed to the bill are the American Farm Bureau Federation, the National Corn Growers Association, the National Chicken Council, the Fertilizer Institute, the National Turkey Federation and the United Egg Producers.

The Obama administration strongly backs the legislation, although some House bill provisions are weaker than what President Obama advocated during his presidential campaign.

Obama called the bill “historic” in a statement. “And this achievement is all the more historic for bringing together many who have in the past opposed a common effort, from labor unions to corporate CEOs, and environmentalists to energy companies,” he said.

While only a small segment of businesses would have to buy pollution allowances, because the U.S. depends heavily on fossil fuels, the new costs resulting from the legislation would probably be spread through the economy.

While the EPA estimated that the overall impact would be too small to significantly dampen economic growth, the conservative Heritage Foundation has said it might cost a family $4,300 per year in a few decades.

Key amendments. An amendment on Thursday, offered and then withdrawn, would have specified the types of agricultural projects that would be eligible for credit for greenhouse gas reduction. The bill would leave it up to the EPA to determine eligibility. Waxman said it would be premature to list specific projects before the EPA figures out how to measure their effects on the environment. He agreed to add language in the panel’s report on the bill directing the agency to consider these types of projects. “I think we need to make sure that EPA has the measurement methodologies in place before we give offset credits to specific activities,” Waxman said.

Amendments adopted would:

-- expand Energy Department funding for advanced nuclear and other energy technologies.

-- ensure that free emissions allowances set aside for electric utilities are in fact used to offset increased rates for ratepayers.

-- authorize a “cash-for-clunkers” provision within the climate and energy bill. The provision would provide temporary vouchers worth up to $4,500 to allow consumers to trade in older, less fuel-efficient cars and trucks for new, more efficient vehicles.

-- adjust a requirement for the EPA to set emissions standards for new vehicles and construction equipment, directing the agency to target large polluters from which the greatest reductions are achievable.

-- provide loan guarantees for pipelines that transport renewable fuels.

-- direct utilities to make “net metering” available to federal agencies, allowing them to receive credit for energy they generate.

-- authorize grants and a loan-guarantee program for the adoption of high-capacity transmission technology.

-- require any entity receiving credits under the cap-and-trade system abide by Davis-Bacon Act prevailing wage rates.

Comments: As previously noted, several hurdles both in the House and notably in the Senate stand in the way of this bill's possible end zone. Many observers believe this topic will be pushed to 2010 or later for any conclusion. Should Congress not eventually find a way to get the bill to President Obama's desk, the president has shown he will take the regulatory route if needed. And there is ample authority for the EPA to accomplish the task should Congress fail to get a bill to Obama.

As for Rep. Peterson, veteran sources signal he is taking "the bad cop" role in this matter, clearly hoping to win some concessions that would allow him and some other farm-state lawmakers to eventually vote for the measure. But Peterson's history shows that if he doesn't get the bulk of what he wants, he will vote against the measure, despite his chairmanship role, and a Peterson no-vote could include more than a few other farm-state lawmakers.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


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