Senate

Yesterday morning, the Senate Environment and Public Works Committee passed S. 1733 – The Clean Energy Jobs and American Power Act.  The bill would create a strong cap-and-trade program with aggressive emission reductions targets through 2050. The bill now becomes one piece of a puzzle that will include the energy bill passed by the Senate Energy and Natural Resources Committee earlier this year, contributions from as many as four other major Senate committees, and contributions from Senators acting outside the committee process.

The importance of the latter is suggested by the announcement Wednesday by Senators Kerry, Graham, and Lieberman that they will be working together to craft a climate bill that incorporates provisions of the EPW bill with other provisions in line with Kerry and Graham’s New York Times op-ed.

Pulling these disparate pieces together into a coherent whole and garnering the 60 votes necessary for passage of a bill through the Senate will surely require strong leadership in the legislative process by the Obama administration.

Michael Tubman is the Congressional Affairs Fellow

Throughout testimony presented by several witnesses before the Senate Environment and Public Works Committee (EPW) last week, one theme consistently resurfaced – cap and trade will spur investments in clean technology and increase jobs in certain sectors by putting a price on carbon. It is a simple formula: a price on carbon will create certainty, certainty will lead to increased investments in clean energy technology, and increased investments will lead to a larger share of the clean technology market.

As Kate Gordon, Senior Policy Advisor of the Apollo Alliance, testified, the United States is already losing ground on the international front. Clean energy investments are the key to our new economy and have been growing even in the face of inconsistent federal incentives, but without true federal commitment, clean energy technologies will not reach their full potential.   According to the UN Environment Program, investments in renewable energy technologies in 2008 increased by 2 percent in Europe to $49.7 billion, decreased in North America by 8 percent to $30.1 billion, and grew by 27 percent in developing countries to $36.6 billion. Specifically, investments in China grew by 18 percent to $15.6 billion and in India by 12 percent to $4.1 billion.   

Members of the business community also stressed how important federal regulation is in creating price certainty for carbon, which would increase clean technology investments domestically and therefore clean energy jobs. J. Stephan Dolezalek, Managing Director of VantagePoint Venture Partners, testified “a growing number of the Fortune 500 community has signaled that establishing a price certainty with respect to carbon is far better for business than a continued uncertainty in the face of certainty elsewhere in the globe.”  As the percentage of global capital invested in clean energy industries continues to increase, the United States will need price certainty to attract investment and thereby create jobs.

How does this clean economy market affect the domestic job market? The truth of the matter is that given the size of the U.S. economy, new jobs are constantly created while existing jobs are lost. Even though sentiments from both sides were reflected in the testimonies, this process will continue regardless of the specific legislation that will be passed. This is little consolation for those losing their jobs, but legislation can be written to include transitional assistance and training to adversely affected workers, as is done in both the Waxman-Markey bill passed by the House in June and the recently introduced Kerry-Boxer bill in the Senate. In the case of clean energy jobs, if the U.S. creates a favorable investment environment at home, American jobs using existing as well as new skills will be created, no matter where a given company is headquartered. The value chains for many clean energy technologies and products are extensive, and even a Chinese wind manufacturer will have to hire American workers if it wants to market turbines in the United States. Philadelphia’s mayor, the Honorable Michael Nutter, summed it up well: “These new, green collar jobs require building science, carpentry, electrical, plumbing, sales, and communications skills. These jobs include: insulators, carpenters, heating technicians, energy auditors, and educators, as well as support services, sales, and manufacturing. The good news is that these jobs are a perfect fit for Philadelphia’s workforce, and are not transferable overseas.”
 
The potential for job growth is welcome news as the U.S. economy continues to climb out of the recession. In opening statements of the final day of hearings, the Senators happily noted the Commerce Department’s announcement of the first increase in real GDP since the third quarter of 2007. Testimony on behalf of businesses and workers at the EPW hearings last week took this welcome news a step further by explaining how comprehensive climate legislation could further expand the economy and increase jobs.

At the Environment and Public Works hearing on Tuesday, both Secretary LaHood of the Department of Transportation (DOT) and Administrator Jackson of the Environmental Protection Agency (EPA) explained that emissions reductions progress is already underway in the transportation sector. Sec. LaHood stated, “We have much to do, but we are not waiting to begin taking aggressive and meaningful action.” 

While the Congress has been working towards establishing comprehensive climate legislation, the DOT, EPA, and Department of Housing and Urban Development (HUD) have been collaborating to develop Federal policies that could help create sustainable communities. The aim is to support and shape state and local land use decisions and infrastructure investments to develop livable communities where people have the option to drive less. According to the DOT, on an average day American adults travel 25 million miles in trips of a half-mile or less and almost 60 percent use motor vehicles for this travel. Walking, biking, and riding transit, regardless of the area where an American might live, are excellent alternatives. “If the presence of these alternatives promotes less driving, then that will reduce road congestion, reduce pollutants and greenhouse gases, and use land more efficiently."

On Friday EPA released its first cut assessment of the economic impacts of the Clean Energy Jobs and American Power Act of 2009 (S. 1733), the Senate‘s response to the House climate and energy bill passed in June.  Senator Boxer (D-CA), Chairman of the Environment and Public Works Committee, unveiled the analysis along with new details of the bill she is co-sponsoring with Senator Kerry (D-MA).

The bottom line: EPA anticipates that the Senate and House bills will yield very similar results in terms of overall costs, allowance prices, and emissions.   Some differences in key provisions could raise the price tag of the Senate bill by up to 1% over its House counterpart.  As for greenhouse gas (GHG) emissions, the tighter 2020 target in the Senate bill -- requiring a 20% reduction in emissions compared to 2005 levels, as opposed to 17% in the House bill -- would reduce cumulative GHG emissions through 2050 by about 1% more than the House version. 

No, Chairman Bingaman isn’t lurking around the Capitol avoiding calls from his landlord.  We’re talking about economic rent.

This week, the Senate Energy and Natural Resources Committee continued its excellent series of hearings on climate change policy options.  At issue this time was a hearing “on the costs and benefits for energy consumers and energy prices associated with the allocation of greenhouse gas emission allowances.”  Whether or not cap-and-trade programs were more or less transparent and costly than carbon taxes and fees was a topic debate during the hearing, as it has been throughout the series. 

Dr. Denny Ellerman, recently retired senior lecturer at the Sloan School of Management at MIT, kicked off the hearing with some powerful testimony, including thoughts on how different carbon control programs create economic rent.  He offered:

The hiatus on nuclear plant construction might be about to end. Renewed interest in nuclear power has been spurred by existing government incentives, and comprehensive climate policy will provide further impetus.

So what does proposed legislation do to promote nuclear power? The energy bill passed by the Senate Energy and Natural Resources Committee (S.1462), the energy and climate bill introduced by Senators Kerry and Boxer (S.1733), and the energy and climate bill passed in the House (H.R. 2454) all include provisions to expand nuclear power generation. Most importantly, the latter two bills include a greenhouse gas cap-and-trade program. This will send a long-term price signal to drive investment in low-carbon technologies, including nuclear power, and will make the cost of electricity generated from new nuclear power lower relative to traditional fossil fuel-based generation. 

Scientists to Congress:  You can argue about the politics all you want, but if you decide not to act on climate change, it won’t be because the science wasn’t strong enough.

In a letter sent today, a slew of scientific organizations, including the American Meteorological Society, American Geophysical Union, Crop Science Society of America, and American Chemical Society, informed the U.S. Senate that there is a strong scientific consensus that manmade greenhouse gases are changing the climate and that claims to the contrary are scientifically indefensible:

“Observations throughout the world make it clear that climate change is occurring, and rigorous scientific research demonstrates that the greenhouse gases emitted by human activities are the primary driver. These conclusions are based on multiple independent lines of evidence, and contrary assertions are inconsistent with an objective assessment of the vast body of peer-reviewed science.”

And they go further:  “there is strong evidence that ongoing climate change will have broad impacts on society, including the global economy and on the environment.” They also say the United States will experience significant impacts; climate change isn’t just a problem for poor or developing countries: 

Sen. Murkowski opened a briefing on Post-Combustion Carbon Capture at the Senate last week by asserting technology is the key to addressing our energy needs. The Senator said that advancing technology will allow the U.S. to move towards a low-carbon future. Sen. Murkowski is correct.

And cap and trade will guide us to just that: advancing technological innovation.  As Sen. Murkowski put it, our current energy technology has an "environmental price," and a clear signal regarding the price of carbon is imperative to spur R&D in technologies with a lower environmental price.  Cap and trade allows the government to set the policy objective – to reduce greenhouse gas emissions – and businesses to decide how to best achieve the objective in the most cost-effective manner. It will give industry experts exactly what they are seeking: a clear signal that financial incentives exist for low-greenhouse gas technological innovation, whether its carbon capture and sequestration discussed at the briefing, or nuclear, wind, tidal, or other technologies.

Read more about technology policies and their relationship to cap and trade here.

Climate action advocates got a jolt Sunday morning from an op-ed written by Senators John Kerry (D-MA) and Lindsey Graham (R-SC) in The New York Times. The op-ed sketched out an energy-climate agreement that would combine aggressive greenhouse gas (GHG) emission reductions with expanded nuclear power, more oil and gas drilling off our coasts, border taxes to protect energy-intensive, trade-exposed manufacturers from imports produced without strong environmental protections, and a price collar on GHG allowances (establishing a floor and ceiling for the cost of emission allowances). I can’t think of anybody who won’t hate at least one part of this formula – certainly we at the Pew Center would offer some important tweaks. But Kerry and Graham have posed a tough question: Are we truly ready to hammer out an all-of-the-above energy policy that meets our economic, security and climate objectives?

Before you answer, keep this in mind: there is no partisan option for passing a climate and energy bill in the Senate. In the House, where 256 out of 435 Representatives are Democrats, even when 44 voted against the Waxman-Markey bill (with 8 Republicans voting for it), it passed. In the Senate, we need 60 votes to pass a bill, there are exactly 60 Democrats, and everybody expects at least a handful of them to vote against any serious climate bill, meaning that at least that number of Republicans will have to vote for a bill in order to pass it. The good news is that the Senate has a history of real Republican leadership on the climate issue. Nine current Republican Senators have written, cosponsored, voted for, or spoken in favor of mandatory GHG reductions – for the most part through cap-and-trade, some of them ahead of their time. We know of at least five more who would engage in the crafting of a climate bill if left to their own devices. The bad news is that the mood in the Senate this year has been bitterly and famously partisan.

The Kerry-Graham op-ed is the strongest ray of bipartisan hope we’ve seen on the climate issue this year. It took real guts on the part of both Senators, and it is potentially game changing. No one is going to love all the particulars – but then no one is going to love all the particulars of any climate-energy bill that has a chance of enactment in this Congress.

Manik Roy is Vice President, Federal Government Outreach

In the House, the committee chaired by Rep. Henry Waxman (D-CA), the House Energy and Commerce Committee, has jurisdiction over most matters touched on by the climate/energy bill.  In the Senate, jurisdiction over the bill is divided between six major committees.  This makes things complicated, since Congress does most of its work in its committees.

The House committee’s membership made it an excellent crucible for producing a balanced comprehensive climate and energy bill.  Even with most committee Republicans not involved in the drafting, there was a large enough majority of Democrats (36 out of 59) to pass the American Clean Energy and Security Act on Democratic votes alone.  Moreover, committee Democrats were roughly divided between those eager to pass a bill and those more cautious, out of consideration for the bill’s possible impacts on the manufacturing or energy sectors in their districts.  This meant Rep. Waxman had to balance the bill’s economic and environmental objectives just to get it out of committee.

This is not as true with the Senate Environment and Public Works Committee (EPW), the committee largely in charge of writing the GHG cap-and-trade provisions of the bill.  The committee is not quite as regionally diverse as the House Energy and Commerce Committee.  This morning we heard that EPW Chairman Boxer plans to start holding hearings on the Kerry-Boxer bill around mid-November, presumably moving shortly thereafter to a “mark up” (the arcane term for when a committee formally amends and decides whether to pass a bill).  EPW passed a cap-and-trade bill in 2007 and is expected to do so again this year.  Even after it does so, however, it will take a few more twists and turns for the bill to win the support of 60 Senators. 

One option for doing this would be to have all six relevant committees tackle the aspects of the climate issue within their jurisdiction.  Eighty-one of the Senate’s 100 members sit on at least one of these six committees.  A robust committee process could therefore engage a much larger group of Senators than the 19 EPW members.  The Senate Energy and Natural Resources Committee (ENR) did in fact earlier this year pass a major bipartisan energy bill with provisions corresponding with many of the energy measures of the House bill.  The ENR Committee is going to continue exploring the climate issue next Wednesday with a hearing on energy and economic effects of climate change legislation.  Aside from ENR’s bill, however, it is not clear at this point whether all relevant Senate committees will be sitting formally to address the climate aspects of the bill.

Another option would be for key Senators, those especially focused on the bill’s implications for manufacturing, agriculture and energy supply, to rise up outside the committee process and engage in the specifics of the bill.  In fact, several ad hoc groups of moderate Democrats have crafted statements on the factors that would need to be addressed in a climate bill, the use of trade measures, the amount of allowance value needed to prevent carbon leakage, and the treatment of coal, setting a good precedent for their engagement.

Regardless of process by which the Senate at large is engaged, observers expect Senate Majority Leader Reid ultimately to be the one to forge the various inputs into a 60-vote bill – no doubt with major input from the President.  I will write more on this in a later post.

Manik Roy is Vice President, Federal Government Outreach