US Climate Bill Hits Summer Snag

14 July 2010

Developments in US climate change legislation have been slow in the past month, as Senate Democrats continue to debate how they should try to push through new rules to cut the country's emissions of greenhouse gases.

Two left-leaning Senate heavyweights - John Kerry, a Democrat and Joe Lieberman, an Independent - unveiled their American Power Act in May. Since then, a senior Republican lawmaker, Richard Lugar, has released his own legislative alternative, the Lugar Practical Energy and Climate Plan.  Unlike the American Power Act (also known as the "Kerry-Lieberman" bill), Lugar's plan would not put a price on carbon through a cap-and-trade mechanism or any other scheme. Most of its emissions reductions would be achieved through new energy standards and subsidies to select clean energy sources, such as nuclear power. Ultimately, its impact on climate change would not be as far-reaching as that of the Kerry-Lieberman bill. However, Lugar's legislation may be more likely to win the Senate's approval.

Recent statements by prominent Senators, including Democrats, suggest that lawmakers may be scaling back their climate change ambitions, at least for this year. Senator Jeff Bingaman, a Democrat, has argued for an emissions cap that would affect only the utilities sector, as opposed to the Kerry-Lieberman bill's economy-wide cap. Bingaman may release his own bill within the next month.

Utilities-only cap floated

Senator Lindsey Graham - a former co-author of the Kerry-Lieberman bill - has intimated that he would accept a utilities-only cap, but only if the bill were put to a vote after the November elections. Since the US Environmental Protection Agency (EPA) has already calculated that the bulk of the emissions reductions under Kerry-Lieberman would come from the utilities sector, Senators Kerry and Lieberman might find such a concession acceptable. Both lawmakers have said they are open to compromise, with Lieberman specifically mentioning the utilities-only approach.

Kerry-Lieberman may have gotten a political boost from a recent report by the Congressional Budget Office (CBO), a branch of the government that estimates the costs of potential new legislation. On 7 July, the CBO predicted that the Kerry-Lieberman bill, with its current economy-wide emissions program, would have a net effect of reducing the US budget deficit by US$19 billion between 2011 and 2020.  Though it would cost US$732 billion to implement, the bill would also generate US$751 billion in revenue, thereby producing the net positive figure, the CBO reported. However, if the Kerry-Lieberman emissions cap were limited to the utilities sector, its net revenue would be significantly smaller.  Regardless, the CBO will not calculate such a proposal until the scale-back is written into a new bill, as Senator Bingaman has suggested he might do.

Economic focus could open doors for climate bill

As fiscal issues dominated the recent G20 summit in Toronto, the budgetary effects of US climate change legislation could take on a new political importance. The CBO report on the Kerry-Lieberman bill could thus be a boon to Democrats, helping them shrug off Republican criticisms that their party is fiscally irresponsible.

Ultimately, any proposal that Senate Democrats push this year will hinge on the strategic decisions of Democratic Senator Harry Reid, the Senate Majority Leader.  Despite numerous meetings with other lawmakers, as well as US President Barack Obama, Reid has yet to clearly signal what kind of bill he would put to a vote. Similarly, Obama has been reluctant to push a specific plan before the US public, though he has offered general support for Congressional efforts thus far.

Assuming some form of climate legislation is passed, the new law will serve as the foundation for the US position in the next round of international climate negotiations. Administration officials will likely hesitate to negotiate an international commitment that is more ambitious than the legislation, given that any climate bill is unlikely to garner more than 60 votes in the US Senate - a necessary condition to avoid a Senate filibuster - and that a new international agreement needs the support of at least 67 senators for ratification.

Another round of international negotiations may be approaching more quickly than either the US Senate or the President would like. The next major talks will take place from 29 November to 10 December in Cancun, Mexico, not long after the 2 November Congressional elections in the US. Thus, the Cancun talks will fall in the "lame duck" period between the US election and the swearing-in of the new Congress on 3 January 2011, a time when Congress is traditionally loath to vote on landmark measures.

Climate negotiations set to take place in China just before the US elections could put pressure on Congress to produce a bill before November, some analysts say. However, with elections coming up soon, vulnerable Democratic Senators, including Majority Leader Reid, may be inclined to scale back their ambitions. For a climate change bill with emissions caps, the path to the President's signature looks murky at best.

ICTSD reporting.

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