Senate Girds for Debate on Carbon Cap Bill
Next week, the U.S. Senate plans to take a deep breath and dive into a topic that's seen years of debate but little action: how to slow climate change.
The focus of the debate will be a new bill, the Climate Security Act, which would put a national cap on greenhouse gases created by burning coal, oil or natural gas. The measure is a bipartisan creation sponsored by Sens. Joe Lieberman (I-CT), John Warner (R-VA) and Barbara Boxer (D-CA), who heads the Senate's Environment Committee.
The legislation would require factories, power plants, refineries and other heavy industry to pay the government for permits to emit greenhouse gases, mostly carbon dioxide. Companies also could trade permits among themselves and even bank them to use when needed. Economists who've analyzed this "cap-and-trade" program say it could generate about $6 trillion by 2050 — most of it from industry coffers.
A Complicated Debate
"It's an unbelievably complicated piece of legislation that will literally transform the entire energy sector of the U.S. economy," says economist Ray Kopp of the Washington think-tank Resources for the Future. "You are basically controlling emissions from literally millions of sources."
Trucking companies, manufacturers, electricity producers — any industry that uses fossil fuels — would be subject to the CO2 cap and feel the cost of permits. And that cap would get progressively lower over the next several decades, increasing the cost of the permits.
The legislation has been long in coming and shows the work of many hands. Lobbying records, for instance, show that climate change is being cited almost 20 times more often than three years ago, according to the Center for Responsive Politics, which tracks lobbyists in Washington.
Who Will Pay?
Industry groups are taking a close look at the legislation. Some see cap-and-trade as a way to bring some predictability to the future cost of dealing with climate change.
"We want to be able to predict what the financial consequences will be," says Preston Chiaro, the chief of energy and minerals for Rio Tinto, one of the world's biggest mining companies. "Particularly for a company like ourselves, when we make an investment in a large new mine, that's billions of dollars' worth of investment."
But Chiaro says businesses likely will pass along the extra costs. He says the trillion-dollar question is this: Who will end up paying the financial consequences in the end?
"Is it going to be the taxpayers? Is it going to be industry? Is it going to be consumers who buy products?" Chiaro says. "We're talking about reallocating trillions of dollars' worth of value, and someone's ox is going to be gored and somebody is going to make money on it." That, he says, is what the tussle in Congress is going to revolve around.
Cutting Carbon at a Cost
The bill's chief sponsors, Lieberman and Warner, point out that the possible multitrillion-dollar windfall to the government will be spent in part to ease the pain of higher energy costs for industries and consumers. The government also would spend some of the money to push green technologies such as solar and wind power.
But the cost of capping carbon will outweigh the benefits, says environmental analyst Kenneth Green at the American Enterprise Institute, another Washington think-tank.
"It's going to raise the cost of everything that depends on energy," Green predicts. "That's going to involve making us less competitive against countries that don't emulate that, which is going to be most countries."
He says those countries include China and India, which are fast becoming serious economic competitors with the U.S. but don't limit CO2 emissions.
If the bill becomes law, Green says, "it's also going to entail simply having less — your dollar will go less far: less food, less housing, less transportation, less of everything."
But also less carbon dioxide.
Both supporters and opponents of the bill expect a long and torturous debate that might not be settled this year.
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MICHELE NORRIS, host:
From NPR News, this ALL THINGS CONSIDERED, I'm Michele Norris.
Next week, the Senate is planning to take a deep breath and dive into a topic that's seen years of debate but little action. That topic is, how to slow climate change.
As NPR's Christopher Joyce reports, the solutions to that dilemma will require a fundamental change in the way people use energy and how much they're willing to pay for it.
CHRISTOPHER JOYCE: There are several climate bills lined up in Congress. The workhorse pulling them all is the Senate Climate Security Act, co-sponsored by Senators Joe Lieberman of Connecticut and John Warner of Virginia. Sleek, it's not.
Mr. RAY KOPP (Economist, Resources for the Future): It's an unbelievably complicated piece of legislation that would literally transform the entire energy sector of the U.S. economy in all aspects of it.
JOYCE: Economist Ray Kopp works for Washington think-tank called Resources for the Future. Simply put, he says, the legislation would put a cap on emissions of carbon dioxide or CO2.
Mr. KOPP: You are basically controlling emissions from literally millions of sources. You and I driving to work every day or driving our kids to school to all aspects of transportation - rail, bus, boat, plane - and all the things that private industry does that uses fossil fuels, being, you know, coal natural gas and fuel oil, plus all the electricity that we generate. And now you're going to put, basically, a regulatory program over top of all of that.
JOYCE: The legislation has been long in coming and shows the work of many hands. The Center for Responsive Politics, which tracks lobbyists in Washington, says climate change is being cited almost 20 times more often in lobbying records than three years ago. The bill's supporters say we're stuck in an energy tar pit. We've burned coal, oil and gas because they've been cheap and easy, but now fossil fuels are warming the planet.
So the legislation would make power companies and factories and refineries pay for the right to emit carbon. They'll have to get permits for every ton of CO2 that goes up the smoke stack. They'll get some free permits, but then they'll have to buy them from the government or other companies that have permits to spare. Why would a company agree to do this? For Preston Chiaro, chief of energy and minerals for one of the world's biggest mining companies, Rio Tinto, it's about predictability.
Mr. PRESTON CHIARO (Chief of Energy and Minerals, Rio Tinto): Particularly, a company like ourselves, when we make an investment in a large new mine that's billions of dollars worth of investment and - we want to be able to predict what the financial consequences will be over those lifetimes.
JOYCE: But Chiaro says the trillion-dollar question is: who pays those financial consequences?
Mr. CHIARO: Is it going to be the taxpayers? Is it going to be industry? Is it going to be consumers who buy products? What we're talking about is reallocating trillions of dollars worth of value, and someone's ox is going to be gored and someone's is going to make money on it. And that's what the tussle really is over in my view.
JOYCE: Economists estimate the Lieberman-Warner bill would extract over $6 trillion by 2050 - most of it would come from heavy industry. The government would spend some of that to push green technology - solar, wind, that sort of thing. Some of the money would go to consumers and hear-hit industries to soften the pain of higher energy bills. But for environmental analyst Kenneth Green at the American Enterprise Institute, another Washington think-tank, the cost of capping carbon outweighs the benefits.
Mr. KENNETH GREEN (Environmental Analyst, American Enterprise Institute): It's going to raise the cost to everything that depends on energy. That's going to involve making us less competitive against countries that don't emulate that, which is going to be most countries.
JOYCE: Countries such as China and India, fast becoming serious economic competitors with the U.S. but which don't limit CO2 emissions.
Mr. GREEN: It's also going to entail simply having less - your dollar will go less far: less food, less housing, less transportation, less of everything.
JOYCE: And less carbon dioxide. Action on the climate bill is scheduled to begin Monday. Both supporters and opponents expect a long and torturous debate that may not be settled this year.
Christopher Joyce, NPR News. Transcript provided by NPR, Copyright National Public Radio.
