Hill Heat

Members of the Senate Environment and Public Works Committee and staff will hold an informal briefing on the provisions of America’s Climate Security Act of 2007 (S 2191).

Contact: Poirier, Bettina – Democratic Staff Director at 202-224-8832

This morning the Senate Committee on Environment and Public Works held its first hearing on Lieberman-Warner (S 2191).

Sens. Warner, Isakson, and Clinton were not in attendance.

Republican senators Voinovich, Inhofe, Vitter, and Craig protested the speed with which the bill is being considered, and called for more hearings and for an analysis from the DOE’s Energy Information Administration and the EPA before markup of the bill. Boxer responded indignantly to the “slow dance” approach, noting that twenty hearings were held this year on global warming and reading a statement from Sen. Warner: “This committee had the chance to hold hearings on Lieberman-McCain and it did not.”

Democratic senators Sanders, Cardin, Lautenberg, and Carper criticized the free allocation of permits to polluters, calling for 100% auction or greater allocation to clean and renewable energy producers.

Sen. Whitehouse (D-R.I.) focused on the lack of jurisdiction and oversight over the market entities created by the bill as a problem area.

Sen. Lieberman favorably noted that entities like electricity company PG&E get both free allocations and proceeds from the auctions.

The witnesses from WRI and the Environmental Resources Trust noted that the basic economic arguments for greater auction of permits: greater economic efficiency and a lower likelihood of market distortion in the form of windfall profits for polluters. They also noted that some degree of free allocation is likely a political necessity. The PG&E witness said he would probably not support the bill without free allocations to his company, and proposed several schemes that would increase subsidies and lower risk for his company at the expense of coal-intensive energy providers. The PG&E witness also made the observation, under questioning from Sen. Sanders, that concentrated solar plants are already competitive with new nuclear plants without government support and would be competitive with current coal/hydro plants if the kinds of subsidies the bill is planning for advanced coal technology were put instead into the renewable sector.

The minority witnesses argued for greater efforts to protect against foreign competition and argued that the short-term caps were too strict. Boxer noted their strong connections to the fossil fuel lobby.

Much more in the live-blog digest transcript.

Full committee hearing on Lieberman-Warner cap-and-trade legislation.

Witnesses

• Peter A. Darbee, Chairman of the Board, CEO, and President, PG&E Corporation
• Jonathan C. Pershing, Director, Climate, Energy and Pollution Program Climate and Energy, World Resources Institute
• Anne E. Smith, Vice President, CRA International
• Dr. Margo Thorning, Senior Vice President and Chief Economist, American Council for Capital Formation
• Wiley Barbour, Executive Director, Environmental Resources Trust

PG&E and WRI are members of US-CAP. The Environmental Resources Trust is connected to Environmental Defense, another US-CAP member.

Thorning has appeared regularly as a minority witness challenging cap-and-trade in previous hearings. Anne Smith also has appeared as a minority witness challenging cap-and-trade in a recent House hearing.

At this week’s subcommittee markup of Lieberman-Warner (S 2191), Senators Sanders (I-Vt.) and Barrasso (R-Wyo.) introduced several amendments, some of which were adopted. The full list gives a good sense of the ideological, political, and economic battles to come as the full Environment and Public Works Committee holds hearings on the bill.

Thanks to the responsive communications staff of each senator, Hill Heat has summaries of all the amendments. See the Sanders amendments in the previous post.

Amendments were defeated unless otherwise noted.

1. Withdrawn after promise from Baucus to work on idea Rocky Mountain Center for the Study of Coal Utilization The amendment would designate the University of Wyoming and authorize a dollar amount. The State of Wyoming and the University of Wyoming have aggressively moved forward with establishing a School of Energy Resources at the University of Wyoming. From their Website: The School of Energy Resources seeks to advance the state of the art in energy-related science, technology, and economics through world-class research, attracting premier scholars and teachers to Wyoming.
2. Withdrawn after promise from Baucus to work on idea Promote high-altitude coal gasification It would provide funds for demonstration projects at 4,000 feet above sea level to mirror guidelines in the Energy Policy Act of 2005. Developing technology that works at altitude benefits the United States, as well as other nations that operate coal power generation facilities at higher altitudes.
3. Adopted, with change to floor of 10,000 btu/lb Provide a definition for what coal is eligible under section 4403 Coal eligible must provide an energy content of 9,000 btu per pound. It attaches a definition to the term “lower rank” coal in the bill. It only mentions sub-bituminous and lignite.
4. Adopted Restore States’ allocation to 5% percent under the General Allocation in Title III by reducing the allocation for International Forest Protection The amendment retains the states’ money, even after an allocation for tribes is made.
5. Withdrawn Provide achievable carbon sequestration standard for new coal powered plants in Title III The carbon sequestration standard would be a gradually increasing one, to allow improvements in our ability to sequester carbon over time. 45% through 2020; 65% from 2021-2040; and 85% by 2041. There is currently no known technology that can capture and sequester 85%. If we want to begin addressing the impacts, we must be realistic in what can be accomplished and build on what we can achieve today.
6. Cap biofuels Expand the definition of covered facilities to include any facility that in a year produces or imports transportation fuel which will emit more than 10,000 carbon dioxide equivalents of greenhouse gas assuming no capture and permanent sequestration of that gas. (It previously singled out only petroleum and coal-based fuels)
7. American Jobs and Family Budget Security Commission The amendment adds a new title to the bill to establish the American Jobs and Family Budget Security Commission, which will study the economic impact to Federal and State budgets of the underlying bill before implementation
8. Sunset The amendment creates a new title under the bill to sunset the bill in five years to review emission goals. We must revisit emission caps to determine whether we are able to achieve the standards set out by the bill.

At this week’s subcommittee markup of Lieberman-Warner (S 2191), Senators Sanders (I-Vt.) and Barrasso (R-Wyo.) introduced several amendments, some of which were adopted. The full list gives a good sense of the ideological, political, and economic battles to come as the full Environment and Public Works Committee holds hearings on the bill.

Thanks to the responsive communications staff of each senator, Hill Heat has summaries of all the amendments, and the full text of those introduced by Sanders. Sen. Barrasso’s amendments will be described in the next post.

Amendments were defeated unless otherwise noted.

SANDERS

1. Funding for Renewables from the Auction Proceeds The amendment will specify that no less than 28% of the funds under the “zero and low carbon energy technologies program” will be used for renewables (as defined in the Energy Policy Act of 2005). The 28% is the same percentage as the maximum amount available to the “advanced coal and sequestration technologies program.”
2. Reduce Funding for Vehicle Re-tooling & Provide Funding for Energy and Environmental Block Grants This amendment would reduce from 20% to 4% the amount of funding from the auction revenues that would be provided to the automobile manufacturing sector and would put the 16% difference into funding an energy and environmental block grant program, whose purposes are to assist State, Indian tribal, and local governments in implementing strategies -
   1. to reduce fossil fuel emissions created as a result of activities within the boundaries of the States or units of local government in an environmentally sustainable way that, to the maximum extent practicable, maximizes benefits for local and regional communities;
   2. to reduce the total energy use of the States, Indian tribes, and units of local government; and
   3. to improve energy efficiency in the transportation sector, building sector, and any other appropriate sectors.
3. Adopted Increase the Accountability for the Automobile Manufacturing Sector Under the Auction Proceeds This amendment would change language in the bill so that to get funding from the auction, the automobile industry would have to be making vehicles that get “at least 35 miles per gallon combined fuel economy calculated on an energy-equivalent basis.”
4. Withdrawn; similar text in substitute amendment Scientific Lookback This amendment would require the EPA Administrator, following a report by the National Academies of Sciences (required by the underlying language), to promulgate regulations to tighten the emissions caps if the latest science suggests that we are not on track to avert a 2 degree Celsius increase in global average temperature.
5. Decrease the Amount of Years Free Allowances Are Given Away to Power Plants & Industry This amendment would reduce, by 10 years, the amount of time the power sector and the industrial sector are given pollution permits (for free by the federal government).
   • 5a. Increase the Amount of Allowances Allocated to the Climate Change Credit Corporation This amendment would change the numbers in the table under section 3201 (Percentage of Emission Allowance Account Allocated to the Corporation) to reflect the decrease in the amount of time that the power sector and industrial sector are given free pollution permits under Sanders amendment # 5.
6. Coal-fired Power Plants This amendment specifies that no coal-fired power plant will commence operation unless it captures and sequesters at least 85% of its CO2.
7. Withdrawn New Entrant Allowances for Renewables Only This amendment would only allow utility-scale renewable projects to receive allowances under the new entrant provision in the bill.
8. Offsets This amendment would limit offsets to an annual amount of no more than 420 million metric tons of allowances, instead of allowing each entity to meet 15% of its emissions reductions with offsets.
9. Emission Reduction Targets This amendment will require the Administrator to promulgate annual emission limits to reduce total US greenhouse gas emissions by 15% below 2005 levels by 2020 and 80% below 2005 levels by 2050

At today’s markup of Lieberman Warner (S 2191), changes were made to win the support of Sen. Lautenberg (D-N.J.), ensuring passage by a 4-3 vote (Sanders, Isakson, and Barrasso voting no) to send the bill to the full Committee on Environment and Public Works.

The changes, according to CQ:

• Extending the scope of the bill to cover all emissions from the use of natural gas. The introduced bill covered natural gas burned in power plants and industrial processes but not in commercial and residential buildings.
• Requiring the EPA to make recommendations to Congress based on periodic reports from the National Academy of Sciences. The bill already would direct the academy to evaluate whether changes in the law are necessary, based on the state of the environment and available technology.

These were two of the four specific changes called for by NRDC at the initial hearing on the bill.

Amendments were introduced by Sen. Sanders (I-Vt.) and Sen. Barrasso (R-Wyo.). Changes made by amendments adopted at the markup:

• Advanced tech auto funding limited to vehicles with minimum of 35 mpg (Sanders 3)
• More allocations given to states, taken from international forest protection (Barrasso 4)
• Definition of lower-rank coal eligible for 25% of CCS funding changed from “for example, bituminous and lignite” to coal with a heat content below 10000 BTU/lb (Barrasso 3)

Sen. Isakson reiterated his passion for nuclear power, and Barrasso argued for stronger coal subsidies, a sentiment supported by Sen. Baucus. Lautenberg compared their role to that of doctors faced with a sick patient who could become terminal, asking why anyone would withhold the necessary medicine. The Senators often laughed about their needs to compromise and balance each others’ parochial interests.

Markup of America’s Climate Security Act, S. 2191.

Prior to hearing changes were made to secure the support of Sen. Lautenberg, ensuring passage with the votes of Lieberman, Baucus, Lautenberg, and Warner. The changes made in the form of a substitute amendment, according to CQ:

• Extending the scope of the bill to cover all emissions from the use of natural gas. The introduced bill covers natural gas burned in power plants and industrial processes but not in commercial and residential buildings.
• Requiring the EPA to make recommendations to Congress based on periodic reports from the National Academy of Sciences. The bill already would direct the academy to evaluate whether changes in the law are necessary, based on the state of the environment and available technology.

Amendments were introduced by Sen. Sanders (I-Vt.) and Sen. Barrasso (R-Wyo.). Changes made by amendments adopted at the markup:

• Advanced tech auto funding limited to vehicles with minimum of 35 mpg (Sanders 3)
• More allocations given to states (Barrasso 4)
• Low-rank coal definition changed from coal below 9000 BTU to 10000 BTU (Barrasso 2)

Live-blog informal transcript of the hearing is below.

VOINOVICH Speaking at the National Press Club on Friday, Sen. George V. Voinovich (R-Ohio), a member of the Committee on Envrionment and Public Works, criticized the “overly aggressive first phase of emission reductions” in the draft Lieberman-Warner legislation, which calls for the Sanders-Boxer target of reduction to 1990 levels of emissions (15% reduction from 2005 levels) by 2015.

According to CQ (subscriber only):

Voinovich said that legislation should include financial incentives for technological development and deployment, such as loan guarantees, government procurement programs and international technology transfer promotion.

“Let’s do a Manhattan project,” Voinovich said. “Let’s do an Apollo project.”

Without new technologies, he warned, coal-fired power plants would simply switch over to using natural gas

ISAKSON Johnny Isakson (R-Ga.) will introduce a “nuclear title” amendment at the subcommittee markup tomorrow for more nuclear power plant incentives. At last week’s hearing, Isakson said it was “just crazy” to not support nuclear power. Update: Isakson may miss the markup to attend a White House meeting on the Georgia drought. David Roberts notes the irony that means Isakson won’t be able to support subsidies for the most water-intensive source of electricity.

ALEXANDER Lamar Alexander (R-Tenn.) sits on the EPW committee. He believes the cap-and-trade system should not apply to the transportation sector through the “upstream” cap on refiners and fuel importers, instead only applying a Low Carbon Fuel Standard (LCFS) such as that in S. 1324 and HR 2215.

According to CQ, Alexander will amend Alexander-Lieberman (S 1168), a power-sector cap-and-trade bill, to include transportation and building efficiency standards.

INHOFE Inhofe, EPW’s ranking member, continues to challenge the science of climate change.

Erich Pica, Friends of the Earth:

The Lieberman-Warner bill will reward corporate polluters by handing them pollution permits worth almost half a trillion dollars. And that’s just one part of this bill. The bill also includes hundreds of billions of dollars of other mind-boggling giveaways. The levels of pollution-rewarding giveaways in this bill are truly obscene.

In calculating the value of emissions allowances, FoE follows the estimates of EPA’s analysis of McCain-Lieberman (Climate Stewardship and Innovation Act of 2007, S. 280) which estimated that between 2015 and 2050, the price of emissions permits would increase from an average of $14 to $78 per ton of carbon dioxide equivalent greenhouse gas emissions.

Friends of the Earth’s analysis found that the bill:

• Provides the coal industry and other fossil fuel industries pollution permits worth $436 billion over the life of the legislation; 58 percent of this amount goes to coal (sec. 3901)
• Returns revenue raised through auctions directly to polluters—for example, an additional $324 billion would subsidize the coal industry’s efforts to develop carbon capture and storage mechanisms (sec. 3601)
• Directs another $522 billion of auction revenue to low or zero-emissions technologies, which could result in handouts to the nuclear power, big hydro and coal industries, which are not clean (these funds could also be directed toward important clean technologies, such as wind and solar—the legislation is not specific) (sec. 4401)

On Thursday, the Private Sector and Consumer Solutions to Global Warming and Wildlife Protection Subcommittee of the Senate Committee on Environment and Public Works, chaired by Joe Lieberman (I-Conn.), will markup S. 2191, the Lieberman-Warner cap-and-trade climate legislation.

The LA Times calls for Congress to implement “simple carbon taxes that would assess polluters for the cost of their environmental damage and offset the resulting economic pain by lowering other taxes”, and failing that, 100% auction. The Roanoke Times supports L-W but calls for a tighter cap, citing UCS. The Center for American Progress, in an article primarily about the California wildfires, calls for these changes to L-W:

• Mandating that new coal fired power plants reduce their pollution by 85 percent using carbon and capture storage technology.
• Providing significantly more resources to protect people in Africa and Asia at risk from global warming impacts.
• Requiring all emitters to purchase allowances that allow them to emit greenhouse gases.

The Great Falls Tribune takes a look at the Montanan perspective, noting Baucus’s scripturally based support for the bill, the no-till agricultural offsets, allowances for rural electric cooperatives, CCS incentives, and the weak cap targets. The Helena Independent Record has more of Baucus’s perspective.

MarketWatch notes that hundreds of billions of dollars are at stake, noting that environmentalists are calling for 100% auction and that US-CAP has avoided a stance, and links to the CBO report from this spring, Trade-Offs in Allocating Allowances for CO2 Emissions.

The Politico takes a look at the lobbying on L-W. Note to the Politico: “allocate” is not “legislative slang for ‘give away’”—auctions and free distribution are the alternative methods of allocation.