Hill Heat

In Bali, EE News reporter Darren Samuelson interviews David G. McIntosh, Sen. Lieberman (I-Conn.)’s counsel and legislative assistant for energy and the environment, about the prospects for Lieberman-Warner (S. 2191) on the Senate floor in 2008.

Before joining Senator Lieberman’s staff in April 2006, McIntosh served briefly as a Maryland assistant attorney general representing the state’s air agency. Before that, he worked at NRDC as a Clean Air Act litigator and regulatory lawyer. After graduating from Harvard Law School in 1998, he clerked for a U.S. District Court judge in Washington, DC before joining the legal and lobbying firm Covington & Burling, for one year. He is not to be confused with former representative David M. McIntosh (R-Ill.), a strong fighter against environmental regulations.

“We could probably predict a half-dozen issues that would be top-line amendment issues,” McIntosh said during an interview at the United Nations’ global warming negotiations in Bali. “Some of them, we have the ability through negotiation and engagement to have those amendments be presented in a way that is not divisive, that does not divide up the votes that would otherwise support passage on the floor.”

McIntosh predicted Senate negotiations over the climate bill from Lieberman and Sen. John Warner (R-Va.) would center foremost on the economic implications tied to creating a first-ever mandatory cap on U.S. greenhouse gas emissions. He also expects a strong push on incentives for nuclear power.

McIntosh hopes to be able to craft a nuclear title suitable for inclusion in Lieberman-Warner:

The bill’s lead cosponsors are interested in “seeing if it is possible to craft an amendment or to encourage others on nuclear enegry in ways that’d be seen as targetted and relevant and fitting within the confines of the bill rather than efforts to revive every type of support for nuclear power that anyone has ever thought of.”

Sen. Kerry (D-Mass.), the only Senator in Bali, also spoke on Lieberman-Warner:

I can’t tell you precisely when, but we’re committed to having this debate regardless of whether or not we can pass it or where the votes are. We believe it’s an important marker, and we intend to make this part of the debate in the presidential elections of 2008.

Sen. Boxer (D-Calif.) successfully shepherded the Lieberman-Warner Climate Security Act (S. 2191) out of the Environment and Public Works Committee from yesterday’s markup with a 12-8 vote, Sen. Warner and the two independents (Lieberman and Sanders) joining the nine Democrats.

Boxer:

The vote of the Environment and Public Works Committee in favor of the Climate Security Act was a historic moment for our country and for my Committee.

For me, it was the greatest legislative accomplishment of my political career of thirty years.

Finally, America is taking bold steps to avert the catastrophe that awaits our children and grandchildren if we do nothing.

Our bill has two goals…to fight global warming and to do it in a way that keeps our economy strong. That will be my focus in the coming weeks and months as we move the bill forward to the Senate floor.

This bill is the most far reaching global warming bill in the world and I am grateful to Senators Lieberman and Warner for breaching the partisan divide and unleashing a spirit of cooperation that puts the wind at our backs.

Ranking member Inhofe:

For the first time in history, a fatally flawed global warming cap-and-trade bill was passed out of committee. Not only is the entire cap-and-trade approach fatally flawed, but the Lieberman-Warner bill failed to improve today, as Democrat amendments were added. Instead of engaging in substantive debate, the Democrats chose to simply reject all serious efforts to mitigate the unintended consequences of this bill and ensure adequate future energy supplies for this nation.

The rejection of key amendments has guaranteed an enormous floor fight as many major issues were side-stepped. While the vote today was never in question, it did provide an opportunity for Republicans to expose the serious deficiencies of this bill. The full Senate now needs to look at a cost-benefit analysis of this bill. It is simply all economic pain for no climate gain. Numerous analyses have placed the costs at trillions of dollars. Even if you accept the dire claims of man-made global warming, this bill would not have a measurable impact on the climate.

Republicans, in a good faith effort, offered a conservative number of amendments [Ed.—150] to address the most important flaws in this bill. Unfortunately, they were rejected. As is, this bill will strike a devastating blow to American families, American jobs, and the American way of life.

We have had approximately 20 climate hearings on the impacts of climate change, but none on so called ‘solutions.’ [Ed.—other than this, this, this, this, this, this] Differing approaches to reducing emissions were never discussed. Instead, the Committee rushed to a single approach, without the aid of government analyses.

Within seven years, electricity prices are estimated to skyrocket 35 to 65 percent and will have a huge economic hit on households. These costs are far greater than the McCain-Lieberman bill that was voted down by the Senate two years ago. Additionally, the poor will be the hardest hit as they pay about five times more per month, as a percentage of their monthly expenditures, compared to wealthier Americans. By 2015 this bill is estimated to cost up to 2.3 million jobs [Ed.—by CRA International], and these lost jobs will go to China, India, and other emerging nations without carbon limits.

The morning part of the session was carried live on C-SPAN 2.

Sen. Bond’s chart from his opening statement:

Amendments

Amendments adopted: Sanders low-carbon manufacturing incentives, Lautenberg decoupling incentives, Cardin good government.

Amendments rejected: Craig offramps, Inhofe auto-industry job offramp, Bond low-income family cost-relief, Isakson nuclear title, Voinovich available-tech offramp.

Amendment withdrawn: Carper multiple-pollutant title.

Markup of Lieberman-Warner, S 2191, scheduled for December 5.

MORNING

Sen. Bond’s chart from his opening statement:

Amendments

Amendments adopted: Sanders low-carbon manufacturing incentives, Lautenberg decoupling incentives, Cardin good government, Klobuchar renewable energy bonus study, Lautenberg aviation greenhouse gas study, Sanders advanced tech vehicle language, Whitehouse coastal impacts, Barrasso coal propaganda, Carper recycling, Craig-Warner forestry package, Alexander low-carbon fuel standard, Inhofe NAS study explicitly including nuclear.

Amendments rejected: Craig offramps, Inhofe auto-industry job offramp, Bond low-income family cost-relief, Isakson nuclear title, Voinovich available-tech offramp, Craig-Inhofe nuclear offramps, Voinovich energy cost offramp, Vitter offshore drilling, Sanders CCS bonus restriction, Sanders 80% target, Sanders 2-degree limit, Barrasso soda ash mine methane emissions exemption, Clinton-Sanders no industry permit giveaways, Voinovich state regulation preemption, Voinovich Clean Air Act exemption, Inhofe Yucca Mountain authorization.

Amendments withdrawn: Carper multiple-pollutant title, Carper output-based allocation, Cardin public transit, Barrasso small refiner giveaways, Voinovich WTO nullification, Barrasso high-altitude CCS demonstration, Barrasso local economy offramps, Inhofe nuclear PTC.

05/12/2007 at 09:00AM

Tomorrow morning’s Environment and Public Works markup of the Lieberman-Warner climate bill (S. 2191) promises to be long and contentious, quite possibly to be extended to Thursday. Republicans have proposed over 150 amendments, with Sen. Craig offering 46; EE News reports they expect votes on upwards of 50 of the amendments. Democrats have submitted about 30 amendments.

Below is a summary of the amendments the senators of the committee are planning to submit, in addition to Sen. Boxer’s manager’s mark.

Major amendments include Sen. Clinton’s two amendments. The first establishes 100% auction of permits, and the second dramatically restricts CCS funding. Sanders #4 establishes an 80% target and #7 limits total offset permits. Vitter #10 restricts ownership of allowances primarily to covered entities. Carper #1 places caps on traditional air pollutants and Carper #2 bases permit giveaways to power sector on historical electricity production, not emissions. Isakson proposed various pro-nuclear amendments.

Friends of the Earth has highlighted five amendments they support.

EE News reports that Sen. Boxer likely has sufficient votes to pass her updated version of the Lieberman-Warner cap-and-trade bill (S. 2191) out of committee at Wednesday’s markup, though the markup process may take two days.

EE News reported on some responses to the changes in Sen. Boxer’s version, known as the “manager’s mark”:

Environmental groups have different perspectives on the new version of the Lieberman-Warner climate bill.

Dan Lashof, a senior scientist at the Natural Resources Defense Council, signaled support. “I think the bill continues to move in the right direction,” he said in an interview. “The changes [in the manager’s mark] are incremental from what was passed in the subcommittee.”

Of the new section for HFCs, Lashof predicted “net environmental benefits” by forcing HFC-polluting industries to compete with each other for emission credits.

But Friends of the Earth still has some of the same concerns that caused it to oppose the legislation in subcommittee. In particular, Erich Pica, the group’s economic policy analyst, found fault with the bill’s allocation system. “It gives away too many permits for free,” he said. “It’s a hundred billion dollar windfall for the polluting industries that got us into this mess in the first place. And the targets need to be strengthened.”

Industry also has its own problems.

At the Edison Electric Institute, spokesman Dan Riedinger said the Lieberman-Warner legislation includes targets and timetables that don’t match industry expectations for the readiness of new energy technologies. He also said the bill doesn’t do enough to hold down the costs to the U.S. economy. And it doesn’t press for enough reductions from developing economies like China and India.

“They don’t begin to address our overall concerns about the bill,” Riedinger said.

A collection of power companies that often lines up with Delaware’s Carper also took issue with the legislation. In a prepared statement issued Friday, the Clean Energy Group questioned the way the bill now favors coal-fired electric utilities over more energy efficient nuclear power and natural gas plants.

“We believe this approach will compromise the effective and efficient attainment of the greenhouse gas reduction targets by providing a subsidy to high-emitting generators,” the statement said. The group includes Entergy, FPL and Constellation Energy.

From EE News (subs. req.), Sen. Boxer has led the drafting of a new version of Lieberman-Warner (S. 2191) in preparation for her committee markup a week from today.

An aide to Sen. Joe Lieberman (I-Conn.), a lead co-author of the bill, said one of the biggest changes involves an “upstream” cap placed on the heat-trapping greenhouse gas emissions that come from natural gas processors. With the new bill’s natural gas section, more than 80 percent of the greenhouse gas emissions that come from the U.S. economy will be covered under the legislation.

Previously, the bill dealt with about 75 percent of the U.S. economy.

Another change in the legislation speeds up by five years the end date for the free emission credits given out to power plants, manufacturers and other industrial sources. Free credits will now be phased out at the start of 2031, rather than the start of 2036.

Some of the other changes (see line-by-line comparison):

• Hydrofluorocarbons (HFCs) are separately capped (all allowances freely distributed), to “remove the financial incentive for companies to shut down their plants that use HFCs and move them to countries that don’t have similar limits” (s. 1202, 3901, 3906, 10001-11002)
• 25% of energy R&D funds explicitly allocated to renewable energy projects (an increase from a failed Sanders amendment in subcommittee markup) (s. 4401, s. 4406)
• 0.5% of annual emissions allowances to go to a “program for achieving” methane emissions reductions from landfills and coal mines (s. 3907)
• 1% of annual emissions allowances to go to states for mass transit funding, distributed following federal highway aid apportionment rules (s. 3304)
• Per the request of international aid groups, the national-security requirement for the Climate Change and National Security Fund has been dropped (s. 4801-4804)
• SEC requirement of corporate disclosure of climate risks dropped (s. 9002)
• Interagency Climate Task Force headed by EPA Administrator to submit a report “make public and submit to the President a consensus report making recommendations, including specific legislation for the President to recommend to Congress” in 2019 based on the triennial National Academy of Sciences reports
• Details added to Climate Change Worker Training Program (s. 4602-4606)
• Details added to Adaptation Fund (including combatting ocean acidification) (s. 4702)
• Details added to eligibility for carbon sequestration bonus allowances (s. 3602)

Lieberman-Warner (S. 2191), the Senate global warming emissions cap-and-trade bill undergoing markup next week, generates a emissions trading system with an estimated lifetime (from inception to 2050) net worth on the order of three to four trillion dollars, in the form of emissions credits given away for free and revenues generated from the auction of the remaining credits.

L-W establishes two independent entities to administer the allocation and appropriations of such funds, taking the direct appropriations authority away from Congress for the lifetime of the bill.

Carbon Market Efficiency Board (Title II, Subtitle F; sec. 2601-2605)

The authority to change the percentage of offsets or foreign credits used and the terms of borrowing allowances against future years is vested in the Carbon Market Efficiency Board, a executive-branch entity with seven members who each serve staggered 14-year terms. The Board is appointed directly by the President and is not part of any existing department.

Climate Change Credit Corporation (Title IV, Subtitle B; sec. 4201-4203)

The Climate Change Credit Corporation, a non-profit private federal corporation, will administer the auctions, the revenues thereof to be split into four distinct funds in the Treasury, the Energy Assistance Fund, Climate Change Worker Training Fund, Adaptation Fund, and the Climate Change and National Security Fund.

The Corporation has five members appointed by the president, no more than three from one political party, who serve five year terms. The Corporation has complete authority of the allocation of the Energy Assistance Fund (55% of the revenues, over one trillion dollars) within general allocation ranges for particular technologies (28% for CCS, 20% for vehicles, etc.).

The remaining funds are put under the jurisdiction of existing programs or Cabinet secretaries.

In a letter to the heads of the Senate EPW and Foreign Relations committees (Boxer, Inhofe, Biden, and Lugar), a large group of development, faith-based, and environmental (including FoE, Greenpeace, UCS, and NWF) organizations write:

We urge you to take action to dramatically reduce greenhouse gas emissions in the United States that are contributing to these impacts on impoverished countries, while also putting in place substantial assistance for those countries to adapt to the widespread and serious consequences of climate change. In particular, a significant proportion of any revenue generated from climate policies, such as auctions of emission permits, should be directed to the adaptation needs of poor people and impoverished countries. To maximize those resources, policies to reduce U.S. greenhouse gas emissions should ensure that the responsibility to pay for emissions reductions and adaptation costs are borne equitably by those who are most responsible for those emissions, such as through robust permit auctions.

The present version of Lieberman-Warner allocates 5% of auction revenues to a Climate Change and National Security Fund “to enhance the national security of the United States” and “assist in avoiding the politically destabilizing impacts of climate change in volatile regions of the world.” The August draft outline allocated 10% of auction revenues to international aid; the initial draft legislation cut those revenues to 5% and allocated 3% of emissions allowances to fighting tropical deforestation; in subcommittee markup a Barrasso amendment was adopted to instead allocate those emissions allowances to states.

EE News reports:

Under the Lieberman-Warner legislation, an auction could create tens or even hundreds of billions of dollars per year in new revenue depending on how much industry pays on the market for greenhouse gas credits. If the credits sold for $10 per ton of carbon dioxide, a 10 percent slice for international adaptation would equal $1 billion.

Senate Environment and Public Works Committee Chairwoman Barbara Boxer (D-Calif.) supports including international assistance for adaptation as part of the climate bill. But a Boxer aide said today that no decision has been made on changes in the distribution of the Lieberman-Warner bill’s auction revenue.

Eight environmental organizations sent a letter calling on the Senate Environment and Public Works Committee to “continue the process of strengthening S. 2191, and to deliver the bill to the full Senate the first week of December.” The signatories included four members of US-CAP (NRDC, ED, NWF, Nature Conservancy), as well as the Union of Concerned Scientists, National Environmental Trust, Defenders of Wildlife, and the Wilderness Society.

The letter does does not specify how S. 2191 needs to be strengthened, though testimony of group representatives before the committee has generally agreed on the call for an 80% reduction by 2050 in emissions and opposition to any safety-valve/price-cap amendments.

In addition, a NWF representative has stated that the National Wildlife Federation supports 100% auction, and the Union of Concerned Scientists has called for 100% auction, with revenues going to efficiency and to “counteract the negative societal impacts of a carbon price.” NET has called for U.S. climate legislation to “auction a significant percent of allowances” to avoid windfall profits. NRDC has opposed grandfathering of emissions allowances to firms and believes “allowances should be held in trust for the public and distributed in ways that will produce public benefits.”

Groups who have directly responded to Lieberman-Warner with a call for 100% auction or outlined climate legislation principles (such as Sierra Club, Audobon, Physicians for Social Responsibility, U.S. PIRG, Friends of the Earth, Rainforest Action Network, and Greenpeace) were not involved in the letter.

The full text of the letter is below.