As Obama Reiterates C02 Priority, Indus Calls For 2009 Bill

By Ian Talley
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)--President-elect Barack Obama on Tuesday recommitted to climate-change legislation as a top priority of his Administration, while a high-powered U.S. industry and environmental group underscored its support by urging lawmakers to pass a climate bill by 2009.
The U.S. Climate Action Partnership, an influential coalition of companies and environmental groups, applauded Obama's commitment, but many Capitol Hill pundits and politicians are skeptical about what they call a too-optimistic schedule.
Some lawmakers, including the head of the Senate energy committee, say it's unlikely a climate bill can be passed in the new year given the complexity of a policy that will impact nearly every sector of the economy and the fierce lobbying fight already underway.
Adding to the political challenges is the financial meltdown that makes a greenhouse gas cap-and-trade law a hard sell when it's likely to force energy costs up and create trillion-dollar wealth transfers between industries.
"My presidency will mark a new chapter in America's leadership on climate change that will strengthen our security and create millions of new jobs in the process," Obama said in a prepared video for a climate-change summit in California on Tuesday.
"That will start with a federal cap-and-trade system."
Obama wants to establish one of the strongest cap-and-trade programs, aiming to cut emissions to 1990 levels by 2020 and ax an additional 80% by 2050.
"Now is the time to confront this challenge once and for all," Obama said in the video. "Delay is no longer an option. Denial is no longer an acceptable response. The stakes are too high. The consequences, too serious."
The U.S. Climate Action Partnership, or USCAP, urged Congress to work quickly on a solution. Members include some of the most energy-intense producers and consumers such as Alcoa (AA), Royal Dutch Shell (RDSA), BP Plc (BP), General Electric (GE), Dow Chemical Co. (DOW) and Rio Tinto (RTP), as well as environmental groups such as the National Wildlife Federation, the Nature Conservancy and Natural Resources Defense Council.
"We believe Congress needs to go to work in a bipartisan way and find a solution and find it '09," said James Rogers, CEO of Duke Energy (DUK), a USCAP member. "Delaying this further doesn't make sense."
Last week, Sen. Jeff Bingaman, D-N.M., chairman of the Senate Energy and Natural Resources Committee, said he didn't think a bill could be passed in the new year, given the complexity of such a bill and the current economic state.
A cap-and-trade bill failed to gain any traction in the Senate earlier this year as there weren't nearly enough votes supporting the measure that Sen. Barbara Boxer, D-Calif., brought to the floor, prompting the Majority Leader to pull it off the schedule after only a few days. One of the factors that analysts say helped kill the bill is that it was brought as energy prices neared their record peak.
Now many say the ailing economy will provide a similar negative political environment. And that's one of the reasons why environmentalists and Democrats are pushing climate action as a tool for economic recovery.
David Crane, chief executive of USCAP member NRG Energy (NRG), said Obama as president would make a major difference in galvanizing the support needed to pass the economy-wide bill: "This can be done in 2009."
The question is how quickly the President-elect will move in the new year. Will he want to expend an enormous amount of political capital in the first 100 days to push a bill that will face tough opposition from several flanks in Congress? Many think not and expect that while he will outline his proposals and fuel debate, ultimately he may wait until later in the year to accelerate action.
The clock is already ticking for Capitol Hill lawmakers, however, and the next Administration has held up an hourglass for Congress. Earlier in November, Obama's energy and environment advisor, Jason Grumet - a man tipped as a prime candidate for a special energy/climate czar position the transition team is considering - said that if Congress didn't act within 18 months, the Environmental Protection Agency would act to regulate greenhouse gases under the Clean Air Act. That, say many opponents, would be much less economically efficient.
"It would be a mistake for President-elect Obama or for Congress to punt the climate issue to the EPA," said Duke's Rogers. "That will just lead to years and years of litigation."
While Rogers said getting consensus on the fundamental of how Congress should cut greenhouse gases was easy, "building consensus around detail is difficult."
That's why USCAP and others say the new bill must be streamlined.
"What's clear to me is that we need to keep it simple, straightforward," Rogers said.
Bingaman said Monday that one of the key ways to simplify the legislation would be to only funnel revenue raised from auctions of emission allowances into programs that reduce greenhouse gases. Many of the provisions offered by Boxer and other lawmakers include funds to help low-income households cope with higher energy costs and communities and local governments deal with the consequences of global warming.
"The excessive complexity ... may have hurt the cause of climate change more than it helped," Bingaman said.
In his remarks to the climate summit Tuesday, Obama also said he planned to invest $15 billion annually to spark private-sector development of clean energy technologies.
"We will invest in solar power, wind power, and next generation biofuels," he said. "We will tap nuclear power, while making sure it's safe. And we will develop clean coal technologies."
-By Ian Talley, Dow Jones Newswires, 202-862-9285; ian.talley@dowjones.com