US set for compromise bill on emissions

By Edward Luce in Washington
Published: May 12 2009 23:15

Democrats in the US House of Representatives are expected to announce a compromise move on Wednesday that would give the go-ahead to a bill to tackle global warming. Success would beat expectations in a political climate increasingly hostile to cap-and-trade.
The bill, which will disappoint some environmental groups, is likely to give away more than half the carbon permits under the cap-and-trade system, and water down the original emission reduction targets envisaged by the two leading congressional sponsors, Henry Waxman of California and Ed Markey of Massachusetts.

However, moderate environmental groups say that any climate-change legislation would amount to a triumph during a severe economic downturn.
They point to a Pew Research Center opinion poll shortly after President Barack Obama’s inauguration, showing global warming at the bottom of the list of the public’s 20 highest concerns, with only 30 per cent of voters saying tackling the problem should be a top priority.
The issue came below “moral decline”, immigration, lobbyists and the military. “If you look at what is possible, then this bill is both environmentally effective and politically attractive,” said Tony Kreindler, a spokesman for the Environmental Defense Fund, an advocacy group.
Under the likely outline, which could be read out as soon as Wednesday, up to 40 per cent of the carbon permits would be given away to local electricity distribution companies, another 12-15 per cent would go to energy-intensive manufacturers, and up to 5 per cent would be allocated to the oil sector.
The bill would also dilute the original target set by Mr Waxman, who had hoped to reduce US carbon emissions to 20 per cent below 2005 levels by 2020. That reduction figure would be trimmed to between 14 and 17 per cent.
The likely bill would contravene Mr Obama’s campaign pledge to ensure a full system of auctions for carbon permits. It could also complicate his budget arithmetic. Proceeds from the auctions had been earmarked by the White House to fund Mr Obama’s “Make work pay” tax cut for the middle classes.
However, supporters say the changes are necessary to bring in centrist Democrats, particularly from the coal and manufacturing-intensive states, such as Rich Boucher of Virginia, John Dingell of Michigan and Gene Green of Houston, the US oil capital.
Supporters add that the House compromise will serve as a good template to bring along Democratic centrists in the Senate, where passing any global-warming legislation looks far tougher.
“If you can get a bill that satisfies legislators such as Boucher and Dingell in the House then you raise its chances in the Senate,” said Daniel J. Weiss, a senior fellow at the Center for American Progress, a liberal think-tank.
Mr Waxman had set himself the target of getting the bill through his committee before Memorial Day weekend in late May, since the Democratic leadership has indicated that much of June will be devoted to pushing healthcare reform – an equally controversial topic.
If it passes muster with Mr Waxman’s committee, the bill could be voted on as early as July.
However, few believe that the Senate will pass anything before the world climate-change summit in Copenhagen in December, where countries such as China and India are seen as unlikely to take steps unless the US has first showed leadership at home.
Nikki Roy, of the Pew Center on Global Climate Change, said: “Historically, America has only passed big environmental bills after a big disaster, like Bhopal [the industrial gas mass poisoning in India in 1984]. No one wants a big disaster, but I fear that it will be difficult to get this past the Senate while voters are so focused on the economy.”
Others believe that Mr Obama’s hand could be strengthened in Copenhagen if the bill has been passed by the House but not by the Senate. Under this scenario, Mr Obama could use the Senate’s reluctance as leverage to extract concessions from the large developing countries.
His task could get tougher if he emerges from the summit with a treaty, which would require a two-thirds Senate approval. The Democrats have 59 seats, and 67 votes would be needed.
Copyright The Financial Times Limited 2009