Climate Bill to Be Slowed by Health-Care Debate

By SIOBHAN HUGHES
WASHINGTON -- The health-care debate threatens to keep energy and climate legislation on the back burner when the Congress returns from recess Tuesday and enters the final push of 2009.
President Barack Obama is scheduled to plead his case on health care in a joint address to Congress this week, as Senate Majority Leader Harry Reid (D., Nev.), delays action on climate and energy legislation.
The Senate's top Democrat now says that climate legislation will be considered by the end of the year -- a deadline that buys time to see whether Democrats will have the political strength to take up climate change after a bruising health-care fight.
"The odds change day-to-day, and some days even hour-to-hour," said David Brown, an executive in the government affairs office of electric utility Exelon Corp. "If they can come up with a health-care package that passes sooner rather than later, our chances are better."
But if the health care debate drags on, the energy bill could get stalled by the 2010 congressional midterm elections, he added.
The Democratic party is already fractured over climate legislation. Coal, oil, and manufacturing state lawmakers have warned about the costs for their regions. Sen. Byron Dorgan (D., N.D.), has said that Congress should drop its plan to hand out allowances granting the right to pollute up to a limit, or cap. Democrats from the manufacturing-heavy Midwest have warned that climate legislation must include tariffs on countries that fail to regulate greenhouse-gas emissions.
Many people think Mr. Obama must become personally involved in order to smooth out opposition. A number of energy bill observers say that Mr. Obama has so far failed to engage on the issue in basic ways, giving opponents an opportunity to define a climate bill as a large tax on consumers. Others see signs the Obama administration is trying to signal that it is sensitive to lawmaker concerns.
"The administration is motivated and they're doing what they have to do to try to look responsive to a lot of different stakeholder groups," said Kevin Book, an analyst at ClearView Energy Partners LLC. He puts the odds of passing legislation at 60%, making Book among the most optimistic of forecasters surveyed.
Among the pieces of evidence is a proposal submitted by the Environmental Protection Agency for White House review last week that suggested the agency would try to limit the reach of greenhouse-gas regulations. The message is two-fold: that the EPA is moving forward on a plan to regulate emissions, even in the absence of congressional action, but that it hopes to make limited use of that power.
"We have absolutely no intention of regulating every school, every church," EPA Administrator Lisa Jackson said in a radio interview last week.
The widely watched deadline is for Senate action ahead of December's international climate-change talks in Copenhagen. The Copenhagen meeting is where countries will try to reach a pact on emission-reductions after 2012, when a current treaty expires.
Ms. Jackson said she hopes the U.S. will head to the talks with "a strong platform that reflects both houses' opinion."
An easier solution might be to pass a scaled-back energy package -- but that could be an affront to the House of Representatives. That's because House lawmakers cast tough votes earlier this year when the chamber narrowly passed an energy and climate bill.
So far, Mr. Reid's rhetoric suggests he remains ambitious. "We must do energy legislation as a package," he said at a clean-energy summit in Las Vegas last month. He said that congressionally mandated energy-efficiency measures had been "minimal," and that the U.S. Congress needs to pass legislation that is comprehensive rather than "scattershot."
Politics in Mr. Reid's home state could be an X factor. Christine Tezak, an analyst at Robert W. Baird & Co., last week lowered the odds for a climate law this year to 10%, down from 30%. But she said in a report that if energy-related stimulus funds begin flowing to Nevada, "Sen. Reid might benefit at home from moving climate legislation forward."
Write to Siobhan Hughes at siobhan.hughes@dowjones.com