Key Democrat Cites Concerns on Climate Bill

By SIOBHAN HUGHES and IAN TALLEY
WASHINGTON -- Sen. Max Baucus said Tuesday he has "serious reservations" about climate legislation unveiled by his Democratic colleagues, signaling trouble for a proposal that is stronger in certain respects than a bill passed by the House.
Mr. Baucus made his comments at a hearing of the Senate Environment and Public Works Committee, which took up climate legislation written by Sens. John Kerry (D., Mass.) and Barbara Boxer (D., Calif.). The bill calls for reducing greenhouse-gas emissions 20% below 2005 levels by 2020. That is tougher than a House-passed version, which calls for a reduction of 17%.
The Senate bill also protects the authority of the U.S. Environmental Protection Agency to regulate greenhouse-gas emissions using the Clean Air Act, powers that were stripped by the House.
Mr. Baucus, a Montana Democrat who is chairman of the Finance Committee, will be a key player in shaping any final bill, as that panel also has jurisdiction over some elements of climate legislation. His views are closer to those of other Democrats from heartland and coal-dependent states whose support will be essential to passing a climate bill.
"I have some concerns about the overall direction of the bill," Mr. Baucus said at the start of hearings Tuesday. "I have serious reservations with the depth of the midterm reduction target...and the lack of pre-emption of the Clean Air Act."
As proposed, the bill risks moving legislators "further away from that achievable consensus on common-sense climate-change [legislation]," Mr. Baucus said.
Ms. Boxer said Mr. Baucus might adjust his position when she explains that the 20% target is easier to achieve since U.S. greenhouse-gas levels have fallen in recent years. "We're going to be talking with him about that," she said.
Other Democratic members of the committee also hinted they would like to see a more moderate bill. Sen. Arlen Specter (D., Pa.) expressed concern that emission-intense industries such as oil refining or coal-production might be hurt. Pennsylvania industry relies heavily on coal-generated power.
Supporters of the climate proposal can ill afford to lose any Democratic votes in the Senate, given stiff Republican opposition. GOP panel members have said they will try to keep the bill from passing out of committee if there isn't a comprehensive review of costs by the EPA and the Congressional Budget Office. Republicans say the Kerry-Boxer bill as drafted could hurt the economy.
Several cabinet officials appeared at the hearing to encourage passage of a bill to curb greenhouse-gas emissions. The Senate bill, like the House measure, would require companies across the economy to hold government-issued permits to emit greenhouse gases -- including carbon dioxide -- which scientists have linked to a long-term rise in global temperatures.
Like the House measure, the Senate bill aims to ease costs to industry by initially giving away for free permits to certain industries, such as electric utilities and makers of steel and cement. Over time, the government would reduce the number of permits issued, bringing down emissions, while letting companies trade the valuable permits among themselves.
Write to Siobhan Hughes at siobhan.hughes@dowjones.com and Ian Talley at ian.talley@dowjones.com