U.S. Senate Climate Bill Runs the Gauntlet of Opinions

WASHINGTON, DC, October 28, 2009 (ENS) – The U.S. Senate Committee on Environment and Public Works Tuesday began three days of hearings on a Senate climate bill to match the bill passed by the House in June.

From the outset, the committee members and the witnesses divided themselves into two camps.

On one side are those who worry about the impacts of climate change on the environment of the United States and the planet. They are convinced that limiting greenhouse gas emissions will stimulate economic growth, technological innovation and green job creation, and will be affordable for taxpayers and the government.

On the other side are those who worry about the impacts of curbing greenhouse gas emissions on the U.S. economy. They believe jobs will be lost and American prosperity will shrink if carbon dioxide emissions are limited, and they fear the entire exercise is unnecessary and too expensive.

Democrats announce the Clean Energy Jobs and American Power Act, From left: Representative Kirsten Gillibrand, Senator John Kerry, Senator Barbara Boxer. September 30, 2009. (Photo courtesy LCV)

Committee chair Senator Barbara Boxer of California, co-sponsor of The Clean Energy Jobs and American Power Act (S. 1733) now under discussion, is in the first camp with her partner in writing this bill, Senator John Kerry of Massachusetts.

In her opening statement Tuesday, Boxer called the Kerry-Boxer bill “a responsible approach that sets attainable goals for gradual reductions in carbon emissions, and it protects consumers, businesses and workers as we move toward clean energy. It provides flexibility to businesses and powerful incentives to drive innovation. It helps consumers, workers, agriculture, transportation, energy efficiency, wildlife, cities, counties, and it will launch an economic transformation.”

Saying the legislation is “our best insurance against a dangerous future,” Boxer cited the warnings of scientists in the Obama and Bush administrations, the National Academy of Sciences and at the UN’s Intergovernmental Panel on Climate Change that “we have a narrow window of time in which to avert the ravages of global warming.”

“They tell us about frequent and intense storms, wildfires in the West, heat waves across the nation, increased droughts and flooding, threats to agriculture, global conflict, refugees and food shortages,” Boxer said.

She said the experience of Hurricane Katrina shows “the kind of world we can expect if we fail to act.” The 2005 hurricane that flooded New Orleans and the Gulf Coast took an estimated 1,700 lives, displaced one million people, and cost over $100 billion.

Senator Kerry told the panel on Tuesday, that “the science is more urgent than ever” but “we have a workable mechanism to address the challenge in a way that is affordable and efficient.”

“Our security, our leadership, and our economic future are at stake,” Kerry said. “And frankly, this body’s leadership is at stake too.”

“America and the world are waiting to hear from the U.S. Senate. World leaders are waiting for a signal that we are serious before they make commitments at the Copenhagen climate talks six weeks from now,” he said. “CEOs and business leaders are waiting for a signal from Washington that will give them market certainty.”

Failure to act comes with another cost, Kerry warned. “If Congress does not pass legislation dealing with climate change, the administration will use the Environmental Protection Agency to impose new regulations. Imposed regulations are likely to be tougher and they certainly will not include the job protections and investment incentives we are proposing. Killing a Senate bill is not success; indeed, given the threat of agency regulation, those who have been content to make the legislative process grind to a halt might well later be demanding that Congress secure the kinds of incentives and investments we can and should simply pass today.”

On Tuesday, Obama administration officials told the committee that the legislation should be approved without delay. The first of 54 witnesses on nine separate panels to appear before the committee this week, Energy Secretary Steven Chu, Transportation Secretary Ray LaHood, Interior Secretary Ken Salazar, EPA Administrator Lisa Jackson, and head of the Federal Regulatory Energy Commission, Jon Wellinghoff, all argued for quick passage of the bill.

The Kerry-Boxer bill is based on the legislation passed by the House, the Waxman-Markey bill, American Clean Energy Leadership Act of 2009.

Obama Administration officials testified on October 27, 2009. From left: Energy Secretary Steven Chu, Transport Secretary Ray LaHood, Interior Secretary Ken Salazar, EPA Administrator Lisa Jackson, and FERC Chairman Jon Willinghoff. (Photo courtesy EPW)

For three key dates, both measures set the same targets – a three percent reduction in greenhouse gas emissions cuts from 2005 levels in 2012; a 42 percent reduction in 2030 and an 83 percent reduction in 2050.

For the year 2020, the Senate bill sets a 20 percent reduction from 2005 levels compared to a 17 percent reduction in the House bill.

The core of the Kerry-Boxer bill establishes an economy-wide cap-and-trade program for reducing greenhouse gas emissions called the “Pollution Reduction and Investment program.”

Entities covered by the cap-and-trade program include large stationary sources emitting greater than 25,000 tons per year of greenhouse gases, producers and importers of petroleum fuels, distributors of natural gas, producers of hydrofluorocarbon gases, and other specified large sources. They would be required to hold enough emission allowances to match their emissions.

The Kerry-Boxer bill covers the same seven greenhouse gases identified in the House bill: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and nitrogen trifluoride.

The bill also contains measures intended to complement the cap-and-trade program including, targeted standards for reducing emissions from key sectors; support for research, development and deployment of clean energy alternatives; and expanded programs to increase energy and water efficiency.

Finally, the Senate bill includes provisions intended to ease the transition to a clean energy economy by protecting consumers, workers, and energy-intensive industries from the impact of higher energy costs.

Boxer said that weeks of analysis and economic modeling by the U.S. EPA found that the Kerry-Boxer bill will carry only “modest” costs for America’s families – the overall impact being 22 to 30 cents a day.

“For 30 cents a day,” Boxer said, “we will put America in control of our own energy future and take a stand for home-grown American energy rather than foreign oil from countries who don’t like us.”

Senator James Inhofe and Senator Barbara Boxer, October 28, 2009 (Photo courtesy EPW)

“For 30 cents a day, we will protect our children from dangerous pollution,” she said. “For 30 cents a day we will send a signal that sparks billions of dollars of private investment and job creation. For 30 cents a day we will be the world’s leader in clean energy technology.”

But Senator James Inhofe of Oklahoma, the committee’s Ranking Republican and a long-time climate skeptic, said today that the Kerry-Boxer bill “will destroy jobs, weaken our national security, and raise electricity prices for consumers.”

“Cap-and-trade, especially of the Kerry-Boxer variety, is a raw deal for consumers and a raw deal for the national security of the United States,” said Inhofe. And other speakers agreed.

Testifying today on behalf of the 450 member National Petrochemical and Refiners Association, Bill Klesse, who also heads Valero Energy Corporation, said refiners are also worried about job losses.

Due to weak demand for petroleum products during the economic downturn, refiners, including Valero, have been closing facilities and cutting payrolls, even before facing rising costs from carbon emissions, said Klesse.

The Valero oil refinery at Benicia, California (Photo by Ted Hamiter)

“The approaches being discussed in Washington are entirely counterproductive to lifting our economy out of the recession, reducing the staggering national unemployment rate, and even reducing global greenhouse gas emissions,” said Klesse. “S. 1733, like its House companion, H.R. 2454, would only exacerbate our current challenges by forcing U.S refiners to further reduce or even close operations in the face of rising costs and unrealistic emissions reduction targets.”

Klesse calculated the cost of the cap-and-trade legislation to his company at $6 billion a year, if carbon emissions allowances sell for $20 per ton, the low end of the projected range.

“Industrywide,” he said, “we estimate the compliance cost for process emissions, with carbon at $20 a ton, to be $4.1 billion a year, and the cost of consumer emissions to be $63 billion a year, for a total cost to domestic refiners – and potentially consumers – of more than $67 billion a year.”

Klesse said refiners believe both climate bills “will drive domestic gasoline and diesel production offshore, resulting in lost jobs for American workers and the outsourcing of our nation’s energy security to regions of the world that do not follow such stringent environmental protections.”

David Crane, CEO of NRG Energy, Inc., said nuclear power plants will have to be built by the dozens before 2050 to achieve the objectives of the climate legislation.

NRG plans to build two new Advanced Boiling Water Reactors in Bay City, Texas that would provide enough electricity to power two million Texas homes. An existing nuclear power plant at Bay City is owned by Austin Energy, CPS Energy and NRG Texas and managed by the STP Nuclear Operating Company.

NRG is part owner of the South Texas Project nuclear power plant at Bay City. (Photo courtesy Nuclear Regulatory Commission)

“If you assume that all 104 nuclear reactors currently operating in the United States have been retired by 2050, that means we need approximately 75 new nuclear units over the next 41 years simply to keep nuclear power’s share of electricity production near 20 percent,” Crane said.

“If we want to double the nuclear share of power production to 40 percent in order to accommodate demand growth and realize a greater carbon benefit, we are going to need to build about 150 new nuclear units,” he said.

For nuclear to succeed, said Crane, in addition to a price on carbon, the climate bill “must address the key commercial constraints to a nuclear renaissance, and include worker training, expanded domestic manufacturing capability, transitional loan guarantees for project financing for a second wave of new plants, and efficient and safe regulatory approval processes capable of handling a much larger volume of projects.”

Brett Vassey, president and CEO of the Virginia Manufacturers Association, said his members “are concerned that these bills will ‘cap’ industrial competitiveness and ‘trade’ domestic manufacturing jobs abroad for an entirely undefined environmental benefit.”

“Proponents of cap-and-trade believe immediate regulation will force industry to stop using traditional sources of energy. Unfortunately, this position demonstrates a fundamental misunderstanding of global manufacturing today,” said Vassey.

“The truth is cap-and-trade is just another tax on businesses and consumers – regressively so on manufacturing – and it does nothing to stop leakage to nations with more favorable conditions. For example,” said Vassey, “even if Virginia limited all of its CO2 emissions, China’s CO2 emissions growth alone would replace all of Virginia’s CO2 emissions in only 77 days.”

Construction workers build the National Renewable Energy Lab’s Research Support Facility in Golden, Colorado. (Photo by Carl Cox courtesy NREL)

David Foster, executive director of the Blue Green Alliance, a national partnership of six major labor unions and two national environmental organizations, views the climate legislation as a path to job creation.

“Passing comprehensive climate change and energy legislation puts us on a new path, one where there is greater hope for job creation and a cleaner environment. A recent report by the Political Economy Research Institute at the University of Massachusetts, Amherst showed that a $150 billion investment in clean energy will create 1.7 million jobs across the United States,” he told the committee today.

“Capping carbon emissions will create the necessary incentives for America to develop its clean energy economy,” said Foster.

Department of Defense Undersecretary Kathleen Hicks told the committee that the military “is the midst of a sea change in understanding the interrelationship between climate change and energy, and their impact on national security.”

Quoting a 2009 report by the U.S. Global Change Research Program Office, she said, “conflicts or mass migrations of people resulting from food scarcity and other resource limits, health impacts or other environmental stresses in other parts of the world could threaten U.S. national security,” and require the DOD increasingly to support disaster relief in other countries.

At home the DOD must cope with drought, wildfires, water scarcity, and the melting of the Arctic sea ice, while increasing its use of renewable energy, said Hicks.

Major General (Ret) Robert Scales told the committee that he is a “historian and a military futurist, not an environmental expert,” with a “deep reservation concerning the science behind the warnings about global climate change.”

He said the effects of the climate bills would be to reduce “American ability to produce fossil fuels in the strategic confines of American territory.”

“According to recent studies,” warned Scales, “this bill would result in a loss of industrial production of over six percent by 2030 and a consequent loss of over half a million manufacturing jobs. These are the very workers who we would rely on to produce the materiel needed to win a future war against a major competitor.”

“Nothing in this bill will either reduce the likelihood of American involvement in future wars nor will it improve America’s war making capabilities,” said Scales. “Indeed over the decades the consequences of the bill might well reduce American influence and retard our ability to deter and fight wars in the future.”

Former Senator John Warner (Photo courtesy U.S. Senate)

Retired Senator John Warner of Virginia, a Republican who served as secretary of the Navy from 1972-1974, supports climate legislation. “Over my 30 years in the U.S. Senate working with military men and women and their families, I left convinced that, if left unchecked, global warming could increase instability and lead to conflict in already fragile regions of the world,” he told the committee today.

“We are talking about energy insecurity, water and food shortages, and climate driven social instability,” said Warner. “We ignore these threats at the peril of our national security and at great risk to those in uniform who must operate, on orders of our President, the sea lifts, the air lifts, and other missions to alleviate humanitarian suffering or sovereign instability in remote regions of the world.”

Warner, who now works with the Pew Charitable Trusts, CNA’s Military Advisory Board, the American Security Project, the Partnership for a Secure America, Center for Strategic and International Studies, and the Truman National Security Project, said America’s future prosperity as well as security depends on strong climate legislation.

“If the U.S. does not get in front now, we risk ceding the technology ground to China and other nations that are investing in renewable energy, investing in research and development at a much faster pace than we are,” Warner said. “We have a chance to not only reduce CO2 emissions, but to help move our economy in the right direction and to create new industries and jobs here at home. We can help revitalize our manufacturing base, but not if we end up having to buy what I call the ‘black box’ that represents the ‘silver bullet’ technology from China. If that is not a reason to act now, I do not know what is.”

Click here for a list of witnesses and transcripts of their testimony before the Senate Environment and Public Works Committee.

Copyright Environment News Service (ENS) 2009. All rights reserved.

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