Putting a Price on Pollution
Climate change laws seem inevitable, but their economic impact is unknown
But coal, and those utilities that use it, are the likely losers in such a plan. Rep. John Dingell, chair of the House committee with jurisdiction over a climate change bill, tells U.S. News that Democrats from coal country "are very wary of what this bill is going to do and how it is going to impact their districts." How will credits be doled out when or if a cap-and-trade policy is implemented? Most utilities argue that the companies that use the most carbon-heavy energy sources deserve the most credits. But environmentalists fear that would spark a construction boom of coal-fired power plants before the plan is implemented. They want clean sources of energy, like wind, to be rewarded, which could spur emitters to action quicker. Another complication is whether the credits should be distributed free by the government or auctioned off at hefty prices.
Such challenges are daunting. Coal is the cheapest, most plentiful source of energy in America, literally powering the economy. Any cost borne by the coal industry will be passed along. Not only is that bad for the GDP; it's bad for the poor, a fact that has many free-market conservatives sounding like fire-breathing populists. Republican Sen. James Inhofe, who famously called global warming a hoax, is touting a Congressional Budget Office analysis that says energy price increases would "impose a fairly large burden" on the poor. That's why, in part, most insiders believe this is a battle industry will win. Most credits will go to heavy polluters, but Congress will most likely try to stop a coal boom by barring any power plants built after a certain date-if it gets to that. Though Republicans like Olympia Snowe, McCain, and Lamar Alexander have all authored their own aggressive cap-and-trade programs, the GOP leadership is digging in its heels.
Policy brawl. Bush isn't ruling out a veto of climate change legislation. And when Speaker Nancy Pelosi announced the creation of a special committee to investigate the science and solutions of global warming, House GOP leaders stocked their side with fervent opponents of any legislation. Democrats did just the opposite. The result has been nearly every committee hearing breaking into a policy brawl. That will very likely only intensify after the news last week that the U.N.'s latest report on climate change determined that acting now would cost 0.12 percent of the annual global GDP. The damage from unchecked warming? As much as 20 percent annually. The report also showed that China and India, which are not obligated by Kyoto, dramatically curtailed their emissions growth anyway-providing possible ammunition for both sides. For some, it's another sign that the United States must join international efforts. For others, it's an argument that voluntary measures, such as those favored by Bush, can work. These growing nations reined in their emissions largely by accident while fighting air pollution, steps the United States took decades ago. And China is still on track to surpass the United States in the next year or two as the world's top emitter.
Despite Pelosi's goal of readying legislation for a vote by Independence Day, nearly no one on Capitol Hill believes it will happen because of the politics and complexities of the issues. While the House can muster enough votes to pass a bill, the Senate is still far from reaching the 60 votes needed to override a filibuster, which the GOP would probably invoke. Still, lobbyists are already counting heads. And the climate in Washington is changing.
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