CLIMATE:

Obama drives auto state lawmakers toward cap-and-trade corner

President Barack Obama's call for fast federal action on fuel economy requirements yesterday appears to have created a new constituency that promises to push for a much more comprehensive global warming bill.

Representatives from auto-producing states used Obama's White House announcement as the launching pad to call for a national greenhouse gas standard for motor vehicles -- something that they said could be accomplished when Congress moves over the next few months onto a broader cap-and-trade measure.

Sen. Debbie Stabenow (D-Mich.), for example, pointed to the large new revenue stream often linked to a cap-and-trade system, saying that the money would help domestic automakers retool their plants to meet a tighter suite of emission standards.

"I think that ultimately this gets addressed in the energy bill/cap and trade," Stabenow said. "It's not enough just to talk about the regulations. If we want to have a domestic auto industry, we have to be provided support, particularly in the middle of this global credit crisis where we have to invest massive amounts of money and aren't able to get credit."

Stabenow added, "It's critical we set up a manufacturing strategy that holds them accountable but makes sure they have the resources and technology they need."

Obama yesterday instructed U.S. EPA to review the Bush administration's decision denying California's bid to regulate greenhouse gas emissions from motor vehicles and ordered the Transportation Department to meet a spring deadline in writing rules that begin the first overhaul to the nation's fuel economy requirements in more than three decades.

According to Sen. Bob Corker (R-Tenn.), the prospect of separate EPA and DOT actions on fuel economy and greenhouse gases likely creates a boisterous new constituency supportive of movement on Obama's favored approach for global warming legislation.

"I certainly have no idea what [Obama's] intentions were, but I think the practical result is that you just can't make cars for state-specific standards, you just cannot do that, and so what will happen is that all of those involved in the auto industry will soon be up here lobbying for a national standard," said Corker, whose home state hosts General Motors Corp., Nissan Motor Co. and Volkswagen AG. "Again, it just adds a constituent base for a national cap-and-trade program."

California's ability to set its own automobile standards has often been an issue in climate debates, with advocates on both sides trying to use the state's unique stature as a leader in environmental lawmaking as a political pawn.

Last fall, then-House Energy and Commerce Chairman John Dingell (D-Mich.) and Rep. Rick Boucher (D-Va.) floated a draft cap-and-trade bill that proposed two extremes on the question of whether California and other states should be allowed to set up their own vehicle regulations to control greenhouse gases.

One option was to grant California's waiver. The other was to outright take away the state's ability to set its own greenhouse gas limits for motor vehicles. Dingell in the past had proposed taking away state authority for climate change, only to face vocal complaints from powerful California politicians including House Speaker Nancy Pelosi (D) and Gov. Arnold Schwarzenegger (R).

Schwarzenegger throws a curveball

In his White House announcement yesterday, Obama only hinted at some of the more difficult climate and energy battles ahead, including his administration's anticipated push for cap-and-trade legislation that sets greenhouse gas limits on a large segment of the U.S. economy.

"My administration will work on a bipartisan basis in Washington and with industry partners across the country to forge a comprehensive approach that makes our economy stronger and our nation more secure," Obama said.

David Hawkins, head of the Natural Resources Defense Council's climate center, found little reason to be alarmed by the lack of specifics in Obama's speech when it came to cap-and-trade legislation. "I suspect that they want to wait until they have a more fully fleshed out proposal before he talks more about that particular proposal," he said. "That's just a hunch."

Californians reveled in Obama's climate moves, with Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) saying she expected EPA to move in "weeks, not many months" to approve the state's four-year old waiver request.

And at a press conference in Sacramento, Schwarzenegger raised an interesting twist for Capitol Hill when it comes to the waiver issue, saying he had spoken with White House climate and energy aide Carol Browner about the possibility of federal legislation that emulates California's standards.

"They will look at it very closely and seriously to maybe do it nationwide," Schwarzenegger said. "It would be great to do this nationwide."

Boxer to unveil legislative principles

Boxer tried to keep the focus on Obama's California waiver order, urging reporters to hold off on discussing cap and trade with her until later this week when she unveils a set of legislative principles on that issue. "We're not going to talk about that today," Boxer said. "We're going to talk about the waiver."

Pressed to address the cap-and-trade debate, Boxer said it is a critical big-ticket piece in combating climate change.

"There are many ways to fight global warming," Boxer said. "Cap and trade has got to happen at some point because it puts a price on carbon. Without a price on carbon, the true cost of energy is not known. And we can't compete with these fossil fuels until we have recognized that there's got to be a price on carbon. That aside, there are things we can do before we do cap and trade. This [the California waiver] is one."

Boxer also said she anticipated cap-and-trade opponents would weigh in after EPA moves on California's waiver.

"Some might argue we did the waiver, we don't have to do anything else," she said. "Surely that's going to be said. I'd argue we have a lot to do. So cap and trade is necessary. It has to be done."

The search for climate allies

Obama will need help from moderate Democrats and Republicans if he is going to win passage of cap-and-trade legislation given the overall economic situation and the sheer complexity of the climate issue, making lawmakers like Stabenow and Corker especially key.

Stabenow has joined forces with about 15 other Senate Democrats to explore how to write a climate bill that poses minimal economic harm and also brings major developing countries like China and India into the mix. And Corker last week circulated a letter to other senators outlining his concerns with more complicated forms of cap-and-trade legislation, saying instead that he could support a measure where all of the funds raised get returned directly to the public.

When cap and trade does come up, Obama will have some of the biggest U.S. automakers on board. Membership on the U.S. Climate Action Partnership -- a group of major U.S. corporations and environmental organizations supporting strong global warming measures -- already includes General Motors Corp. and Ford Motor Co.

Sen. John McCain (R-Ariz.), another potentially useful ally for Obama, begged off specific questions about the president's moves yesterday on the California waiver and fuel economy rules, saying he had not yet been briefed on the decisions.

But Obama's opponent from last November's presidential election did praise Browner's White House appointment. "I noticed we now have a climate change czar," McCain said. "That's good."

And McCain also suggested that he will be an important player when the cap-and-trade debate picks up steam on Capitol Hill. "I sure want to work with him, as you know, I sure do," McCain said. Of climate change, he added, "I still think this is a huge issue."

Sen. Amy Klobuchar (D-Minn.) called Obama's statements a "good sign" for climate legislation even as she warned against expecting a bill to move too quickly.

"But I think the fact that he made this a priority right out of the chute shows how important it is to him, getting something done in a climate change area, so I think it is a very good sign that he so quickly did this," Klobuchar said.

E&E reporters Ben Geman and Robin Bravender contributed. Reporter Colin Sullivan contributed from San Francisco.