POLITICS:

Hoosier senators feeling heat, may be hard sell on climate

Indiana's two U.S. senators are considered critical fence sitters on major climate legislation moving through Congress.

But should they be?

In interviews last week, Republican Sen. Richard Lugar (Ind.) and his Democratic colleague Evan Bayh (Ind.) expressed serious concerns about a mandatory cap on greenhouse gases, with unease about China, the economy and state utilities prevalent in their minds. Both did not rule out eventually voting for a bill, but each voiced the need for changes in global warming legislation that passed the House 219-212 in June.

"I would have voted against the House bill if I had been in that chamber that day. That doesn't condemn whatever we're going to do in the Senate. But it does indicate that I'm not wildly enthusiastic with what the House came up with," said Lugar, who assumed office in 1977 and is known for his foreign policy expertise, including efforts to reduce nuclear warheads.

He said too many compromises were made on the House side, leaving little certainty that the measure would do anything to control warming temperatures. Meanwhile, the senator received 8,000 letters in July from his constituents slamming climate legislation. In the same time frame, some 56 supporters contacted his office.

"That's not a scientific poll, but that's the sentiment in my state, and that's a fairly large number of people on a subject that isn't even on the Senate floor yet," Lugar said. The Senate is not expected to release its version of climate legislation until September.

Bayh said his role at the moment is "more to wait and see what they come up with [in the Senate] and then read it." Then he plans to say "this needs to be changed and that needs to be changed."

Bayh said "getting India and China" on board with parallel restrictions to the United States would be his top priority for support of a climate bill, followed by ensuring the protection of the economy and electricity consumers. The senator introduced legislation and signed letters in the past two months expressing his concerns about the impact of a global warming legislation on energy-intensive industries.

Unhappiness with House bill in 'Neverland'

Analysts watching the status of potential votes in the U.S. Senate tend to agree on two things about Lugar and Bayh: Their votes could be the deciding factors, and obtaining those votes will be challenging.

Already, many green groups are unhappy with the compromises made in the House. It remains to be seen whether politicians can give much more to states like Indiana without unraveling an entire environmental and business coalition that got behind the legislation sponsored by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.).

As advocates ramp up their lobbying and information campaigns in the Hoosier state, the pressure from the state's Republican governor, Mitch Daniels, public opinion, and a variety of economic factors to stand against a mandatory carbon cap is intense.

"There's always a chance for arm-twisting and blackmailing, but you better have a naked picture if you're going to ask an Indiana senator to vote for this," Kevin Book, managing director at ClearView Energy Partners, said about global warming legislation headed to the U.S. Senate.

In a recent analysis, Book placed Indiana with 10 other states in a political spot called "Neverland." That is because multiple variables -- such as its coal reliance and decline in state budget funds from 2007 -- provide no "economically based reason" for senators to get behind legislation, he said.

Book came to his conclusion even though Indiana is blessed with some of the nation's best ethanol resources and rich farmland, which could be an economic boon for property owners receiving money under a climate bill for doing things like retilling their soil to store more carbon.

A farmer himself, Lugar planted black walnut trees on his property and had the action listed in 2006 as carbon credits on the Chicago Climate Exchange, a voluntary program for trading greenhouse gases. The exchange could benefit handsomely from the Waxman-Markey plan.

Lugar questions Senate passage of cap-and-trade bill

Lugar never cashed in on the trees, but publicly welcomed the exchange's leaders to his farm. Last week, he argued that one of his suggestions for climate legislation would be to "ease the paperwork" for farmers trying to obtain carbon credits.

Even so, he changed the subject when asked whether he would like to see more credits, or offsets, in legislation. Instead, he said, "I think it is a large question," on whether the United States will adopt a cap-and-trade system in the first place.

Such a system would set an overall ceiling on greenhouse gas output and require businesses to buy carbon allowances in a marketplace if they exceed their emission caps. The House version of the concept calls for an 83 percent cut in emissions by 2050.

Lugar's staff will be working during the August recess to draft suggested legislative language on agriculture and coal, two of Indiana's top industries. Most of the utilities in Indiana felt that the legislation was unfair to them, Lugar said.

"I'm listening to their suggestions to how things could be made more fair if we are to get into that business of allocation," Lugar said, referring to the Waxman-Markey proposal. In an allocation formula that many considered favorable to coal, that bill awards a fat chunk of allowances to utilities reliant on the fossil fuel.

Indiana burns coal for almost all of its electricity. As a result, the state has electricity prices that are significantly lower than the national average, and the generators of that power fear that a new climate regime will penalize them more than generators in states that use less coal.

Lugar said he would make a constructive set of suggestions. "I don't want to be a spoiler," he said.

Bayh seeking re-election

Unlike Lugar, who wields significant influence on two Senate committees expected to weigh on the legislation, Bayh sits on one. The second-term senator, who widely was considered as a potential vice-presidential pick in 2008, is up for re-election next year.

Despite his comment about a wait-and-see approach, Bayh gradually has been making his views known on the issue.

Last week, he co-signed a letter with nine other senators emphasizing that climate legislation must have strong protections for manufacturers in energy-intensive industries like iron and steel. The letter calls for a "border adjustment mechanism" that would penalize the carbon-intensive imports of countries without similar climate policies.

Indiana's per capita consumption of energy is higher than the national average, largely because of the presence of such heavy industries, like aluminum and glass businesses, according to the Energy Information Administration.

In June, Bayh introduced two pieces of legislation requiring the Department of Energy to perform climate change studies. One would mandate a report on global warming and energy policy in China and India. The other would investigate the impact of climate policy on energy-intensive sectors.

Today, Bayh ranks "getting developing countries on board," like China, as his first priority with climate legislation.

Like Lugar, he emphasizes the impact of new climate controls on electricity prices and the economy generally. His state currently is facing more than 10 percent unemployment.

Both senators worry about electricity prices

"We don't want to do anything to make it any worse. In the long run, it's going to create green jobs and help the economy, but we don't want to exacerbate the problem we face with the economy," Bayh said.

Similarly, Lugar said that "climate change is important. But so is the solvency of the United States government. In other words, I would take the standpoint of first things first."

Among the gloom-and-doom predictions, some analysts in Indiana said Lugar and Bayh might surprise everyone by taking a "yes" vote when and if climate legislation ever makes it to the floor in the Senate. When push comes to shove, analysts say, both care about the issue enough that they might pick climate as an issue on which they want to make a stand.

Bayh voted yes last year to break a filibuster on a climate bill that never made it to passage. Lugar voted no last year, but supported cap-and-trade legislation earlier in the decade.

"Lugar is definitely thinking about a legacy with respect to energy," said Kenneth Richards, a professor at the School of Public and Environmental Affairs at Indiana University. "I could see him voting for a bill before Bayh."

Groups supportive of quick action on global warming also are wasting little time to try and counter pressure on Bayh and Lugar from well-funded lobbyists and opponents.

The Environmental Defense Fund, for example, has been running advertisements in the Hoosier state targeting Rep. Mark Souder (R-Ind.) for his vote against the Waxman-Markey bill. A spokesman for the Fund's national climate campaign, Keith Gaby, told The Journal Gazette in Fort Wayne, Ind., that part of the goal was to catch the attention of the state's two senators.

Other information campaigns are targeting recent actions by Bayh, such as his stand-alone opposition among Democrats on the Senate Energy & Natural Resources Committee to a renewable electricity standard during a May vote. They are making the case that the state has extensive wind and biomass potential that would benefit from congressional action on climate.

One way to dangle a carrot for both senators would be to highlight the potential destruction rising temperatures would wreak on the state, some analysts say. In July, the Union of Concerned Scientists released an Indiana-specific assessment of how rising temperatures could damage crops and change flooding patterns, among other things.

The state's potential for storing carbon dioxide underground could be a yet-to-be-tapped enticement for Bayh and Lugar, as well. The state has the geological formations to potentially make it a big winner when and if such equipment is commercially developed to trap and store the greenhouse gas, said Richards.

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