The Senate climate debate detoured from cap-and-trade legislation today as the Energy and Natural Resources Committee weighed alternatives like a carbon tax or even sector-specific limits on power plants.
"We need to dispense with the blind loyalty to cap and trade, or at least begin to question if it is warranted," said Sen. Lisa Murkowski (R-Alaska). "We should objectively review the strengths and weaknesses of our policy options and develop a measure that protects both our energy and the environment."
Murkowski, the committee's ranking member and a co-sponsor last year with Democrats of a cap-and-trade bill, said Americans now associate the cap-and-trade concept as a tax that will raise prices on a range of consumer goods. That, she added, should prompt Congress to consider other less-expensive legislative approaches that take aim at reducing greenhouse gas emissions.
"We need to be honest about those costs, and ensure that the revenues associated with them are returned to the people who will bear the burden of compliance," Murkowski said.
The Alaska Republican insisted she was not working on a specific proposal. Still, she added, "As we take stock of our options, I believe we should explore pairing a massive tax cut with a price on emissions. Academics and economists suggest that climate policy offers an opportunity to improve the efficiency of our tax code and benefit our economy."
Sen. Bob Corker (R-Tenn.) offered accolades for a carbon tax, too, adding that such an approach "always seemed like the more intelligent thing to do. It's a constant. You know it's there."
Corker also questioned the integrity of a cap-and-trade system's allowance distribution system, in which well-financed industries lobby for their share of valuable emission allocations. "Climate has become about making money," he said. "There's a lot of old-time politicians around here who want to focus on the money."
Witnesses invited to the Energy and Natural Resources Committee underscored the many options that Congress has before it as it weighs a major shift in U.S. energy and environmental policy.
Jonathan Banks, climate policy coordinator at the Clean Air Task Force, floated sector-specific emission limits for power plants, other major industrial facilities and the transportation sector, as opposed to cap-and-trade legislation across the economy.
Banks said his group started studying a range of sector-specifc policy options following the June 2008 Senate floor debate on climate legislation that fell more than a dozen votes short of the 60 needed to defeat a GOP-led filibuster.
The Clean Air Task Force is modeling a climate approach that would include a midcentury cap on power and industrial sector emissions equaling 90 percent below 1990 levels, as well as stronger corporate average fuel economy regulations of 45 miles per gallon by 2030, more federal energy efficiency standards, technology incentives for the capture and sequestration of carbon dioxide, and a cap-and-trade program for hydrofluorocarbons.
"Whatever the policy is at the end of the day, we need to have targeted policies that deal with the inconsistencies within the economy," Banks said.
Early modeling, Banks said, suggests costs would be about half of the House-passed climate bill that sets a broad set of emission limits. Staff to Sen. Richard Lugar (R-Ind.) say they are researching the power-plant-only approach for climate change, a central point of the legislative debate during the early years of the George W. Bush administration (Greenwire, Nov. 18).
NRDC pushes back
But David Hawkins, director of the Natural Resources Defense Council's climate center, urged lawmakers to stick to the economywide approach that was the focal point of the House debate. A sector-specific approach like the one being studied by the Clean Air Task Force offers lower costs because the emission reductions are not as strong.
"It's like buying a 19-inch television or a 36-inch television," Hawkins said. "Nineteen inches is cheaper and smaller."
Hawkins also pushed back against the carbon tax approach, explaining that it would face the same political dynamics. "There'll be a constant pressure to create exceptions," he said. "A tax approach sounds simple when you're talking about it from a theoretical standpoint, but you're going to confront the exact same considerations as you do with a cap."
The committee chairman, Sen. Jeff Bingaman (D-N.M.), produced legislation earlier this year (S. 1462) that includes a nationwide renewable electricity standard and a raft of other energy incentives, including a provision that could bring oil and gas rigs closer to Florida's Gulf Coast. But core details on curbing greenhouse gas emissions, including a cap-and-trade system, are likely to come from other arenas, including negotiations among Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.)
Bingaman today noted that he is a "longtime supporter" of the cap-and-trade approach but is open to hearing about the other ideas.
"I believe that it's preferable to many of the alternatives, but I also understand it is valuable to understand the pros and cons of other policy options that may have the ability to achieve the same level of reductions of greenhouse gas emissions," Bingaman said.
Of carbon taxes, direct regulations and sector-specific approaches, Bingaman added, "It's important to note that these policies are not mutually exclusive. In fact, it will more than likely be necessary to rely on a suite of these policies to ensure that we are effective in addressing global warming."