CLIMATE:

Graham's cap-and-trade pronouncement reframes Hill debate

Is cap and trade really "dead"?

After all, didn't Sen. Lindsey Graham say so? The South Carolina Republican's recent remarks -- or snippets of them -- have ricocheted around Capitol Hill and beyond in recent weeks, lending momentum to the notion that the congressional effort he is helping lead no longer plans to implement a system that requires companies to buy and sell emission credits.

But Graham's remarks appear to be more political than substantive. Indeed, cap and trade remains very much a part of the debate on what legislation will look like when the closed-door negotiations are finished.

Graham was quoted Saturday in The Washington Post telling environmentalists "cap-and-trade is dead." The New York Times carried a similar quote in January that the senator later clarified, explaining he was referring to the large-scale, House-passed climate bill and a Senate counterpart approved by the Environment and Public Works Committee (Greenwire, Jan. 27).

In fact, Graham remains committed to putting a price on carbon emissions. And the proposal he is working on with Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) is likely to utilize the cap-and-trade mechanism when it comes to the electric utility industry, and later to manufacturers.

"I have no problem with trading as long as you don't devastate the economy," Graham said yesterday in an interview. "This is what solved acid rain. Some people on my side say, 'Just create incentives.' I say that's opening up the Treasury to every group in the country. I want to set emission standards and let the best technology win."

Bigger picture, Graham explained his reason for declaring "cap-and-trade is dead" is more about framing the debate for public consumption than anything else.

"This started with the planet is heating up and Iowa is going to become beachfront property," he said. "Now people go around not saying that much. I think they've oversold the consequences to climate change, to global warming. And the momentum around this large cap-and-trade bill to save the planet has been replaced by a business model: How do we create jobs and stay ahead of the Chinese and clean up the air? Once you start changing your perspective from 'Iowa is going to be beachfront property' to 'How do you create jobs and clean up the air?' you have a completely different focus."

He added, "We're going to fundamentally change how we price carbon looking at the economy differently than we have in the past. And the goal of this bill is not only to clean up the air but to create energy independence and jobs. The goal of cap and trade was to solve the Al Gore problem. I'm trying to solve the Lindsey Graham problem."

Efforts to rebrand cap and trade are not new.

Kerry, Graham and Lieberman have been struggling for a term other than "cap and trade," which opponents dubbed "cap and tax" during last June's House debate. Last fall, Kerry introduced a bill largely modeled after the House approach but dubbed the trading mechanism a "pollution reduction and investment" program. The new label barely stuck (Greenwire, Sept. 30, 2009).

But Graham's "cap-and-trade is dead" remark managed to strike a nerve in ways that others failed to do.

Wide-ranging interpretations

His comment is being interpreted -- and spun -- in wildly different ways.

Several Senate aides working on the legislation said they welcomed this weekend's press accounts that suggested a radical new approach was being considered for tackling climate change. And moderate Senate Democrats and Republicans who are in talks this week with the Kerry-Graham-Lieberman trio to try to find a sweet spot on a bill say they see reason to get more engaged on the issue, possibly opening up a door toward the 60 votes needed to pass.

"I don't know that I'll get to put it together, but I'll certainly listen to it," Sen. Judd Gregg (R-N.H.) told reporters yesterday, a few hours before his own one-on-one meeting with Kerry.

Sen. Bob Corker (R-Tenn.), a longtime critic of the emission allocation debate associated with cap-and-trade legislation, said he would keep an open mind if the proposal shifted toward the cap-and-dividend concept in which allocations are auctioned off, with a large majority of the revenues returned to taxpayers.

"I think all moves toward taking away the Rube Goldberg-esque nature of what has been discussed are all good," Corker said. "I think all of those things are very positive steps and give me the sense that people here in Congress are getting the message that the American people want us to be transparent about all things we do, including cap and trade."

But others are reading Graham's remarks differently. A spokesman for Australia's opposition party told reporters that the United States was shifting away from a cap-and-trade bill and toward a climate approach more in line with their efforts focused on technology spending.

"Advice I have is [the U.S. bill] is likely to seriously erode creation of an international carbon market," Greg Hunt, a spokesman for the country's climate opposition team, told The Age newspaper.

Opponents in the United States said they do not think the rhetoric shift will make much of a difference.

"Cap and trade or a first cousin of cap and trade won't pass this year, in my judgment," said Sen. Byron Dorgan (D-N.D.), who renewed his call for an energy-only bill.

And Sen. James Inhofe (R-Okla.), a renowned climate science skeptic, said he would not stop using the original term.

"Anytime you have this type of exchange that's going on, you can rename it all you want, it's still cap and trade," Inhofe said. "They kind of put themselves in a position where they have to come up with something."

An academic's perspective

Matt Nisbet, a professor of communications at American University, sees an opportunity for better public debate in the wake of Graham's comments declaring the end to the broad cap-and-trade approach.

"I think what's happening politically is we're moving from a very narrow limited focus on just one option," he said.

In the past, the longtime focus among politicians and reporters was on cap and trade alone, squeezing out other options like a carbon tax or a cap-and-dividend approach.

"Most of the discussion is not on substance, but rather political viability and the game or jockeying in order to win support," Nisbet said.

Nisbet said the single-tracked focus has soured the public's understanding of the legislative debate and all of its complexities. "What you have is a picture for the public of a lot of ideological crossfire from the left and right over a policy that very few members of the public understands, or even cares to understand," he said.

Looking forward, opponents will slap the "cap and tax" title on the bill no matter what sponsors say.

But he predicted that Graham's message about energy independence and jobs may be the right strategy, especially as he speaks to a different constituent group of independents and Southern voters, compared with some of the movement's traditional leaders.

"Even though they might share the same goals, Lindsey Graham, Al Gore and John Kerry, they're also trying to differentiate among themselves and claim credit for achieving those goals," Nisbet said.

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