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Fear of costs looms over climate debate

Wednesday, April 22, 2009

WASHINGTON -- As Congress begins to debate climate change in earnest, the science is taking a back seat to economics: How much will it cost to slow the Earth's warming because of man-made pollution -- and what's the cost of doing nothing?

With a key House committee starting four days of hearings, Speaker Nancy Pelosi, D-Calif., vowed to get a climate bill approved this year. Noting that Earth Day will be celebrated today, she told reporters by the next Earth Day "we want to celebrate what we've done this year" to address climate change and clean energy.

But the challenge of getting bipartisan support became apparent.

The Energy and Commerce Committee hearing had barely begun when Republicans raised their concerns about higher energy prices produced by putting an added price for burning fossil fuels.

"In its current form, this bill may do more harm to our economy than any bill that is likely to come before Congress for the rest of this year, or perhaps during my natural lifetime," said Rep. Michael Burgess, R-Texas.

The Democratic proposal calls for broad limits on carbon dioxide and other greenhouse gas emissions, meaning energy from fossil fuels, especially coal in the production of electricity, will become more expensive. It would cut greenhouse gases by 20 percent from 2005 levels by 2020, and 83 percent by mid-century.

The bill also includes measures aimed at reducing the use of fossil energy such as requiring utilities to produce a quarter of their electricity from renewable sources, and calling for tougher standards to promote energy efficiency.

The proposed "cap-and-trade" system would limit greenhouse gas emissions and allow industries to buy and sell emissions credits in the market to make it easier, and less expensive, to comply with the emissions ceiling.

A key question yet to be resolved is how the government should make available pollution permits: Sell all at an auction or provide them for free to industries most greatly affected such as coal-burning power plants and energy intensive industries.

"We need to talk that through with our members," said Committee Chairman Henry Waxman, D-Calif., who said he's confident "it will be resolved in the legislative process."

Rep. Ed Markey, D-Mass., whose subcommittee crafting the bill, said some emissions permits likely will be given to energy-intensive industries threatened by imports. Keeping energy costs down, "that's our commitment, our goal," he told reporters.

President Barack Obama wants all of the permits auctioned off with billions of dollars in auction proceeds to blunt the cost hikes of electricity and other energy as fossil-fuel generated energy becomes more expensive.

The Environmental Protection Agency in a preliminary review of the House draft said the emission reduction can come at a relatively small cost -- as little as $13 a ton of carbon dioxide -- in 2015 and produce significant energy savings through improved efficiency.

The policy "will have relatively modest impact on U.S. consumers" if most of the money collected by permit auctions are returned to households, said the EPA on Tuesday.

But Republicans are opposed to the Democrats' cap-and-trade approach in general and a number of Democrats from coal-producing and industrial states argue some ways must be found to limit the economic impact in their regions.

Failing to provide free emission allowances to certain industries is "a dealbreaker" for many lawmakers, said Dingell.

"We cannot know the true cost of this bill until the permit issue has been decided," said Rep. Steve Scalise, R-La.

The four days of hearings during which the committee is to hear from about 60 witnesses -- environmentalists, business groups and academics all hoping to shape the final legislation -- is expected to focus largely on economic costs.

But in the current tough economic times, Republican critics of the bill believe the cost issue will resonate with the public and, in turn, with lawmakers.

"The question is can we do this in a way that boosts our economy and not hurts it, that creates jobs in America and not sends them overseas," asked Rep. Tim Murphy, R-Pa. He didn't have an answer.


On the Net:

House Energy and Commerce Committee: http://energycommerce.house.gov/


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