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Senate Energy Committee Kicks Off Climate Change Debate

Jan.25.2007

The morning after the President's call for measures to "confront the serious challenge of global climate change" - his first reference to global climate change in a major policy speech - the Senate Energy Committee held the first hearing of the 110th Congress on mandatory greenhouse gas (GHG) emissions caps and a national emissions trading policy. Senator Bingaman (D-NM), the Chairman of the Committee, is one of several legislators who have drafted legislation establishing a mandatory cap-and-trade policy for GHG emissions.

The Draft Bingaman Bill

Senator Bingaman's draft proposal would set an annual emissions cap based on targeted reductions in greenhouse gas intensity, defined as emissions per dollar of GDP. His proposal takes an "upstream" approach to regulation, covering fossil fuel producers and importers. Initially, a small portion of the total emission allowances would be auctioned off; the remaining allowances would be allocated to regulated and non-regulated entities.

A recent Energy Information Administration (EIA) analysis of the draft Bingaman bill concludes that the proposal would result in a decrease of about 1,200 million metric tons of CO2 equivalent by 2030, but that total emissions could still be expected to grow by 24 percent between 2004 and 2030. EIA's analysis further suggests that the proposal would result in an increase in the price of fossil fuels - 11 cents per gallon of gasoline and a four percent increase in the cost of electricity. Coal use is still expected to increase, but at a lower rate than otherwise projected.

Hearing Reveals Important Basis for Agreement Among Senators

Yesterday's hearing further reinforced the evolution on climate change thinking across the country, especially since November 7. While there are certainly many complex issues to be addressed, and disagreements regarding specific policies, there is also an expanding common ground. For starters, there was a real sense within the Committee that the hearing provided a platform from which the Committee and Congress could move forward with meaningful climate change legislation. Even Senator Sessions (R-AL), who denied that carbon dioxide is a "pollutant," acknowledged that reducing greenhouse gas emissions is a legitimate goal. The members also recognized the importance of safe, nuclear energy as part of the solution to climate change.

Testimony from the witnesses echoed the concerns raised by several members on several key issues: how to provide sufficient incentives for new technologies and, significantly, how to ensure that developing countries would similarly reduce their emissions. Dr. Anne Smith of CRA International testified that, although the draft proposal creates a "Climate Trust Fund," that Fund cannot satisfy the need to develop brand new technologies. It would merely operate as a second subsidy to technologies already on their way to market. In Dr. Smith's words, the draft bill "creates the cart, but not the horse." Senator Craig (R-ID) agreed with Dr. Smith's statements, expressing his frustration that neither the Administration nor Congress had done enough to fund research and development in this area.

And there was bipartisan concern about "leakage" - the relocation of businesses, and their associated emissions, to developing countries where those emissions might not be regulated. Senators Domenici (R-NM) and Akaka (D-HI) specifically sought some reassurance that action taken by the U.S. on climate change would spur corresponding action by developing countries like China and India. Mr. Jason Grumet of the Energy Policy Commission expressed optimism that other countries would follow the United States' lead, based in part on the country's past successes as a leader.

The President's call to action this week was a first step. The ball is now very much in Congress's court. The Energy Committee's first hearing demonstrates that it will be a serious player in fleshing out the details of the debate over the coming months.

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