Senate delays action on climate bill

Nov 20, 2009
by WLJ

Senate delays action on climate bill

The Senate leadership announced last week that there won’t be any action to advance climate change legislation this year. The news came as President Barack Obama pushed for a bill before international talks on climate change in Copenhagen, Denmark, in December. The shift in focus also means that the House or Representatives, which passed climate change legislation earlier this year which included an exemption for agriculture, will have to take up the measure next year.

"We’re going to try to do that sometime in the spring," Senate Majority Leader Harry Reid, D-NV, said last Wednesday in a press briefing on the state of the bill. He didn’t offer an explanation for the bill’s delay, although it appears that the Senate’s schedule is packed full between now and the end of the year as they attempt to pass health care reform and a number of spending bills. There is also the likelihood that passage would have been blocked as confidence in the unpopular legislation falls among Americans. A newly released survey showed that the number of Americans who believe that climate change is actually occurring dropped to 57 percent in recent months. That’s down from 77 percent just two years ago, a sign that attempts to pass a cap-and-trade bill to limit greenhouse gas emissions is likely to be met with resistance from some senators and their constituents. The fact that many incumbent senators are facing difficult re-election battles next year might make passage next year all the more difficult to achieve, a point expressed by Whitney Stanco, a Washington, D.C.-based analyst, last week.

"The spring timeline would push the debate closer to the 2010 mid-term elections, potentially setting lawmakers up for a difficult vote before they face their constituents in the ballot box," said Stanco, whose company advises investors.

There is also a weariness among members of the Senate who have been taking on a number of broad reforms this year, said Missouri Democrat Claire McCaskill. The Obama administration is pushing to overhaul the U.S. health care system, revamp regulation of the banking system, and develop new proposals to replace jobs lost during the worst recession since the Great Depression.

"I don’t think anyone’s excited about doing another really, really, big thing that’s really, really hard that makes everybody mad," McCaskill, told reporters. "Climate fits that category."

Producers have been growing increasingly skeptical of the passage of any climate change bill despite assurances from Agriculture Secretary Tom Vilsack and the National Farmers Union. There are few groups who support passage of the bill which would likely make input costs rise sharply. The exemption from emissions caps is a welcome addition to the bill for the ag industry, but there is little doubt that costs for fuel, fertilizer and other products would rise sharply, offsetting any gains from an exemption.

Last week, the American Farm Bureau Federation (AFBF) praised the delay, saying it would give members of Congress a chance to go back to the drawing board and to re-evaluate whether the legislation was necessary in the first place.

"Legislation previously approved by the House, and a similar bill approved on a party-line vote by a Senate committee, would impose higher energy and food costs on consumers. The bills also would create an energy deficit due to limited alternatives. Farmers and ranchers would see higher fuel, fertilizer and energy costs. And the cap-and-trade provisions would do little more than downsize American agriculture and our ability to produce food in this nation. None of those are acceptable results to us, and we will continue to tell our members of Congress, ‘Don’t cap our future.’

"The timing for this announcement by Senate leaders could not be better. We now know there will be no international agreement resulting from the upcoming meeting in Copenhagen," said AFBF President Bob Stallman. "Furthermore, we have heard testimony from the administrator of the Environmental Protection Agency (EPA) that the House-passed bill would have no significant impact on the global climate. These bills represent all pain and no gain for our nation and American agriculture and now the Senate has a chance to correct that error."

In fact, much of the perceived benefit for agriculture in a cap-and-trade system would come from the ability to sequester carbon on their operations and, in turn, sell those carbon credits on the open market or on the Chicago Carbon Credit Exchange. However, Maria Cantwell, D-WA, wants to limit the cost of those credits by preventing large financial companies from trading them. Instead, all carbon credits would be auctioned under her plan, with only affected parties bidding, thus limiting the number of buyers and the potential price.

Americans living in rural areas would also be hit harder than their coastal neighbors because rural states generate a much higher percentage of their electricity with coal-fired electrical generators. That fact would mean that coal-fired plants would pay a disproportionately higher cost to generate electricity, a cost which would undoubtedly be passed along to customers in rural areas.

Senate Republicans and at least 10 Democrats from rural areas acknowledged that impact last week, saying the current proposals would be harmful to their constituents. Tom Harkin, D-IA, and McCaskill are among the Democrats who are concerned that the current proposals will harm voters in their states.

"For the heartland of America, the 25 states where more than 50 percent of electricity comes from coal, we’ve got to make sure there’s a bill they are comfortable with," said James Rogers, CEO of Charlotte, NC-based Duke Energy Corp., last week.

However, the wrangling among members of the Senate to get a bill passed that their constituents will accept may be moot. The White House may prod EPA to move forward with climate change regulations which have the potential to be far more damaging to agriculture now that legislation efforts have stalled. Obama has been adamant that a bill be passed before the December talks in Copenhagen. If EPA moves forward with regulations, Congress may yet be forced to act quickly to prevent more damaging measures from being imposed. — John Robinson, WLJ Editor