Dems may combine carbon-trading, renewable measures

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Democratic leaders in Congress may seek to remake U.S. energy policy in a single stroke by bundling President Barack Obama’s carbon-trading and renewable- electricity initiatives into one comprehensive measure.

House Speaker Nancy Pelosi of California said last week that she wants the two proposals, intended to change energy and environmental policies, put in one bill. Senate Majority Leader Harry Reid of Nevada is “seriously” considering the idea, according to spokesman Jim Manley.

Environmental groups said the strategy may speed passage of legislation to reduce global warming and enhance energy independence. The danger for supporters is that the maneuver may rally Republican and business opponents around a single target while exacerbating regional differences among the Democratic majority, according to analysts such as Julian Zelizer.

“This is a risky move that could leave the administration with nothing,” said Zelizer, a professor of history and public affairs at Princeton University in New Jersey.
Obama’s cap-and-trade climate plan would set limits on emissions tied to global warming, and companies would have to buy pollution allowances. That raises concerns among lawmakers in southern and midwestern states that electricity costs would soar because of heavy dependence on coal, a leading source of carbon emissions. Allowances could later be traded on an emissions market.

The president also wants to require that the U.S. generate one quarter of its electricity from renewable sources, such as wind and solar power, by 2025.

The green-energy proposal is getting a chilly reception from Democrats in Indiana, where 95 percent of electricity comes from coal, in oil-pumping Louisiana, and in Arkansas, which is among southern states with limited renewable-energy development.
‘Signs of nervousness’

“Even Democrats who have supported cap-and-trade started showing signs of nervousness,” said David Jenkins, vice president for government and political affairs at Albuquerque, New Mexico-based Republicans for Environmental Protection, which backs both measures. “I have concerns about putting the regional overlay of a renewable electricity standard on top of that.”

More than half of U.S. states already have their own renewable-energy standards. Indiana rejected a statewide requirement.

“For those of you who support this proposal, why do you think you know more about what is in the best interest of the people of Indiana than our state legislature or our governor?” said Senator Evan Bayh, a Democrat who represents the state, at a Senate committee hearing on the topic Feb. 10.

The theme that states know best on energy policy has been embraced by power companies such as Charlotte, N.C.- based Duke Energy Corp., which operates in Indiana, Ohio, Kentucky, North Carolina and South Carolina.

“We really need to reinvent what I call the energy federalism,” in which Washington assumes that one size fits all, Duke Chief Executive Officer James Rogers told reporters last week.

Rogers, who backs a cap on greenhouse-gas emissions, has said Obama’s plan to generate $645.7 billion in revenue by 2019 by auctioning all trading permits could increase electricity bills substantially in some states. Obama’s renewable-energy requirements would also hit consumers, said Mike McKenna, president of the consulting firm MWR Strategies Inc., who represents utilities in Washington.

“It is very difficult to explain to voters that you voted to increase their electricity rates in the middle of the worst economic downturn in living memory,” McKenna said in an e-mail.

Melinda Pierce, a lobbyist for the environmentalist Sierra Club in Washington, said utilities in the Southeast such as Duke are leading a charge that is creating “serious opposition” to the renewable-energy plan in the region.
Failed efforts

In the last two years, senators tried and failed to pass separate measures to create a cap-and-trade system and a renewable-electricity plan. Now, with support from Obama and a bigger Democratic majority in Congress, both issues are back.

“Senator Reid is looking very seriously at the possibility of doing energy and climate change in one combined bill to be certain Congress can achieve the goals set out by the president this year,” Manley said in an e-mail.

Reid hopes to have a vote this summer, Manley said. Pelosi has promised a floor vote this year.

Combining the carbon-trading and renewable-energy proposals may be easier in the House, where a simple majority is needed and Democrats hold a 76-seat edge. The melding would be more difficult in the Senate, where the proposals fall under two different committees and proponents would need 60 votes to cut off debate and win passage. Democrats currently have 58 votes in the chamber.

Because the policies are related, it makes sense to pair them and speed the process, said Tim Greeff, deputy legislative director at the Washington-based League of Conservation Voters.

“The battles that people are going to be fighting on these bills, they would be fighting anyway if they were separate or together,” he said. “Now we can sit down and have one big conversation.”