Senate Debates Climate Bill
ALEX CHADWICK, host:
This is Day to Day. I'm Alex Chadwick.
MADELEINE BRAND, host:
And I'm Madeleine Brand. Most people agree that something must be done about global warming. Today, the Senate takes up a massive bill that would cut greenhouse gas emissions by about two-thirds by the year 2050. The Climate Security Act has bipartisan support and support from industry as well as some major environmental groups. However, this bill has virtually no chance of passing. And to find out why, we called up Wall Street Journal reporter Jeff Ball. Jeff, first tell us broadly what's in this bill.
Mr. JEFFREY BALL (Reporter, Wall Street Journal): Well, what's in this bill is something that affects essentially everyone in the economy from every industry in the economy to regular consumers. Broadly what this does is put a cap on emissions of global warming gasses, notably carbon dioxide which is produced whenever a fossil fuel like oil or coal is burned. So fundamentally what this bill does is create higher prices to consume the sort of energy that powers everything in this economy. And as a result of that what you have is a huge food fight in Washington over the details of this, which are really going to determine who gets hit the hardest.
BRAND: And who's for it and who's against it?
Mr. BALL: Well, one thing is that this fight is often described as a partisan fight with Democrats versus Republicans. And really it's not that. It's really a regional fight. Energy politics and environmental politics in this country, like around the world, are mostly regional. Where people are in the Congress, just like out in the country, depends on what kind of fuel they use for electricity largely. So coal-state Senators, whether Democrat or Republican are likely to be at a different place in this debate than Senators say from the North-East and California who get most of their electricity from natural gas or nuclear energy, which is less emitting than coal.
And the other thing is that there are very different positions even within industries. You have interesting splits, say, between the auto industry on the one hand and the oil industry on the other hand. There's a very broad group called the US Climate Action Partnership, which is based in Washington. And interestingly, represents companies sort of across the industrial spectrum. I mean, among its members are General Electric and General Motors, both of whom make equipment that is used in activities that produce quite a lot of emissions. And you might not expect them to support this bill, but they do, and basically the reason is that they figure that like it or not, they're going to get hit with a climate bill, and they better be involved early on in shaping it so that they can shape it to their advantage.
The other thing is that if you look at this bill itself, you see this fascinating sort of matrix of slicing the pie. So this bill actually names a broad group of constituencies and parses out how much of these pollution permits that the bill would create would be divvied up among these various constituencies. And this is a big, big economic issue, because these permits are expected to be worth something like perhaps 25 dollars apiece.
These are permits, each of which allows its bearer to emit one ton of carbon dioxide, if this bill is passed, when it takes effect. And each of these things, if it's worth 25 dollars apiece, will collectively be worth more than 100 billion dollars in the first year of this bill. And so to the degree that any constituency gets these things, it can either use them to lessen its cost of compliance, or it can actually sell them on the market and make money.
And so this is largely seen as an environmental bill, but fundamentally this is sort of like a tax bill. It's an economic bill with huge stakes and essentially everyone who uses energy in this economy is at the federal bar trying to maximize his take.
BRAND: And this is why the group Friends of the Earth is opposed to it, because they see it as a big giveaway to polluters.
Mr. BALL: Well, right. I mean, lots of - groups who are opposed to this on the environmental side think that it's too soft. One big debate is whether the quote unquote "big polluters" ought to be given a chunk of their pollution permits or whether they ought to have to pay for all of them. There was a big fight in Europe, which created a system like this a couple of years ago, where there was a sense that large emitting companies got windfall profits. That is they were given permits for free and still electricity prices rose and their profits rose as well. There were investigations into that, and that hangs as a specter over this whole discussion in the US.
BRAND: So this is supported by, or sponsored by Republican John Warner of Virginia and former Democrat, now independent Joe Lieberman of Connecticut. So these two are veterans of the Senate. You would think that they could bring along enough Senators with them. Why can't they?
Mr. BALL: Well, remember two things about where we are on June 2nd, 2008. We are facing four dollar a gallon gasoline at the pump, and we're five months away from a presidential election. Both of those things ultimately argue against passing a climate bill, and here's why. First of all, again everyone agrees that on some level passing a climate cap bill is going to increase energy prices, including ultimately increasing gasoline prices at some level. Now there are many studies that say it won't be too much. Studies disagree on this, but nevertheless it's not a message that a politician wants to deliver to a consumer today.
Secondly, they particularly don't want to deliver that message as the presidential election heats up. And it's interesting that all three leading presidential candidates apparently will not be in the Senate today for this debate. Now they all say that they have reasons not to be there, but it is sort of interesting to note because at some level this climate bill has been a subject of discussion on the campaign trail.
BRAND: Yeah, I mean, interestingly, John McCain has recently said that he says global warming is real and something needs to be done about it.
Mr. BALL: Right. And they all essentially say that, but then when you parse the details, they're all very careful and they've become increasingly careful in recent weeks not to say that anything should be done at all costs. I mean, I think most of them say that things should be done such that it doesn't kill the economy. And that's a big caveat, which leaves a lot open to interpretation. Because look, at the end of the day, in order to win the presidency, any of these candidates is going to need support from states that depend heavily on fossil fuels. I mean, notably coal states.
And it's pretty clear that depending on how this thing shakes out, coal states are going to get hit harder than other states. There are provisions in this bill that would seek to address that, to sort of parse out some more largesse as compensation to coal states. But, you know, this debate largely has been had in this country so far in a very esoteric, general 30,000-foot level. And I think what we're about to see is this debate get had on a more detailed level. And when that happens people are going to start to realize that there's not a free lunch here. And that's not going to be a politically popular realization, probably.
BRAND: So you expect it not to pass this week, but perhaps after November it might be revived.
Mr. BALL: Yeah, I think the consensus is that - well, consensus broadly is that it won't pass this year, and it'll be taken up again probably next year and maybe it'll pass next year, maybe the year after that.
BRAND: We've been talking about the big global warming bill debated this week in the Senate with Jeff Ball. He's a reporter for the Wall Street Journal. Jeff, thank you.
Mr. BALL: Sure, thank you.
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