boilingspot: Fiscal woes could delay climate change efforts

The financial crisis and a deepening economic downturn are threatening to delay efforts to deal with another pressing global crisis: climate change.

Zachary Coile, Chronicle Washington Bureau, San Fransisco Chronicle, Monday, October 13, 2008

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Hopes for action had been running high since both Republican John McCain and Democrat Barack Obama had pledged to make cutting U.S. greenhouse gas emissions a top priority. But environmentalists now fear that the next president may be more focused on reviving a flatlining economy, and Congress could be wary of supporting any measures that might slow growth or raise energy prices for consumers.

"The truth is there is a very large question mark hanging over the idea that Congress would take economywide action on global warming with the economy in such anemic shape," said Frank O'Donnell, president of Clean Air Watch.

In the short term, a declining global economy could reduce the growth in greenhouse gas emissions as consumption of goods and energy usage drops. But world leaders warn it could also undermine efforts to find long-term solutions.

European Union leaders are discussing delaying planned emissions cuts in response to the financial crisis. United Nations officials worry that wealthier nations may cut back on commitments to help poorer countries invest in clean energy or adapt to the impacts of warming, which is seen as crucial in getting a global deal to reduce emissions.

"You can't pick an empty pocket," Yvo de Boer, the United Nations' top climate official, told the Associated Press last week.

The scientific evidence of the need for action on climate change continues to mount. Last month, scientists announced that man-made carbon dioxide emissions rose by 2.5 percent last year, four times faster than a decade ago and faster than the worst-case modeling had predicted. The rise was fueled by rapid growth in emissions from fast-developing nations such as China and India.

U.N. climate scientists have said that global emissions must peak by 2015 and drop by at least 50 percent by 2050 to limit the temperature rise to 3.6 degrees Fahrenheit, the threshold where some of the most extreme impacts could begin.

Warming a serious threat

But the growing consensus in the United States that global warming is a serious threat has not been matched by a consensus in Washington over how to solve the problem. All of the proposed solutions would require broad changes in the economy and how Americans use energy, and all carry significant costs.

Neither presidential candidate has backed away from his pledges to tackle global warming. Both men appeared at former President Bill Clinton's Global Initiative conference in New York last month to reiterate their commitments to cutting emissions. At last week's presidential debate, both candidates said investments in clean energy could help revive the economy.

"It can be an engine that drives us into the future the same way the computer was the engine for economic growth over the last couple of decades," Obama said.

But translating those pledges into legislation that can pass Congress could prove politically difficult.

Obama and McCain have backed bills to create a cap-and-trade system, which would cap emissions and allow major emitters like power plants to trade credits to emit greenhouse gases. The plan mirrors the scheme approved by the California Legislature and Gov. Arnold Schwarzenegger, which requires cuts in emissions to 1990 levels by 2020.

Cap-and-trade plans

The goal of cap-and-trade plans is simple: Put a price tag on carbon dioxide and other gases to pressure industry to reduce the use of fossil fuels. By auctioning off credits, the government could raise hundreds of billions of dollars in revenues to support investments in renewable energy and other programs.

But a Senate cap-and-trade bill was pulled from the floor last year before a final vote after most Republicans and some Democrats, especially from Midwest and Southern states that rely heavily on coal, raised concerns that it could slow economic growth or raise energy costs. The U.S. Energy Information Administration estimated that the bill would reduce gross domestic product by 0.2 to 0.6 percent by 2030, and could raise electricity prices by 11 to 64 percent and gas prices by 22 to 49 cents.

Scott Segal, who lobbies on the climate issue for electric utilities, said those arguments could be even more powerful if the economy continues its decline.

"The prospects for rapid action on climate change have been slowed by the economy," Segal said. But he added that McCain or Obama could still achieve a breakthrough on climate change if they push a package that limits costs to the economy and guarantees that U.S. businesses are not put at a disadvantage to competitors India and China.

In a sign of where the debate may be headed, two key House Democrats, Energy and Commerce Committee Chairman John Dingell, D-Mich., and Rick Boucher, D-Va., released a long-anticipated "discussion draft" of a new cap-and-trade bill. The bill proposes less aggressive short-term cuts in emissions than this year's Senate bill - a 6 percent reduction from 2005 levels by 2020 - but deeper cuts in later years to reach an 80 percent reduction by 2050.

Environmentalists are suspicious about parts of the bill, including a provision to pre-empt efforts by California and other states from moving ahead with their own cap-and-trade systems, and to prevent the Environmental Protection Agency from using its existing authority under the Clean Air Act to regulate greenhouse gases.

Bill called sign of progress

Sen. Barbara Boxer, D-Calif., who chairs the Senate Environment and Public Works Committee, said she doesn't support everything in the new bill, but called it a sign of progress. She also believes the coming elections, where Democrats are favored to win seats, could improve the odds in the Senate of passing a climate bill.

"We could have 58 or 59 Democrats, maybe 60 Democrats. We will have many more voices in the Congress on this," she said.

Boxer said she also thinks the next president will be able to make the case that a weak economy demands a new energy and climate policy.

"We have to become a leader in alternative energy to get out of this economic malaise," she said. "You're not going to get out of it just by doing business as usual."

Climate options for the next president

Both Republican John McCain and Democrat Barack Obama have pledged to make tackling climate change a priority, but a weakening economy could lead Congress and the next president to put off immediate action. Here are some options the next president could consider:

Cap and trade: McCain and Obama support "cap-and-trade" proposals that would cap emissions at a certain date, gradually reduce them over time and allow industry to trade credits to emit greenhouse gases. But the plan's critics warn that it could raise energy costs, and it's not clear that a majority in the House and Senate will back the idea - even if Democrats gain seats this fall.

Let the states lead: The Bush administration rejected efforts by California and at least 17 other states to set tough limits on greenhouse gas emissions from vehicles. Both McCain and Obama have said they would have granted California's request. Doing so would allow the next president to signal a shift in climate policy.

Regulate under the Clean Air Act: The U.S. Supreme Court said the EPA has the authority under the Clean Air Act to regulate greenhouse gases. The next president could decide to begin regulating emissions - effectively bypassing Congress and setting limits through administrative action.

Energy bill: With a cap-and-trade bill possibly tough to pass quickly, the next president and Congress might have better odds of passing an energy bill with tax incentives and federal research money for clean energy. McCain has stressed the need to build new nuclear plants, while Obama has focused more on wind and solar power.