boilingspot: SCENARIOS-Political turmoil shakes U.S. climate bill

By Richard Cowan | Reuters | Jan 19, 2010

A U.S. climate change bill, already facing a difficult fight in the Senate, is facing new political problems that could sink "cap and trade" this year.

A leading Senate Democrat on Tuesday said he does not think the Senate can pass a bill in 2010. A special election on Tuesday for a Massachusetts Senate seat could spell deeper problems for the long-delayed legislation.

Republican state Senator Scott Brown is aiming to defeat Democratic state Attorney General Martha Coakley to fill the seat formerly held by Edward Kennedy, who died last August.

Following are some possible scenarios for the legislation that aims to mandate industry reductions in U.S. greenhouse gas emissions, which are blamed for global warming.

Cap and trade bill will not pass this year

With Democrats nervous about their prospects in the November congressional elections amid tough economic times, many do not want to take on a controversial environmental bill that could raise consumer prices by requiring the use of more-expensive alternative energy sources.

Senator Byron Dorgan, a member of the Senate Democratic leadership team and a renewable energy advocate, on Tuesday said it was unlikely that the Senate would pass a climate change bill this year. Instead, he said the Senate this year probably would focus on a more limited energy bill to expand offshore oil drilling and require more electricity supplies be generated from renewable sources like wind and solar power.

Failure to pass cap and trade would disappoint traders and banks looking to bring a financial mechanism to fighting climate change.

Under the cap and trade bill, the federal government for the first time would limit how much carbon dioxide could be released into the atmosphere by utilities, factories and oil refineries. Over the next 40 years, companies would have a dwindling number of permits for every ton of carbon dioxide they emit. Those making quicker progress in using cleaner alternative fuels could sell, or trade, permits to those that remain more reliant on dirty fossil fuels like coal and oil.

Democrats' election worries were underscored by the Massachusetts race in which Brown has made a strong showing in an overwhelmingly Democratic state. If Brown wins, the numbers change. Kennedy was a certain "yes" vote for a climate bill, as was his temporary replacement, Paul Kirk.

Democrats currently hold 60 of the 100 votes in the Senate, and Republicans have 40. The bill needs 60 votes to overcome procedural hurdles that could block passage.

Brown says he would "oppose a national cap and trade program because of the higher costs that families and businesses would incur." If elected, climate bill supporters would have to find one more vote in an already tough quest.

If Coakley ekes out a win, the uphill climb is slightly less steep. Instead of needing to find six or seven Republican votes in the Senate to pass a climate bill, supporters probably would need four or five. Several moderate Democrats, including some from coal-consuming states, likely will oppose the bill.

Climate bill still alive

Senator John Kerry on Wednesday will resume negotiations with independent Senator Joseph Lieberman and Republican Senator Lindsey Graham on a compromise climate bill, according to Senate sources who asked not to be identified.

Jim Manley, a spokesman for Senate Majority Leader Harry Reid, countered Dorgan's bleak assessment, saying: "We have to finish reforming health insurance and Wall Street and also must help bring Americans out of unemployment. But we are not so busy that we can't find the time to address comprehensive energy and climate legislation."

Reid has said he wants a climate bill on the Senate floor this spring.

Plan B

If Kerry fails to find a compromise bill that would pass the Senate, Democrats might seek passage of the narrower bill that Dorgan mentioned. But Republicans would be expected to try to beef up that bill with expanded government aid for the U.S. nuclear power industry and new offshore oil drilling rights.

Christine Whitman, a former Bush administration Environmental Protection Agency chief who favors cap and trade, expressed doubts that a cap and trade bill can pass this year.

If not, she thinks more help for nuclear power should be approved by Congress promptly. Many environmentalists would put up a big fight. They think increased oil drilling and more help for nuclear must, at the very least, be linked to putting a higher price on carbon emissions.

Copenhagen accord suffers

The political turmoil in Washington over passing a climate change bill is not expected to help international efforts to tackle global warming. In December, the Copenhagen Accord, barely hammered out under U.N. auspices, set a Jan. 31 deadline for nations to submit new goals for reducing carbon emissions.

That becomes more dicey if confidence is shaken by the inability of the United States, the developed world's largest carbon emitter, to take concrete action.