Friday Green News Round-up - Special Cap-and-trade Edition

The cap-and-trade debate is heating up on Capitol Hill as the Waxman-Markey Bill moves its way through committee and potentially to vote on the floor.  Though many amendments are anticipated - any one of which could prove the poison pill - it is currently the only prominent piece of legislation that looks to aggressively reduce emissions of carbon dioxide and set a ceiling on the amount of pollution that the United States pumps into the atmosphere each year.

As a quick primer and a way to catch up on some viewpoints you may have missed, here is a collection of some of the top articles from the opinion pages of major dailies on the issue.  Most seem on board with the overall idea of reducing these emissions, but many are also hesitant about the implications of levying higher costs against energy - and the result is a number of varying viewpoints and solutions to one of the most pressing issues facing our country today: how to balance on environmental concerns, our impending energy crisis and our less than fortuitous economic situation.

There are many different topics being debated:

Multiple Amendments: In the Washington Post, David Fahrenthold discussed the numerous amendments that could be tacked on by both sides this week - perhaps a large impediment to Waxman's goal of passing the bill out of committee by the end of next week.  One amendment of note has already been shot down that would have classified wood from mature forests on federal lands as 'renewable biomass', as approved source of clean power.

Paying Twice: David Sokol, the chairman of the board of MidAmerican Energy Holdings, wrote an op-ed in the Washington Post the day before that looked at the potential for the American taxpayers to essentially be stuck paying for clean energy improvements twice through this legislation - first indirectly as a result of the increased cost for energy allowances and then again through the increased costs for the actual construction of new clean energy production or sequestration down the road, both passed on to consumers by utilities and energy intensive industries in the form of rate and cost increases.

Another interesting note from Sokol's piece is the fact that this cap-and-trade system would also create an unregulated financial marketplace for trading allowances - the bill allows for credit default swaps and carbon derivatives, the exact financial products that brought about our current banking misfortunes when they were based on the mortgage industry.

Taxing the Middle and Lower Class: In the Wall Street Journal last week, Martin Feldstein took a look at the underlying principle of who presumably would be footing the bill for cap-and-trade, which is in his opinion a tax levied against energy.  His concern is that proportionally, lower income and middle income citizens pay a larger chunk of their paychecks to cover energy costs for their homes (in the lowest quintile, almost 20% of their income according to the CBO), and therefore an increase in energy costs would result in an increased burden on those that already give up the largest portion to energy intense items and utility bills.

Energy Intense Industries Won't Go Overseas: In an early May piece in the New York Times, Christa Marshall looked to debunk criticism that energy intensive industries - like aluminum and steel processing - would be forced overseas since they are somewhat helpless to reduce energy consumption to the great degrees prescribed in the legislation.  The non-partisan study she cites in her piece indicates that even though consumers would opt for less energy intensive products in some cases, that those industries could be supported through rebates and other financial incentives to ensure viability.  Though the tone of the piece is overall that vulnerable industries will be spared dramatic consequences, the end result seems that they will in fact suffer and we will need to prop them up to some extent with federal incentives or bailouts.

Internal Conflict: Paul Krugman took aim at the interesting mix of political support that has come on board with the current language of the bill (Al Gore, among others), and the surprising opponents of the compromise like Greenpeace and NASA scientist James Hansen.  Krugman's summation seems to be that he is for the current legislation and agrees with it supporters, arguing that this cap-and-trade system allows for more international cooperation and comparison, an essential element in the fight on global warming.

'Inequitable Distribution' by Industry: The Times' Green Inc. Blog took note of an oil industry complaint against the provision in the bill for what they have called an 'inequitable distribution' of free carbon permits to the oil refining industry.  Power companies it seems - the top polluters in the nation - will get the majority of free permits or 'allowances', while refineries will receive about 2% of them.  This will put some immense pressure on the industry to lower energy consumption, and inevitably increase their costs to meet steadily increasing requirements, meaning a rise in cost for fuels and other refined products. 

Take Your Time: Energy Secretary Steven Chu noted in an interview with the BBC that even though he is a supporter of climate change legislation, he understands the political pragmatism that is necessary to pass truly progressive reforms.  Chu says "And if we say we want something much more aggressive on the early timescales that would draw considerable opposition and that would delay the process for several years."

This bill will obviously see vigorous debate if it survives the numerous amendments being attached and makes it to the floor - and with so many industries having a major stake in the outcome of the bill, it will probably be one of the most lobbied topics on the Hill until healthcare legislation starts moving forward.  Since Obama has included some amount of the revenue that would be generated from sale of permits into his budget, the White House will also be pushing to move this forward and will expect quick action - but 400 amendments later, who knows what legislators would be acting on.