Cap and Trade Dying in the Senate; Utilities-Only Cap Possible

A nationwide cap-and-trade policy is highly unlikely to gain the 60 votes necessary to break a Senate filibuster, recent developments show. But a utilities-only version may be possible.

Pundits and politicians agree that if cap and trade is going pass the recalcitrant Senate it will need the full weight of the presidency behind it. Yet in a major speech June 15, President Obama failed to express support for the controversial policy, and left the door open to alternatives.

According to the energy and environment news service Climatewire, Senate Democrats came out of a party caucus a couple days later with the sinking suspicion that “cap and trade doesn’t have the votes.”

Then, last week, the President abruptly postponed a crucial bipartisan meeting to discuss energy legislation to deal with the General McChrystal imbroglio (the meeting has been rescheduled for next week). All of this as the number of days left before the November elections continues to shrink.

Although it has its critics, a market based system of allocating permits for the right to pollute, aka cap-and-trade, is considered the most elegant and effective way of reducing greenhouse gas emissions by many energy and environmental experts. Very successful small-scale cap and trade programs to deal with nitrous oxide and other pollutants have been in place in this country for years, and the EU has had a cap and trade program for carbon since 2005.

A cap and trade system is also central to the American Power Act, the energy bill co-sponsored by Senators John Kerry and Joe Lieberman, the fate of which will undoubtedly be discussed when Obama does finally have that meeting on energy.

All hope is not lost, however. There is a possibility of a cap and trade system limited to utilities somehow making it through the Senate gauntlet.

Although not as effective as an economy-wide system, utilities-only cap and trade would still make a difference – because utilities are the biggest emitters of GHGs, about 37 percent in 2008.

A number of big utilities, including PG&E, Duke, and others have come out strongly in favor of cap and trade. Duke spokesman Tom Williams told Bloomberg Businessweek yesterday that his company would support a utilities-only version if a wider version “doesn’t happen.”

As David Roberts explains in Grist, there are drawbacks to “siloing” a cap and trade program to one industry, however. When cap and trade is limited to just utilities, options will be more limited and more expensive because there will be less demand for carbon reduction solutions.

Given the dwindling amount of time left for the Senate to act, and the deep pessimism from all corners, my guess is that cap and trade’s fate will be sealed if and when that meeting with Obama does take place.

BC (Ben) Upham is a freelance writer based in Los Angeles. He has written for the New York Times, and was a writer and editor for News Communications, Inc., a local paper consortium serving Manhattan. When he's not blogging on green issues -- and especially renewable energy -- he's hiking in the Angeles Mountains or hanging out at El Matador.

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