Cap and Trade Is Dead

Cap and trade officially died on July 22 when Senate Majority Leader Harry Reid announced at a news conference that the Democratic Caucus was unable to reach a consensus on any form of energy bill, even a recent short-lived version that proposed reducing carbon emissions from only the utility sector. I predict that carbon cap and trade is now dead for at least a decade, maybe longer.

Senator John Kerry (D-Mass.) was next to the podium to offer his mea culpas. He described the stripped-down energy bill as an “admittedly narrow, limited bill” in seemingly apologetic tones. “President Obama called me before this meeting and said, point blank, he is committed to working in these next days at a more intensive pace… to help bring together the ability to find 60 votes for that comprehensive legislation.”

In fact, the long-promised comprehensive energy and climate legislation has devolved into a bill that now covers oil spill liability, manufacturing natural gas vehicles, and a home energy program known as Cash for Caulkers. It’s crunch time for the Senate; pass anything with the word “energy” attached, declare victory, and go home to campaign.

Practical Politician

President Obama, regardless of your personal feelings, is a realist and carefully invests his limited political capital on initiatives that he believes he can win. Therein lays the crux of the problem for advocates of cap-and-trade legislation—finding 60 votes has been and will remain an impossible task for the near future.

Without the promise of 60 votes, Obama’s support will continue to be merely strong rhetoric. In the past, Obama has used his words in support of various energy and climate legislative initiatives, especially before heading over to the overhyped UN Climate Change Summit in Copenhagen last December, but without response from the Senate. You may also remember that shortly after his election, Obama recorded a talk for YouTube promising climate legislation as one of his legislative priorities. However, the much-reported arm-twisting and deal-making that took place on the eve of the health care and financial regulatory reform votes illustrates that Obama is willing and ready to go move beyond rhetoric and spend much political capital when victory is within his grasp.

On the other hand, Obama has remained a cheapskate when it comes to investing political capital on energy legislation with carbon cap and trade. There have been no signs that he has been kicking butt (to use his own term) and taking names on any of the recent cap-and-trade legislative proposals. My guess is Obama knows that Reid’s announcement of the demise of the American Power Act (APA) was the fourth time that energy legislation with carbon cap and trade has failed in the Senate since 2003, the first time with 43 votes in favor and then again in 2005 with only 38 votes. During Obama’s watch, The American Clean Energy and Security Act of 2009 (ACES) passed the House on June 26, 2009, by a vote of 219-212 (with 44 Democrats in opposition), but it never saw the light of day in the Senate. Cap and trade is now political kryptonite, even for Obama.

Gain Must Exceed Pain

In my opinion, Reid pulled the plug on the APA before a Senate vote to avoid certain humiliation just months before his own reelection bid. Insiders put the expected vote tally at between 35 and 40 votes in support, even with the strong support of large utilities, the Edison Electric Institute, and many, but not all, environmental organizations. It’s a mystery how another “comprehensive” legislative proposal could possibly garner another 20 or so votes if it includes cap and trade, in spite of the president’s optimistic promises. It’s clear that major disagreements within the majority party on carbon cap and trade remain strong and beyond Reid’s ability to exert control. The bottom line is the political pain for senators representing cap-affected constituencies overwhelms the possible political gain by going along to get along with the Democratic leadership. The differences are primarily regional, not party ones.

The president also faces much fencemending with his constituents before he can push cap and trade again. I’ve read reports that supportive environmental groups fully mobilized their forces and invested upwards of $100 million since Obama’s election on media blitzes supporting climate change legislation. Obama must now mend fences after throwing House Democrats that supported ACES under the bus. In addition, his environmental supporters may think twice before again investing so much sweat and money until the president’s actions match his rhetoric.

Regional Differences Rule

This lack of support for carbon cap and trade in the Senate goes beyond the simple arithmetic of counting votes to the power and prestige of individual senators. For example, key congressional Democrats such as Ben Nelson (Neb.), Mary Landrieu (La.), Evan Bayh (Ind.), Jay Rockefeller (W.V.), and the late Robert Byrd (W.V.) consistently opposed carbon cap-and-trade legislation at every turn. Others, such as Jim Webb (Va.), Mark Warner (Va.), Claire McCaskill (Mo.), and Jeff Bingaman (N.M.) would like to support cap and trade but have the intellectual honesty to temper their enthusiasm with true concern about its economic impact on their constituents.

Would cap and trade pass were the president to put his full political weight in support of it? I doubt it. Without the unfailing support of these Democratic stalwarts by addressing their unique regional concerns, carbon cap-and-trade legislation will remain out of reach for this, or any future, president.

Dr. Robert Peltier, PE, is POWER’s editor-in-chief.