First Legislative Hearing of Senate Climate Bill Focuses on Leadership, Economy, Allowances

The first legislative hearing on the 923-page Kerry-Boxer climate change and energy bill kicked off on Tuesday at the Senate Environment and Public Works Committee, with four prominent Obama administration officials making the case that failure to act now on climate change could affect U.S. standing in the global economy. Moderate committee members, meanwhile, criticized the legislation, signaling a tough battle ahead.

Witnesses at the first legislative hearing on The Clean Energy Jobs and American Power Act (S. 1733) included Energy Secretary Steven Chu, Transportation Secretary Ray LaHood, Interior Secretary Ken Salazar, Environmental Protection Agency (EPA) Administrator Lisa Jackson, and Jon Wellinghoff, chair of the Federal Energy Regulatory Commission. The Senate will hear from 54 witnesses, on nine separate panels, over three days of hearings.

Committee Chair Sen. Barbara Boxer (D-Calif.), who sponsored the bill with Sen. John Kerry (D-Mass.), opened the session leaning heavily on the EPA’s recently released economic analysis on the Senate bill (PDF). That document finds that the Senate bill, modeled on the Waxman-Markey bill that passed the House in June, would cost the average U.S. household about $100 per year, mirroring the House legislation.
“EPA’s economic modeling found that the Kerry Boxer bill will carry only modest costs for America’s families—the overall impact being 22 to 30 cents a day,” Sen. Boxer said on Tuesday.

“No climate bill has ever had this level of review and the Obama Administration stands behind this analysis. EPA spent five weeks analyzing the Waxman Markey bill and another two weeks analyzing our version.”

Sen. Kerry urged prompt passage of the bill, listing reasons that included America’s threatened leadership. “While the Senate stands still, the world is racing ahead: Japan, Mexico, Brazil, South Korea, the EU, and Australia have committed to significant emissions cuts,” he said. “Last month, Chinese President Hu Jintao pledged to reduce China’s emissions below projected levels. India, for its part, is working on its own domestic legislation to reduce carbon pollution.”

More significantly, Kerry said, failure to act could force the EPA to impose new regulations. These will “likely … be tougher and they certainly will not include the job protections and investment incentives we are proposing,” he said.

The committee’s ranking minority member Sen. James Inhofe (R-Okla.) called the bill a “temple of doom” that would cost Americans up to $400 billion a year. He also criticized the EPA’s analysis of both the House and Senate bills. “While I have serious problems with EPA’s analysis of Waxman-Markey, and its 38-page ‘meta-analysis’ of Kerry-Boxer, the latter was not entirely EPA’s fault,” he said. “In its drive to ram S. 1733 through the legislative process, the majority didn’t provide EPA enough time to do a serious analysis.”

Boxer on Friday unveiled the Chairman’s Mark—a new version of the climate and energy bill (PDF)—which for the first time details how emission allocations (PDF) will be distributed. The bill largely mirrors the House-passed climate bill, including identical language to H.R. 2454, which allocates 30% of allowances for free to state-regulated local power distribution companies. The local distribution companies must then use revenue gained from the allowances to guard customers from price hikes.

Under the Kerry-Boxer bill, merchant coal generators would get 3.5% of the free allowances, while companies with long-term power purchase agreements would get 1.5% of free allowances. Free credits for investor-owned utilities, merchant coal plants, and long-term power contract holders would phase out over a five-year period from 2026 to 2030.

Sen. Max Baucus (D-Mont.), who is also chair of the Senate Finance Committee, on Tuesday said he had “overall concerns” about the legislation, including the bill’s mandate to cut 20% of national carbon emissions 2020. “We cannot afford the unmitigated impacts of climate change, but we also cannot afford the unmitigated effects of legislation,” he said.

The opposition by the moderate Democrat signals a contentious path forward for the bill. Baucus is an influential voice for Democrats from coal states. The finance committee also plays a major role in the financing of a carbon cap-and-trade program.

Sources: U.S. Senate Environment and Public Works Committee, EPA, POWERnews

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