Air Date: Week of May 30, 2008

Senators Lieberman and Warner drafted the climate change bill. (Courtesy of the U.S. Congress)

A global warming bill before the U.S. Senate splits the once monolithic electric utility industry. Now it's coal-burning companies vs. cleaner energy users. But does division in the industry ranks make a climate change law any more likely? Living on Earth’s Jeff Young reports from Capitol Hill.

Transcript

GELLERMAN: From the Jennifer and Ted Stanley Studios in Somerville, Massachusetts – this is Living on Earth. I’m Bruce Gellerman in for Steve Curwood. The climate on Capitol Hill is heating up as Congress begins debating a bill to deal with global warming. Republican Senator John Warner of Virginia and Independent Joe Lieberman of Connecticut propose what’s called a “cap and trade” system to reduce the emission of greenhouse gases. It’s a complex and comprehensive piece of legislation that could transform the nation’s energy economy. And that has some of the biggest names in the energy business scrambling, sparking a power struggle among power companies. Living on Earth’s Jeff Young reports.

YOUNG: The Warner-Lieberman Climate Security Act faces some pretty long odds. Well-funded, industry lobbies oppose the bill, and even if it does manage to pass Congress it would almost certainly be vetoed by President Bush. Some would say the bill doesn’t have a prayer. Well, Senators Warner and Lieberman had a bishop, a pastor and Rabbi David Saperstein on hand to show that it does.

SAPERSTEIN: It has taken a giant courageous groundbreaking step in addressing the global warming crisis. And we will do what we can to see the success of your efforts. (Murmured thank yous in background)

YOUNG: It will take more than religious support to convert enough senators, though. So Senators Warner and Lieberman tried to ease worries about the potential cost of cutting CO2. The bill lets companies who have a hard time cutting CO2 use more carbon offsets, instead – things like tree planting and other projects that could store carbon. It helps low-income households pay utility bills. And Senator Warner says his bill would let the president alter the carbon trading system if energy prices went too high.

WARNER: But it’s important that the president of the United States have the ability to take that throttle on occasion and bring it back if economic situations dictate that.

YOUNG: The cost question will dominate Senate debate. It’s already dominating the airwaves: in states where senators are considered swing votes, the pro-industry Club for Growth is running this ad:

[CLUB FOR GROWTH AD: “ This time, they’re pushing massive new taxes and regulation in the name of global warming. But let’s ask ourselves, are the unproven benefits of legislation worth the major job losses, new taxes and increased energy costs that could result?”]

YOUNG: The ad shows scary numbers about lost jobs and energy price spikes. But most economists consider those numbers very unreliable. Even some electric utility companies complained about their own trade group, Edison Electric Institute, making dire predictions of economic catastrophe. Edison Electric commissioned an economic forecast that said capping CO2 emissions would push electricity prices sky high. Eight of Edison Electric’s member companies wrote a testy letter telling Edison to stop using those figures.

Steven Kline is a vice president for one of those companies, Pacific Gas and Electric. Kline says the forecast Edison Electric used did not give very useful data.

KLINE: No, I think that it’s sort of like throwing a dart. We encouraged them to look in a much more robust way at the bill and to think about it a little more broadly, and they were very open to doing that. I still would probably be a bit more optimistic about our ability to do this at lower cost.

YOUNG: That letter to Edison Electric was also released to the press. Suddenly an industry dispute usually kept to the corporate boardroom was very public – much to the amusement of environmentalists watching from the outside.

O’DONNELL: So we see a real fissure within the electric power industry where some of the less coal-dependent companies are saying, ‘let’s just do an honest assessment of costs, let’s not jack up the costs.’

YOUNG: That’s Frank O’Donnell with the non-partisan watchdog group Clean Air Watch. O’Donnell says a power company’s position on a climate change bill largely depends on what fuel that company uses. Those that burn more coal are the strongest opponents. Companies like Pacific Gas and Electric tend to support regulation. They use a mix of nuclear, hydropower, natural gas and renewables like wind. O’Donnell says that’s creating a split in an industry that often spoke with one voice against environmental measures.

ODONNELL: Historically they have been a monolith. In this case, some of the disagreements are right out there on the front pages, and I think it’s happening because some of the coal-heavy companies have been very aggressive in pushing their approach, and some of the less coal-dependent companies have decided, we can’t just sit back here and let them run over us. We’re gonna have to speak up for ourselves.

YOUNG: Power company CEO’s are also fighting over the Warner-Lieberman bill‘s system for allocating permits to emit CO2. There’s big money at stake, and Edison Electric spokesperson Dan Riedinger says it’s unlikely his group’s member companies will reach agreement.

RIEDINGER: So companies don’t see eye-to-eye on that. It’s a tough issue, and it’s not one, you know, that we as an industry may be able to take, you know, one position on.

YOUNG: Industry lawyer and lobbyist Scott Segal, of the firm Bracewell and Giuliani, says it’s no surprise that global warming has sharpened divisions in a highly competitive industry.

SEGAL: Climate change has the outward appearance of pitting all of public interest against all of private interest, but that’s actually not right. Lurking below the surface, you find that the private interests all have different and discrete views when it comes to global climate change, and in the course of the debate I think you will hear a lot of these discrete interests teased out and come forward.

YOUNG: So what do these splits within industry mean for global warming legislation? Well, there will be vigorous debate about costs, and there could be a shake-up in the usual dynamic of business versus environment. Insiders say that could help push a climate change bill to passage – sometime. But probably not this bill, and probably not this year.

For Living on Earth, I’m Jeff Young in Washington.

 

Links

The latest version of the Lieberman Warner bill, with changes intended to reduce costs

Edison Electric Institute on the Warner Lieberman bill

An overview of economic forecasts for the Warner Lieberman bill

Pacific Gas & Electric climate change initiatives

Clean Air Watch