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Climate Change Bill Suffers from Backroom Dealings, Industry Influence

May 18, 2009 

Climate Change Bill Suffers from Backroom Dealings,  Industry Influence

Statement of Tyson Slocum, Director of the Energy Program at Public Citizen

The climate change legislation that will be debated this week is a huge disappointment. Not only will it prove a boon to energy industries, but it won’t protect consumers and may very well not even curb global warming. The first draft, penned months ago, was on track to accomplish these goals, and we applauded it as a great start. Since then, however, lawmakers have met in secret with representatives of the coal and oil industries and facilitated industry efforts to gut the bill.

The Obama administration got it right when officials released a budget that would auction 100 percent of pollution allowances. As long as pollution allowances are auctioned, the government will have the revenue necessary to mitigate energy price increases through rebates while having money to invest in the sustainable energy infrastructure we need to end our reliance on fossil fuels.

This was further reinforced by President Obama’s selection for the new chair of the Federal Energy Regulatory Commission, Jon Wellinghoff, who said that “we may not need any” new nuclear or coal power plants because we have yet to harness the capacity of renewables and energy efficiency.

But the House of Representatives has not followed the administration’s lead. When Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) released a draft climate bill in March, we praised it as a great first step but noted that it needed to be improved during the committee mark-up process.

But instead of a transparent process involving debate and voted-upon amendments, committee leadership conducted closed-door negotiations with polluters. The result: The bill was radically altered to accommodate the financial interests of big energy corporations while giving nothing new for the environment or for working families. This is hardly the transformation this country needs to jump-start its economy and curb climate change. This is more of the same old wait-and-see, special-interest-bailout approach that has gripped Washington for ages.

It is disappointing that the entire process has been riddled with the corrupting influence of big money, with hundreds of thousands of dollars being given to members of the Energy and Commerce Committee by the oil, gas and coal industries. Ultimately, the people’s business should be done in front of the people. Instead, deals have been cut in back rooms to bribe special interests into supporting the bill.

The committee’s decision to give away most of the pollution allowances for free for the next two decades is unacceptable. This approach hurts working families and average households the most; an Environmental Protection Agency analysis has shown that giving away pollution credits is “highly regressive.” Congress can look out for average families or give away pollution credits for free. It can’t do both.

Europe’s experience shows that when the right to pollute is given free to energy companies, nations fail to meet their emissions caps and price signals in the carbon trading markets are undermined. While we can understand providing some allowances to energy-intensive domestic manufacturing industries that are subject to fierce international competition, the same cannot be said for oil refiners or coal utilities. The bottom line is that this thwarts the very goal of curbing global warming.

The committee’s plan to distribute allowances to coal utilities will set up a legal fight in all 50 states’ utility regulatory commissions on how exactly the money will be returned to families and how much utilities can skim off the top – a fight that anti-poverty and consumer groups lack adequate resources to wage, given the army of lawyers utilities hire and the millions in campaign contributions they make. Without provisions to provide intervener funding   – a process by which utilities help finance the legal and technical costs borne by consumer groups in the utility regulatory process   –  ratepayers will not receive the full rebates to which they are entitled.

We should not assume that a future Congress will hold fast to today’s pledge to hold polluters accountable in 20 years. In fact, using history as a guide, these polluters will simply ramp up their lobbying and influence-peddling in an effort to again stall the day of reckoning when their greenhouse gas emissions carry a price.

Giving away allowances deprives the government of the revenues needed to invest in clean technologies. That may explain why the coal industry, in Section 114 of the bill, has secured up to $11 billion over the next decade in a new carbon tax that coal utilities would collect and spend through a private corporation they control, dedicating the money not to weatherization for families to finance rooftop solar power, but to new coal power plants, which would generate more carbon emissions. Setting up a new carbon tax paid by working families but benefiting only the coal industry at the expense of financing solar and other renewables is unacceptable.

Renewable energy took another hit in the legislative process. The federal renewable energy mandate contemplated in the first draft of the bill would have required utilities to produce 25 percent of their power from renewable energy by 2025; that figure is now 20 percent.

At the foundation of the committee’s bill is a flawed market plan that would make even Enron blush. The price of pollution would be determined by a trillion-dollar derivatives market no different from the one that helped sink our economy into is current depressed state. This reliance on “cap and trade” markets – which esteemed U.S. climate scientist James E. Hansen calls the “Temple of Doom” –  will allow Goldman Sachs and other derivatives traders to dominate the market and influence prices.

Industry lobbyists aren’t done yet. Indications suggest that lobbyists for the nuclear industry may be successful today in inserting language creating a “Clean Energy Bank,” which would be used to provide public financing for risky and dangerous nuclear power. The nuclear provisions are also unacceptable. For some strange reason, Congress apparently believes that the answer to helping the most heavily subsidized energy source in the country is more subsidies and bailouts.

Holdouts on the Energy and Commerce Committee have made clear that they are more willing to give in to ultimatums by the coal, oil and nuclear industries than to stand up for their constituents.

If this process shows anything, it is that the committee process is up for sale, which guarantees terrible outcomes in the upcoming health care debate.

We hope, however, that Congress will come to its senses and begin to look out for consumers.  There will be an opportunity to make improvements to the American Clean Energy and Security Act on the House floor, where lawmakers will have opportunities to weigh in. We hope that Ways and Means Committee Chairman Charlie Rangel (D-N.Y.) and other members will look out for their constituents, rather than special interests.