Lobbyists for cap and trade face daunting task

The US Senate’s stalled climate bill is getting a last big push from an unlikely ally – a group of energy companies

But intensive lobbying by these climate bill proponents – including heavyweights like Duke Energy, Shell Oil Co and General Electric Co – may not be enough to counter powerful opposition and get a bill passed before the US mid-term elections in November.

President Obama says he still backs a climate bill but many have written off the chances of passing legislation with the most controversial provision: a market that aims to cut pollution by letting companies buy and trade permits to emit greenhouse gases.

Nevertheless, some major US companies are pushing for a bill that would include this cap-and-trade system, saying it would create a modern energy economy and thousands of jobs.

Duke Energy Chief Executive Jim Rogers and Shell Oil Co President Marvin Odum met moderate lawmakers, seeking ways to push such a bill in the Senate that has made little progress.

One idea is to allow cap-and-trade to be implemented on power utilities first, with regulations on oil refineries and other industries coming later.

Proponents from industry are lobbying with environmentalists under the US Climate Action Partnership, who still want a bill regulating emissions of planet-warming gases across all sectors of the economy. They say cap-and-trade will create a lot of jobs and boost the economy.

But climate legislation has fierce opponents in the main US business lobby, the US Chamber of Commerce, and most Republican lawmakers, some of whom doubt the threat of global warming. Few climate bill proponents are confident there are enough votes in the Senate to pass the bill, especially with Democratic fortunes falling ahead of the mid-term elections.

A cap-and-trade system would reward companies for adopting clean energy technologies like nuclear plants and burying carbon emissions from coal generators underground. Rogers said this would give investors confidence to finance new power plants.

“We have to retire or replace every plant by 2050,” he said. “The sooner we get about the business of doing that, the better.”

He said wind and solar power markets would grow faster under a cap-and-trade system, which would help the United States compete with emerging powers like China.

Odum said an emissions market would create hundreds of thousands of jobs as companies race to begin building a new energy system. In such markets, governments limit pollution and let cleaner companies earn valuable credits to sell.

Lobbyists for cap-and-trade, who also include General Electric Co, must find ways to bring in other energy and industrial companies that have opposed the system, said Dan Weiss, an energy expert at the Centre for American Progress.

Otherwise, they will not be able to secure the 60 votes in the Senate needed to avoid a Republican filibuster and pass the bill.

Time runs short
Passage will be more difficult since Senate Democrats lost their 60-seat super majority with the election of Massachusetts Senator Scott Brown. The Republican campaigned against a cap-and-trade bill, citing worries about higher energy costs.

With the midterm elections 39 weeks away, many lawmakers may avoid controversial climate legislation and turn their attention to campaigning.

“The bottom line is it will be hard to convince the fence sitters before the midterm elections that the new green jobs will replace jobs that will be lost in the traditional energy economy,” said Divya Reddy, an analyst at the Eurasia Group.

A compromise bill being hashed out by Senators John Kerry, a Democrat, Lindsey Graham, a Republican, and Joe Lieberman, an independent, is not expected to be out before March.

Lobbyists for companies that support a cap-and-trade system have taken heart in signals from the trio of senators, and in recent comments from President Obama, that a compromise could pick up votes.

Rogers at Duke said the lobbyists are targeting 15 to 17 Democratic and eight to 10 Republican Senators to win votes.

A “hybrid” bill, that would impose cap-and-trade on power plants and an emissions fee on other industrial sources of greenhouse gases, could break down resistance from lawmakers in states that produce oil and natural gas.

Shell’s Odum said such a bill could assure the petroleum industry that traditional fuels will be around for decades to come, freeing lawmakers in oil states to vote for a bill.

But time is growing short. “It’s a tough sell,” said Eurasia Reddy, who added they would also need to convince lawmakers the bill would not raise short-term energy bills.

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