Hearings on Senate's climate change bill to begin soon

The US Senate Environment and Public Works Committee will begin 3 days of hearings on Oct. 27 on the global climate-change bill that its chairwoman, Barbara Boxer (D-Calif.), and John F. Kerry (D-Mass.) introduced Sept. 30.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Oct. 14 -- The US Senate Environment and Public Works Committee will begin 3 days of hearings on Oct. 27 on the global climate-change bill that its chairwoman, Barbara Boxer (D-Calif.), and John F. Kerry (D-Mass.) introduced Sept. 30.

“Members of the committee and their staffs, along with the committee’s staff, have been working day and night since the bill was introduced, and we have made great progress,” she told reporters at a briefing. “Draft provisions of the chairman’s mark have been sent to the Environmental Protection Agency for analysis. We expect that to be completed in time for the hearings.”

Boxer said the hearings will begin with testimony from US Energy Secretary Steven Chu, Interior Secretary Ken Salazar, Transportation Secretary Ray LaHood, Environmental Protection Agency Administrator Lisa P. Jackson, and Federal Energy Regulatory Commission Chairman Jon Wellinghoff.

Witnesses for the two other hearings will be announced shortly, she said. “We will schedule a full committee markup as soon as possible after the hearings,” she said.

Boxer’s announcement came a day before the Senate Energy and Natural Resources Committee’s second hearing on potential costs of a carbon cap-and-trade program, a component of both S. 1733, the Boxer-Kerry bill, and HR 2454, the measure cosponsored by Reps. Henry A. Waxman (D-Calif.) and Edward J. Markey (D-Mass.), which the House approved by seven votes on June 26.

‘Radical transformation’
“As the Senate continues to consider ways to deal with the global environmental problem of climate change, much of the discussion centers around the overall costs and benefits of such a program,” committee chairman Jeff Bingaman (D-NM) said Oct. 14 as he opened the hearing. “Addressing the issue of climate change will require a radical transformation of our energy sector, so this committee will continue to take a great interest in this topic in the months ahead.”

The committee’s ranking minority member, Lisa Murkowski (R-Alas.), said it will be important to make certain climate change legislation does not endanger a domestic economic recovery. “The proposals before us will affect not only climate change, but every facet of our economy for decades to come,” she maintained. “It’s incredibly difficult to conduct a sensitive and comprehensive analysis of climate change bills, but it’s equally important to know how those bills might work and what they may cost.”

Four federal analysts testified at the hearing: Douglas W. Elmendorf, director of the Congressional Budget Office; Richard G. Newell, US Energy Information Administration administrator; Reid P. Harvey, a branch chief within the EPA’s climate economics division; and Larry Parker, of the Congressional Research Service.

Addressing climate change could entail substantial costs domestically since the US accounts for roughly 20% of total global carbon dioxide emissions, Elmendorf said in his written testimony. “Achieving such reductions would probably involve transforming the US economy from one that runs on CO2-emitting fossil fuels to one that increasing relies on nuclear and renewable fuels, accomplishing substantial improvements in energy efficiency, or implementing the large-scale capture and storage of CO2 emissions,” he said.

Climate legislation also would permanently shift production and employment away from industries which produce carbon-based energy and energy-intensive goods and toward alternative energy sources, goods, and services, Elmendorf said. “While those shifts occurred, total employment would probably be reduced a little compared with what it would have been without a comparably stringent policy to reduce carbon emissions because labor markets would most likely not adjust as quickly as would the composition of demand for different outputs,” he indicated.

Aspects of HR 2454
Other witnesses discussed studies of HR 2454 since its passage. Newell said EIA found carbon capture and storage and other key technologies for reducing emissions face a variety of technical challenges and, in some cases, additional questions regarding their widespread deployment.

“EIA’s results also suggest that the free allocation of allowances to electricity and natural gas distributors significantly lowers direct impacts on consumer electricity and natural gas prices prior to 2025, when it starts to be phased out,” he continued. “While this result may serve goals related to regional and overall fairness of the program, the overall efficiency of the cap-and-trade program is reduced to the extent that the price signal that would encourage cost-effective changes by consumers in their use of electricity and natural gas is delayed.”

Harvey said in his written testimony that EPA’s analysis of HR 2454 and related Senate bills indicates cumulative reductions over several decades affect overall costs more than a particular year’s cap level. “Because HR 2454 allows emissions allowances to be banked over time, its 2050 cap (an 83% reduction from 2005 levels by 2050) drives overall behavior and encourages banking in the early years of the cap-and-trade program,” he observed.

“In other words, just changing the 2020 cap alone does not have a significant effect on total costs if all else stays the same. Costs will be lower the sooner we start acting, but a national commitment to meeting these long-run emission targets is key,” Harvey said.

Parker said the ultimate costs of HR 2454 would be determined by the economic response to the bill’s technical challenges, that the distribution of allowance value (either through free allocations or auction revenue) would determine who bears much of the program’s costs, and that the availability of offsets, especially international allowances, will be significant.

“The interplay between nuclear power, renewables, natural gas, and coal-fired capacity with carbon capture and storage among the cases emphasizes the need for a low-carbon source of electric generating capacity in the mid-to-long term,” he continued. “A considerable amount of low-carbon generation will have to be built under HR 2454 to meet the reduction requirement.”

Contact Nick Snow at nicks@pennwell.com.

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