Scaled-Back Carbon Emission Plan's Prospects Slim, Senator Harkin Says

Scaling back legislation to cap carbon dioxide from power plants rather than most of the U.S. economy might not win enough votes for a new greenhouse gas law to pass the Senate this year, two senators said.

“I don’t think that’s going to fly,” Senator Tom Harkin, an Iowa Democrat, said yesterday of the plan for cutting power- plant carbon dioxide that may be included in an energy bill to be debated later this month.

Cap-and-trade legislation, in which power plants, factories and refineries would buy and sell a declining number of carbon dioxide allowances, narrowly passed the U.S. House last year and stalled in the Senate. The House cap-and-trade plan would regulate sources responsible for roughly 85 percent of U.S. greenhouse gases.

Senators John Kerry and Joseph Lieberman released a revamped cap-and-trade plan in May, which they now have scaled back to the electricity sector, in the hopes of winning the support of lawmakers who worry about the impact of carbon caps on energy prices, the cost of manufacturing and job growth. Power plants produce about one-third of U.S. greenhouse gases.

Senate Majority Leader Harry Reid, a Nevada Democrat, has said he wants to include a carbon-cutting program for power plants in energy legislation to be debated the week of July 26. The legislation, which is still under negotiation, should also overhaul offshore drilling regulation, boost alternatives to fossil fuels and curb energy consumption, he said.

Democrat Appointed

It usually requires 60 out of 100 votes to pass major legislation through the Senate. Democrats had a 59-41 margin until Senator Robert Byrd of West Virginia died last month.

They are expected to regain their 59th seat after West Virginia Governor Joe Manchin, a Democrat, said today he’ll appoint Carte Goodwin, a Charleston lawyer, to succeed Byrd.

Goodwin told reporters today that House and Senate cap-and- trade proposals “simply are not right for West Virginia” and he won’t vote for legislation that “threatens the long-term economic security of this state.” West Virginia is the second- highest coal-producing state in the U.S., according to the Energy Information Administration. Wyoming is first.

West Virginia’s other Democratic senator, Jay Rockefeller, also opposes cap-and-trade legislation and said July 14 that it “cannot get 60 votes.”

Pryor’s Reservations

Senator Mark Pryor, an Arkansas Democrat, said in an interview yesterday he also doubts there are enough votes to pass an electricity sector cap-and-trade bill right now.

Pryor said he’ll wait to see a final proposal from Kerry, a Massachusetts Democrat, and Lieberman, a Connecticut independent, before deciding whether to support the plan.

Kerry and Lieberman have produced a discussion draft of the electricity sector cap-and-trade plan that leaves room for further talks with industry groups, environmentalists and other senators. Pryor said he has reservations about their approach.

“I’ve never been a huge fan of cap-and-trade,” Pryor said.

Harkin said the Senate should focus on legislation approved last year by the Energy and Natural Resources Committee that requires power companies to buy more from renewable sources such as wind farms. He said the bill’s renewable electricity standard, which calls for 15 percent of power generation to come from low-pollution sources by 2021, should be increased.

Lieberman Confident

Lieberman told reporters yesterday that he and Kerry are still confident the “utilities only” cap-and-trade bill can win enough support to pass. Reid has said he wants an energy bill to pass the Senate before lawmakers leave Washington in early August for a month to campaign in their home states ahead of elections in November.

Lieberman said he would be open to starting the Senate’s debate on the energy bill before the August recess and completing it when the senators return in September if more time was needed to build support for curbing the greenhouse gases that scientists have linked to climate change.

Some Senate Democrats from Midwestern U.S. states are holding back their support for the power-plant cap-and-trade bill until it shields factories from higher electricity prices.

Under previous House and Senate cap-and-trade proposals, the U.S. manufacturing sector was regulated, so factories got free carbon dioxide allowances to cushion the cost of cutting their own emissions and higher electricity prices from power plants that were required to make pollution cuts.

Aid for Manufacturers

While pollution from factories won’t be regulated in the scaled-back cap-and-trade bill, U.S. manufacturers still need some form of assistance to cope with higher electricity prices, Senator Carl Levin, a Michigan Democrat, said yesterday.

Supporters of the economy-wide carbon dioxide limits “can’t just make it smaller” and think it will win more votes, Levin said. “If the small package has impacts on the parts that are left out, then you’ve got to worry about the parts that are left out.”

Senator Sherrod Brown, an Ohio Democrat, told reporters yesterday that carbon tariffs on goods from countries without greenhouse gas limits, which were included in past cap-and-trade proposals, also must be added to the new plan.

“The utilities-only doesn’t work for manufacturing at this point,” Brown said.

To contact the reporter on this story: Simon Lomax in Washington at slomax@bloomberg.net.

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