Global Warming: Why Team Bush Could Generate Some Heat

Ever since scientists suggested that humans are warming the earth, Washington's response has been mostly more hot air. The 1997 Kyoto Protocol, with its curbs on greenhouse-gas emissions, would devastate the U.S. economy, opponents charged. And each time President Clinton tried to push climate-friendly technologies or emissions limits, the Republican Congress screamed that he was trying to implement Kyoto through the back door.

Now that George W. Bush is President, Kyoto is dead at both ends of Pennsylvania Avenue. But surprisingly, the political climate for action on global warming looks brighter. Treasury Secretary Paul O'Neill, for instance, has a long record of pushing for action. Other members of the Bush team and GOP lawmakers are working on legislation that could reduce carbon emissions at home. And on the international front, many U.S. companies are backing the idea of negotiating a new accord to replace Kyoto. Says Larry Bruneel, lobbyist for Wisconsin Electric Power Co.: "We're getting primed to reevaluate climate change initiatives."

"TRAIN WRECK." Part of the reason is that the case for warming is mounting. For example, based on new evidence, the U.N. panel on climate change reported on Jan. 21 that the planet could heat up more than previously estimated--as much as 10F by 2100. Meanwhile, business is increasingly convinced that a global accord to regulate emissions is inevitable. That's why a breakdown of the climate talks in The Hague last November was a "train wreck, from the perspective of American companies," says one industry exec. Business fears the provisions of Kyoto it likes, such as emissions trading, could be lost. And, execs add, Bush has a chance to do a bold "Nixon-to-China move."

Of course, Bush and the GOP Congress aren't suddenly going to join Greenpeace. Instead, their mantra is providing incentives to the private sector. Bush's coming energy plan is expected to include tax credits and other provisions to spur renewable energy technology, clean coal development, and perhaps even nuclear power. While other parts of the bill, such as drilling in the Arctic National Wildlife Refuge, will be controversial, these provisions will get broad bipartisan support, predicts Alden Meyer of the Union of Concerned Scientists, a nonprofit science and enviro group.

Bush also made a radical, if little-noticed, campaign pledge to alter the way utilities are regulated. Instead of separate rules for each major pollutant--sulfur dioxide, nitrogen oxides, and mercury--he promised to regulate them together, and throw in carbon dioxide as well. And new Environmental Protection Agency Chief Christine Todd Whitman has endorsed the plan's basics: set overall emissions caps and give utilities more flexibility to meet them, including the ability to trade emissions. Bush's team will work with the Senate Environment Committee, whose chair, Bob Smith (R-N.H.), has already proposed a similar idea. While utilities are split on the plan, it has the support of major coal users such as American Electric Power Co. As for the enviros, "we're going to do our best to see that it happens," says Gregory S. Wetstone, legislative director of the Natural Resources Defense Council.

If Washington fails to take action at home, Bush will find himself in hot water abroad. But if he can convince world leaders that the U.S. will make verifiable emissions reductions, some countries hint that they will do what American business has long been urging--scrap the Kyoto targets and timetables and negotiate a new protocol.

It's too early to know whether any of this will come to pass. Indeed, Secretary of State Colin Powell has already asked to delay the next round of international talks to give him more time to develop a strategy. But at the least, global warming will jump to a higher place on Washington's agenda.

Before it's here, it's on the Bloomberg Terminal.