Monday, January 4, 2010

Climate Change Legislation

Global warming at the US Capitol
Senate to Take Up Cap and Trade in the Spring?

Washington—President Barack Obama faces stout opposition from Senate Democrats this spring over key parts of the controversial Cap-and-Trade Bill. Many key Democrats are up for re-election and fear grass-root voter backlash in the 2010 mid-term elections.

The worried Democrats are looking for ways around the carbon reduction proposals that President Barack Obama is determined to sign into law; many are begging the Administration to hold off climate change legislation until after the elections in 2011.

The nation’s most powerful farm lobby has serious concerns about invisible costs in the bill. American Farm Bureau President Bob Stallman says Cap and Trade could cost farmers and consumers money in rising energy and food costs.

“The bills create an energy deficit due to limited alternatives. Farmers and ranchers would see higher fuel, fertilizer and energy costs,” said Stallman. “And the Cap-and-Trade provisions would do little more than downsize American agriculture and our ability to produce food in this nation. None of those are acceptable results to us, and we will continue to tell our members of Congress ‘Don’t cap our future.’” Last fall the Legislation cleared the House, and a similar bill passed a party-line vote in Committee last month.

Farmers and Ranchers across the nation are mobilizing, speaking at a Capitol Hill news conference, Texas rancher Richard Cortese said increased fuel prices, on top of other energy-related costs, would deal a sharp blow to farmers and ranchers. Cortese, who farms near Little River, Texas, is a member of the Texas Farm Bureau board of directors.
The news conference, hosted by Sens. Kit Bond (R-Mo.) and Kay Bailey Hutchison (R-Texas), highlighted a new report showing that cap-and-trade legislation will result in a considerable fuel tax increase on Americans. The senator’s report is the first effort to show climate change legislation’s effect on fuel costs.

According to the senators’ report, under current climate change legislation, America’s farmers and ranchers face an estimated half-billion fuel bill by the end of the decade and an additional billion the next decade.

“The type of gasoline and diesel fuel cost increases described in this report will make it very difficult for me to continue on the farm,” Cortese said. “As a small businessman, I cannot pass along my increased fuel costs to my customers without running the risk of losing them. That means I would have to absorb any increased costs and have it consume my bottom line.”
Senators from Nebraska, Louisiana, Indiana, and North Dakota, some with powerful energy companies in their states, worry about large-scale cap-and-trade schemes that allow major polluters to buy permits to pollute on the open market. Critics say speculators can easily manipulate those markets, driving up energy costs while pushing small operators out of business.

A study by the Massachusetts Institute of Technology estimates that the Cap and Trade market would be worth $366 billion in revenue paid by those who purchased the credits. The buyers pass the costs along to consumers in the form of higher prices for power, fuel, and manufactured goods. If you divide $366 billion by 300 million households, the cost per household is $3,128. Ideally the federal government would return a portion of the money to the consumers while keeping a portion for research on energy technology. Skeptics don’t see a return to consumers, or cash for research in a profit-driven system.

Meanwhile each Senate Democrat vote is vital for the climate change bill to pass. Louisiana Senator Mary Landrieu was asked if she urged the White House to hold off the bill till after mid-term elections:

“I am communicating that in every way I know how.”
High-ranking Democrats warn the bill faces serious obstacles in the election year. Senator Kent Conrad of North Dakota thinks the bill has “very poor prospects”, while Senator Ben Nelson of Nebraska say he’d like to “see the bill set aside until we work through the economy”.

On the other side of the isle in the Senate, Republicans stand unanimously against Cap and Trade and even the administration’s ‘go to guy’, expressed doubts about the fundamental inner works of the system. Democrat Senator John Kerry, told the Copenhagen climate conference last month, said: “I can’t tell you the method or the means by which we might price carbon, we haven’t resolved that issue yet.”

Critics of the system point to serious problems when the European Union rolled out the pilot scheme that started during the Kyoto Protocol, when carbon prices collapsed because of too many free carbon permits to big, politically connected polluters.

Senator John McCain, once a vocal supporter of cap and trade, now wants huge federal backing for the nuclear industry in return for his vote while Senator Mike Johanns of Nebraska has called the scheme “a death sentence” for farming.

Senator James (R-OK) Inhofe published an enlightening op-ed piece in USA Today, "The bottom line is this: The American people have caught on to the significant flaws of cap-and-trade policy," Inhofe adds: “Approval has plummeted from 61% last spring to 45% last week. Given the state of the American economy, it is hardly surprising that the American public is growing restless with policies that would put more Americans out of jobs and raise the cost of energy."

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