WASHINGTON, April 13 (UPI) -- The Senate Committee on Energy and Natural Resources held a full-day conference last week on climate change and heard testimony from utilities, big business and advocacy groups about the design and implementation of possible mandatory cap-and-trade programs. But state and regional governments might beat them to the punch in the implementation of such regulations.
California Gov. Arnold Schwarzenegger announced his support Tuesday of a statewide mandatory cap-and-trade program that aims to cut all greenhouse gas emissions by 80 percent by 2050, an aggressive goal that would put California ahead of even signatories to the Kyoto Protocol on global warming, which the United States opposes. More than a dozen bills have been introduced in the state legislature that would support various measures in the proposed program.
"We know that we can't reach targets to reduce greenhouse gases unless we measure our progress. So let's work together to create a mandatory reporting system for our carbon emissions," Schwarzenegger said. "We know that we can't reduce emissions unless we have market-based solutions, like trading mechanisms, in addition to our regulatory solutions.
"So let's work together to create the world's best market-based system to limit and to slash emissions."
Schwarzenegger's support of such a program runs contrary to the Bush administration's position. The president has emphasized the need for cap-and-trade programs but wants it to be voluntary. Other Republicans, like Sen. John McCain, R-Ariz., are calling for a mandatory cap.
California has steadily moved toward tighter regulations on greenhouse gas emissions; the state's emissions standards for vehicles are the most stringent in the nation and the Clear Skies Initiative enacted in 2003 seeks to reduce nitrous oxide by 6 percent by 2020.
Cap-and-trade initiatives reflect a market-based solution to control the emission of greenhouse gases through caps on how much pollution is emitted and the setting up of a trading market for allowances that help participants meet standards.
The European Union began a trading system following the ratification of the Kyoto Protocol and U.S. companies operating in Europe must comply with Kyoto regulations. The only U.S. voluntary program that deals in emission allowance trading is the Chicago Climate Exchange.
In March, Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York and Vermont announced a model set of regulations to establish the regional emissions trading system for the Northeast to begin in 2009. The Regional Greenhouse Gas Initiative, started by New York Gov. George Pataki, has been developing this model based on work begun in 2003.
There is pronounced resistance to the California plan from big business and oil companies in particular. Chevron, Texas Industries, and the California Chamber of Commerce oppose many of the measures that would impose mandatory caps on emissions in the state.
But many companies, which are not already acting in compliance with EU regulations, supported a national mandatory cap-and-trade program at the April 4 Senate conference, favoring a national standard rather than state-by-state piecemeal legislation.
Energy Committee leadership, including Chairman Pete Domenici, R-N.M., and ranking member Jeff Bingaman, D-N.M., posed several questions to utilities, energy companies and retailers in a white paper following a failed amendment to the Energy Policy Act 2005. The senators asked who should be regulated, where regulation should apply, should allowances be subsidized, and what would be the criteria for offsetting startup costs for an allowance market. They also asked for testimony on the ability of a U.S. cap-and-trade system to trade with other systems around the world.
Response from big business was mostly favorable to the setting up of a cap-and-trade program, though there was much difference over the specifics.
Shell, General Electric, large U.S. utilities Exelon, Duke Energy, Southern Company, and Wal-Mart all testified to the who, where and how of regulation. With the exception of Southern Company and a few others that stood out against a mandatory program, the energy giants came out in favor of mandatory standards. Duke and Exelon said they favored the regulation of upstream activities. Almost all the companies that testified, including Wal-Mart, acknowledged the need to act on climate change. GE's spokesman said at the conference that the company wants to see congressional action now.
But with immigration and lobby reform looming large and another week out of session, Congress seems far from acting.
Sen. Diane Feinstein, D-Calif, has drafted a climate change bill, the Strong Economy and Climate Protection Act, which endeavors to cut greenhouse gas emissions, support low-carbon technologies and regulate downstream activities. But as far as using the results of the conference, a bill seems distant.
A spokesman for the Senate Energy Committee said the next step is to take what was gained in the conference and the feedback process and craft a bill, and that "there is no timeline, and no decisions have been made beyond an understanding that bipartisan committee staffs will continue to work together on climate policy and possible new legislation."
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