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‘Cap-and-Trade’ Emissions Bill Faces Test in Congress

June 25, 2009 at 6:10 PM EDT
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As early as Friday, the U.S. House of Representatives may vote on landmark climate legislation that would establish a "cap-and-trade" system for carbon emissions. Judy Woodruff talks to analysts about the measure's pros and cons.

U.S. PRESIDENT BARACK OBAMA: The nation that leads in the creation of a clean-energy economy will be the nation that leads the 21st-century global economy.

JUDY WOODRUFF: The president chose the Rose Garden on a scorching Washington summer afternoon to press for passage of landmark climate legislation.

BARACK OBAMA: There’s no longer a debate about whether carbon pollution is placing our planet in jeopardy. It’s happening. And there’s no longer a question about whether the jobs and industries of the 21st century will be centered around clean, renewable industry. The only question is, which country will create these jobs and these industries? And I want that answer to be the United States of America.

CONGRESSMAN: Madam Speaker, I rise today in strong support of the American Clean Energy and Security Act.

JUDY WOODRUFF: Democrats have spent weeks cajoling skeptical moderates and conservatives within their own ranks to support the bill. There has been much horse-trading as a measure was fashioned that could garner support.

The president acknowledged the political sensitivity of the bill in his remarks.

BARACK OBAMA: I know this is going to be a close vote, in part because the misinformation that’s out there that suggests there is somehow a contradiction between investing in clean energy and our economic growth.

JUDY WOODRUFF: The 1,201-page measure may come to a vote tomorrow. It has as its centerpiece a so-called cap-and-trade system for carbon emissions that are the root cause of global warming. It would establish a market for the buying and selling of permits to pollute.

The bill calls for reducing greenhouse gas emissions by 17 percent over the next decade and by 83 percent by 2050. It would mandate power companies produce at least 12 percent of their electricity from renewable sources like wind and solar by 2020. And the bill would limit emissions from industrial polluters, but exempt agriculture from caps.

The senior Republican in the House, John Boehner, said Democrats don’t have the votes for passage, and he blasted the bill in remarks this morning on Capitol Hill.

REP. JOHN BOEHNER, R-Ohio, House minority leader: When it comes to energy, the Washington Democrats, I think, are poised to make matters worse by imposing a job-killing energy tax, courtesy of Speaker Pelosi.

This is going to force small businesses and their workers and families to pay more for electricity, gasoline, and other products that are made in America that have a high energy content. This bill will also cost 2.3 million to 2.7 million Americans their jobs.

JUDY WOODRUFF: The speaker of the House said the bill would create, not eliminate, jobs, and she pointed to a Congressional Budget Office analysis that cited additional benefits.

REP. NANCY PELOSI, D-Calif., speaker of the House: What you should see is what the CBO put out about how lower-income people will benefit from this bill. They will not have any increase in their costs. So I am very proud of the bill; I think it takes us in the direction we want to go.

JUDY WOODRUFF: House Democrats are aiming to pass the bill tomorrow before they adjourn for the Fourth of July recess.

Weighing bill pros and cons

Karen Harbert
U.S. Chamber of Commerce
We want to have a cleaner environment, but we also want to have a healthy economy. And I'm afraid that this legislation will make it more expensive for businesses to do business here at home.

JUDY WOODRUFF: Before the House begins its formal debate, we have our own about the merits of this bill. It comes from Karen Harbert, president and CEO of the Institute for 21st Century Energy at the U.S. Chamber of Commerce.

And Daniel Weiss, director of climate strategy at the Center for American Progress, he has worked for a number of environmental groups.

Thank you both for being with us. And, Dan Weiss...

DANIEL WEISS, Center for American Progress: Thank you for having me.

JUDY WOODRUFF: ... I'm going start with you first. You think this is a good bill. In brief, why?

DANIEL WEISS: This bill is about two big things: first, shifting investments into clean-energy technologies of the future, wind and solar power and energy efficiency; second, it's about saving consumers money.

EPA just came out with a study earlier this week that said it would save the average household about $84 in utility bills every year, and so it's going to create jobs, and save people money, and, by the way, fight pollution.

JUDY WOODRUFF: Karen Harbert, you point out that you and the chamber want cleaner energy, but this is the wrong way to do it.

KAREN HARBERT, U.S. Chamber of Commerce: Well, we do think it's the wrong way to do it. We want to have a cleaner environment, but we also want to have a healthy economy.

And I'm afraid that this legislation will make it more expensive for businesses to do business here at home. It will make them less competitive overseas. And that's not really smart policy, and particularly not at this economic juncture in our...

The issue of cost

Daniel Weiss
Center for American Progress
The Congressional Budget Office and EPA said the cost is going to be small overall, about the price of a postage stamp for overall products costs. And for electricity, the average consumer is going to save money.

JUDY WOODRUFF: Why do you think it's going to cost businesses more? The president today was arguing that ultimately Americans are going to pay less or, in the short term, Americans are going to pay less for energy.

KAREN HARBERT: Well, the reason the bill is 1,200 pages and growing as we speak is because it's very complex. And they're proposing a number of offsets to industries that are going to bear more costs. And if they're going to be bearing more costs, they're going to pass those costs onto the consumer.

American business is not in the business of philanthropy, and so they're going to have to have somebody pay for these things, so it's going to be the consumer and the taxpayer.

JUDY WOODRUFF: The consumer is the one who's going to pay the bill?

DANIEL WEISS: Well, I appreciate Karen's arguments, but the Congressional Budget Office and EPA said the cost is going to be small overall, about the price of a postage stamp for overall products costs. And for electricity, the average consumer is going to save money. So I'm going to listen to the CBO and EPA and their independent analyses of what this bill will do.

Nobel Prize-winning economist Paul Krugman said that what this will do is this will actually jump-start our economy and help get the recovery going because it will stimulate investments in new industries.

JUDY WOODRUFF: How do you know that's wrong?

KAREN HARBERT: I don't know that mandates stimulate anything. Mandates are mandates to change behavior, and they're going to bring up costs for the business community to actually operate. If energy is going to be more expensive and products are going to be more expensive, that is, frankly, a cost that the consumer is going to bear.

So the cost of the postage stamp, though, is interesting. The Congressional Budget Office said, We didn't take into account what was going to happen after 2020.

2020 is when all the allocations aren't free any longer and there's real costs, so I'd like the CBO to actually do an analysis of the full bill and take into account some of the job losses that are going to go overseas.

DANIEL WEISS: Well, it's important to note, they also didn't take into account the savings from reducing the threat of global warming: fewer droughts, fewer floods, less smog, less tropical diseases. None of that's included.

Nor does it include energy efficiency. So the number is a conservative, cautious one that doesn't include many of the benefits of this bill.

JUDY WOODRUFF: And, in other words, there are other savings in this bill that aren't even...

DANIEL WEISS: That's right, that no one calculated.

How cap and trade would work

Karen Harbert
U.S. Chamber of Commerce
It's a very simple mechanism; that is without a doubt. But I don't understand why that takes 1,200 or 1,400 pages to explain it to the American public.

JUDY WOODRUFF: Let's talk just briefly about cap and trade. Most people still don't exactly understand how it would work. Explain how it would work and why you think it's positive.

DANIEL WEISS: A cap-and-trade system is a tried-and-true mechanism that we use right now to control the pollution that causes acid rain. What it does is, it puts a limit on pollution, and everybody has to have a permit for every ton of pollution they emit. The less you emit, the fewer permits you have to buy, and the more money you save. The more you emit, the more permits you have to have.

KAREN HARBERT: It's a very simple mechanism; that is without a doubt. But I don't understand why that takes 1,200 or 1,400 pages to explain it to the American public.

The American public, 25 percent of them understand what cap and trade is; 75 percent don't.

DANIEL WEISS: Well, you know, actually, Karen, there was just...

KAREN HARBERT: Now, this is an American issue.

DANIEL WEISS: Sorry. Sorry. Go ahead.

JUDY WOODRUFF: Let's let her finish.

KAREN HARBERT: And so I really do think that we shouldn't be approaching this in such a way that the American public doesn't have a chance to really get into understanding the debate. It's going to come to the floor tomorrow. We're only going to see the bill tonight. It's very complex. Let's have a more national discussion about this.

JUDY WOODRUFF: But is your disagreement that people don't understand it or that you think the way it works is not the way that will serve your interest, the interests of members of the Chamber of Commerce who you represent?

KAREN HARBERT: Well, quite frankly, we've seen it operate in Europe, and it caused price increases in Europe, it caused job-shedding in Europe, and we still haven't seen any environmental benefit from that. In fact, CO-2 has gone up in Europe.

So we have a living, breathing example right across the Atlantic Ocean. We should learn from that. We should do this smartly. It's not that we shouldn't do something; we just need to do it more smartly.

JUDY WOODRUFF: Dan Weiss, we heard the president say that this is going to create jobs. How can you be certain that it will do that?

DANIEL WEISS: Well, we did an economic model, done by the University of Massachusetts, that factored in all the provisions in this bill and calculated it will create at least 1.7 million new jobs. And these are jobs in things like manufacturing of steel, the construction industry, people going to work putting in new windows. These are jobs for the most part that can't be outsourced.

And, Karen, you'll be pleased to know that people are starting to catch on to cap and trade. The Washington Post just had a poll today that said more than half the people in the country support cap and trade as a way to reduce global warming pollution and about 75 percent support action now. So you'll be pleased to know the American people are catching on.

KAREN HARBERT: I hope that they're brought into this debate so that they can weigh in rather than at midnight tonight.

Effects on the U.S. economy

Daniel Weiss
Center for American Progress
The country that controls the clean-energy technologies of the future are going to be the ones that dominate the world economy. We're behind....We need to catch up. And this bill will launch the investments that will do that.

JUDY WOODRUFF: What about the jobs question, though, about whether jobs will be created and, if so, how many?

KAREN HARBERT: You know, there are as many analyses of this bill as there are flavors of ice cream. The National Black Chamber of Commerce also did an analysis and ran an economic model, and its conclusion was, after you take into account the green jobs that it may create, we're actually going to lose between 2.3 million and 2.7 million jobs.

So I think your question is a good one. How do we know? And what is the right answer? We need CBO and others to do a thorough economic analysis of whatever this bill is going to look like tonight.

JUDY WOODRUFF: Just quickly, Karen Harbert, the president also said that this legislation provides assistance to businesses and families to make the transition to cleaner energy. Do you buy that?

KAREN HARBERT: You know, I'm not sure that's good news that right now what we're proposing is that it's going to be -- the costs of complying with this regulation are going to be so high that now the taxpayer has to pay American business to stay in business. I'm not sure that really makes sense.

Why is the taxpayer paying American business to stay competitive? So it means that the regulatory scheme is too onerous and too expensive to just stay in business.

JUDY WOODRUFF: What about that argument?

DANIEL WEISS: Well, we've used this system before to reduce the sulfur emissions that cause acid rain, and it came in at one-quarter of the price that EPA predicted, not to mention the even more higher price that the utility industry predicted.

I don't know what she's talking about with taxes and people paying business and all that sort of thing.

What this bill does is, it provides a smooth economic transition for companies and families to move into a clean-energy future. As the president said, the country that controls the clean-energy technologies of the future are going to be the ones that dominate the world economy.

We're behind. We've spent eight years doing nothing. Germany leads in solar energy; China's going to be leading in wind. We need to catch up. And this bill will launch the investments that will do that.

KAREN HARBERT: The American economy is actually number one in wind. We produce more wind than any other country in the world, and I hope that continues to grow.

But when you take wind and solar together in this country, they provide 1.3 percent of the nation's electricity. So we need to approach this thoughtfully, constructively, and don't rush it so that we bankrupt our economy.

JUDY WOODRUFF: Very quickly to both of you, how do you see this coming out tomorrow, Karen Harbert? You just said there will be a vote. And what?

KAREN HARBERT: I wish my crystal ball was clear. I don't know how it's going to come out, but assuming that it passes, the real debate is going to happen in the Senate that looks at these things very differently. And so we will see.


DANIEL WEISS: I think the vote's going to be very close. Then we're going to go on to the Senate. And fortunately, a lot of the ways that they worked out problems in the House are going to be to the benefit of the same senators, senators have the same interest that the congressmen have, like Virginia, Indiana, Ohio. Some of those solutions will be attractive to the senators, as well.

JUDY WOODRUFF: Dan Weiss, Karen Harbert, I thank you both.


DANIEL WEISS: Thank you for having me.