June 1 , 2002
A Changing U.S. Climate
thereby making investments in cleaner technologies more valuable in the short term; and Encouraging companies operating in carbon-constrained-and mostly deregulated-states to push for federal regulation, while rate regulators in states without carbon constraints (which are largely regulated states) may be increasingly willing to accept the costs of carbon constraints, which can be passed on to ratepayers.
State measures to address climate have not, of course, gone unnoticed by policy-makers on Capitol Hill. As Alexandra Teitz, minority counsel at the House Committee on Government Reform, noted at SEI's roundtable, there is a history of state policies acting as catalysts for federal legislation, serving as policy testing grounds for legislators. But perhaps more important, Teitz added, state action creates a more favorable political climate for action at the federal level.
In the case of climate-change policy, it is too soon to tell if the state actions will prompt federal measures. The Bush administration recently announced its intention to push its "Clear Skies" proposal-addressing the power sector's emissions of SOx, NOx and mercury-through Congress early this year. The proposal does not include limits on GHG emissions. 9 The chairman of the Senate Environment and Public Works Committee, Sen. James Inhofe, R-Okla., has committed to working with the president to pass Clear Skies and has been one of the harshest critics of climate-change legislation. 10 Speaking at the SEI roundtable, John Shanahan, majority council on the Environment and Public Works Committee and representative for Sen. Inhofe, warned that "those who say the science is behind this are misleading us."
At the same time, two bipartisan bills-the Carper-Chafee-Gregg bill and another bill sponsored by Sens. Jim Jeffords, I-Vt., and Susan Collins, R-Me.-would impose limits on the power sector's emissions of carbon in addition to the other three pollutants. Meanwhile, Sens. John McCain, R-Ariz., and Joseph Lieberman, D-Conn., have vowed to reintroduce their bill, the Climate Stewardship Act (S.139), in the new term (following its 43-55 defeat last year). 11 That bill targets all industries-not just the power sector-and would establish a cap-and-trade system for the nation's largest emitters. Finally, Sen. Chuck Hagel, R-Neb., intends to introduce an additional proposal in early 2005, and he conferred on the subject with British Prime Minister Tony Blair last December. 12
At this time there is only speculation as to the second-term agenda of the Bush administration with respect to climate change issues. Most bets are that the administration intends to continue emphasizing the development of technologies and voluntary actions to cut emissions, and to reject the regulation of carbon and any international commitments to cut emissions.
But it is worth noting that Jeffrey Holmstead, EPA assistant administrator for air and radiation, told a coal industry conference last year that "there in some point in the future will be a carbon-constrained world," and that uncertainty regarding government policy on GHGs has "got to be frustrating for business people who are trying to anticipate" the future regulatory landscape. Depending on the degree of interest from industry, which appears to be increasing for the reasons cited earlier, pressure on the administration to take