CapitolWire August 2010 by Bertelsmann Foundation

CapitolWire

Inspiring People. Shaping the Future.

The Brussels Connection to Capitol Hill

WASHINGTON, DC 1101 New York Avenue, NW Suite 901 Washington, DC 20005 USA Contact: Tyson Barker Contact: Tyson E-mail: tyson.barker@bertelsmanntyson.barker@bertelsmann- foundation.org Tel: (+1) 202.384.1993 Tel: www.bertelsmann-foundation.org

BRUSSELS Résidence Palace Rue de la Loi 155 1040 Brussels, Belgium Contact: Thomas Fischer Contact: Thomas E-mail: E-mail: thomas.fischer@bertelsmannthomas.fischer@bertelsmannstiftung.de Tel: (+32 2) 280.2830 Tel: www.bertelsmann-stiftung.de/brussels www.bertelsmann-stiftung.de/brussels

CapitolWire is a joint publication of the Bertelsmann Foundation offices in Washington, DC and Brussels. It connects the European Parliament to Congressional policy and politics, and contributes to a common trans-Atlantic political culture. CapitolWire is an occasional publication that highlights issues, legislation and policymakers relevant to the European Parliament’s legislative cycle. This publication looks at the Congress from the point of view of European Parliament staffers and offers timely operational analysis.

US Climate-Change Legislation: Up In Smoke? KEY POINTS • The EU has had an Emissions Trading System in place since 2005, while only the US House of Representatives has passed cap-and-trade legislation. • A fractious Senate and approaching mid-term elections make it politically impossible for the US Congress to act on climate change this year. • The US Environmental Protection Agency (EPA) can regulate CO2 emissions through “endangerment findings”. States will also devise schemes to reduce CO2 emissions. • The Department of Energy (DOE) is enacting energy-efficient and clean-technology programs through construction and vehicle initiatives, and alternative-energy infrastructure.

US President Barack Obama’s efforts to negotiate the Copenhagen Accord at the United Nations Framework Convention on Climate Change (UNFCCC) summit last December were perceived in the US as laudable for getting the world’s major emitters to agree that emissions reductions are necessary to mitigate the adverse effects of climate change. But his commitment to implementing the terms of the agreement has thus far amounted to nothing more than wishful thinking. Sen. John McCain (Republican-Arizona) described the accord shortly after it was announced as “a nothing burger”. He later warned against expecting much action to back up the commitment. Sen. McCain’s political instinct was correct, and the future appears unlikely to herald any change.

AUGUST 2010

ABOUT THE BERTELSMANN FOUNDATION: The Bertelsmann Foundation is a private, nonpartisan operating foundation, working to promote and strengthen trans-Atlantic cooperation. Serving as a platform for open dialogue among key stakeholders, the Foundation develops practical policy recommendations on issues central to successful development of both sides of the ocean.

Failure in the US Senate

CapitolWire

The US Senate has yet to pass any climate-change legislation. Several proposals (i.e., those put forward by, Sens. Kerry/Lieberman, Sen. Bingaman, Sens. Kerry/Boxer) have surfaced in the 111th (current) Congress, but none has sufficient support for a vote. And the prospects for any Senate energy legislation are grim because time is running out: The body is in recess for August and most of September to The Connection to Capitol Hill election in allowBrussels campaigning for November’s elections. That fast-approaching any case removes anything controversial from consideration. Some Congressional Democrats and White House officials, including energy adviser Carol Browner, have said that a post-elections energy bill is possible, but even that would likely be a slimmed-down piece of legislation. Such a bill

The EPA Endangerment Finding In lieu of Congressional action, President Obama will rely on the Environmental Protection Agency (EPA) to act. A Supreme Court ruling in 2007 ruled that the Clean Air Act could include greenhouse gases, thereby giving the EPA discretion to decide if CO2 emissions endanger public health. Last year, the EPA concluded in its endangerment finding that they do. In response, Sen. Lisa Murkowski (Republican-Alaska) this year sponsored a resolution disapproving the finding, but the resolution failed when brought to a vote. The EPA has begun action on curbing CO2 emissions by, for example, implementing new greenhouse-gas rules for automobiles and large stationary sources. How quickly the EPA will move forward and how far their measures will go, however, remain uncertain. The agency is facing a number of “endangermentfinding” lawsuits from some states and industry groups. Additionally, Senate Majority Leader Harry Reid (Democrat-Nevada) is rumored to have promised Sen. Jay Rockefeller (Democrat-West Virginia), who represents a state in which coal mining is widespread, a vote on his Stationary Source Delay Act, which would suspend for two years EPA regulation of greenhouse gases from stationary

Inspiring People. Shaping the Future. could offer few clean-energy provisions (i.e., incentives for electric vehicles and home efficiency retrofits), but would primarily be a response to the oil spill in the Gulf of Mexico. With polls showing probable Democrat losses from the mid-term elections, however, prospects for any Senate action on climate change in theBRUSSELS foreseeable future are WASHINGTON, DC bad. New York Avenue, NW Résidence Palace 1101 Suite 901 Washington, DC 20005 USA Contact: Tyson Barker E-mail: tyson.barker@bertelsmannfoundation.org Tel: (+1) 202.384.1993 www.bertelsmann-foundation.org

Rue de la Loi 155 1040 Brussels, Belgium Contact: Thomas Fischer E-mail: thomas.fischer@bertelsmannstiftung.de Tel: (+32 2) 280.2830 www.bertelsmann-stiftung.de/brussels

sources. Should this pass, Congress would have more time to approve climate-change legislation, in which case it would become the author of climate regulations instead of the EPA.

p EPA Administrator Lisa Jackson testifies on Capitol Hill in response to Sen. Rockefeller’s questions about the agency’s endangerment finding.

Other US Government Actions The US Department of Energy (DOE) also has some discretion to enable cleanenergy policies. Congress allocated US$16.8 billion to the Energy Efficiency and Renewable Energy (EERE) division of the DOE through the American Recovery and Reinvestment Act of 2009 (also known as the “stimulus bill”). The funds are being used for energy-efficient projects, such as updating building technologies and developing alternative energy sources.

It is unclear if any of these actions will live up to President Obama’s commitment to the Copenhagen Accord. But without Congressional action, his pledge is likely to go unfulfilled.* * See World Resources Institute analysis on reducing greenhouse-gas emissions using existing federal authorities and state action.

In the meantime the states are forging ahead with their own plans to put a price on carbon. Ten northeastern states have already enacted cap-and-trade schemes for the utilities sector, and other states plan to follow suit.

p Sens. Kerry and Lieberman unveiled the American Power Act in May 2010, but lacked the necessary support in the Senate to bring it to a vote.

AUGUST 2010

For their part, Sens. John Kerry (Democrat-Massachusetts) and Joe Lieberman (Independent-Connecticut) have reactivated the debate on a US carbon tax by including provisions for a “border adjustment” in their American Power Act. A carbon tax could be considered in the next Congress (which convenes in January 2011), especially since the business community wants certainty on any carbon price. But thorough reviews and thoughtful debate will be necessary for a carbon-tax proposal to gain traction in the Senate.