Bloomberg
Energy Measures May Go to Jobs Bill After Brown Win (Update1)
January 21, 2010, 03:17 PM EST More From Businessweek
By Jim Efstathiou Jr. and Kim Chipman
Jan. 21 (Bloomberg) -- Measures to spur green-energy jobs may end up in a new economic-stimulus bill after Republican Scott Brown’s Senate victory in Massachusetts dimmed prospects for legislation to curb carbon-dioxide emissions.
Provisions to help homeowners reduce power use and make industry more energy-efficient may be shifted out of cap-and- trade legislation that’s stalled in the Senate, said Robert Stavins, director of the Harvard Environmental Economics Program in Cambridge, Massachusetts.
“Those Democrats who may have already been nervous about a vote on climate policy are even more nervous now,” he said.
Brown, who on Jan. 19 won the Senate seat held by the late Senator Edward M. Kennedy for almost 50 years, opposes the emissions-trading program that President Barack Obama says is needed to fight global climate change. Republican opponents say the cap-and-trade legislation would boost costs and cut jobs in an economy that already has a 10 percent unemployment rate.
“A large cap-and-trade bill isn’t going to go ahead at this time,” Senator Dianne Feinstein, a California Democrat, told reporters in Washington yesterday.
Putting energy provisions into a bill to stimulate job creation instead “makes sense” because that’s the Senate’s next priority after health-care legislation, Senator Sherrod Brown, a Democrat from Ohio, said before Brown’s win.
“Everybody who’s got a job-creation idea is going to try to get on this train,” Brown said in a Jan. 15 interview, referring to a new jobs bill. “Anything that we’re thinking of doing in any energy related area that can produce jobs short- term, mid-term, long-term will be considered in this.”
House Jobs Bill
The House passed a $154 billion jobs bill before the Christmas break. The Senate was planning to take up a bigger package this year.
Some Republicans may support moves to help manufacturers make the transition to clean-energy production if the provisions aren’t too costly, said John Feehery, a Republican strategist who advised former House Speaker Dennis Hastert. The loss in Massachusetts should prompt Democrats to seek smaller-scale legislative victories.
“What Democrats are going to want to do more is get some discrete, easily understandable accomplishments that they can take back to the voters,” Feehery said in an interview. “They’re going to have to ditch climate change and push on more targeted agenda items, like energy independence and green jobs.”
Renewable-Energy Investment
The U.S. lost 85,000 jobs in December, and unemployment remains close to a 26-year high. Republicans have successfully cast the cap-and-trade bill as “as a job-killer and a tax- raiser,” Feehery said.
Climate-change legislation would penalize use of power from fossil fuels while guaranteeing long-term returns for investors in wind turbines and solar panels, said Jeffrey McDermott, the former co-head of investment banking at UBS AG who started Greentech Capital Advisors LLC in 2008 to advise and raise money for alternative-energy companies. Renewable developers in the U.S. must rely on a “patchwork” of state regulations and short-lived federal incentives, he said.
“There’s no way to spin it as positive,” McDermott said in an interview. “The failure of Congress to put in place policies which set a framework is that it’s just going to be more difficult for capital to make long-term investment decisions.”
Exelon, Nike
Chief executives officers of Exelon Corp., Nike Inc., and 81 other companies today urged Obama and lawmakers to enact climate legislation. In a letter, the group called for “strong policies and clear market signals that support the transition to a low-carbon economy and reward companies that innovate.”
The new Senate version of the jobs bill may include funding for a “cash for caulkers” program providing grants to make homes more energy efficient, said Lowell Ungar, policy director for the Washington-based Alliance to Save Energy.
“The money will run out from the recovery act and if there’s not further legislation to push these retrofits, there’s a real risk that the infrastructure we’re creating right now will wither,” Ungar said in an interview. “The people who are being trained right now to do these retrofits will no longer have jobs.”
The Obama administration credits last year’s economic stimulus bill with helping to stabilize the economy and creating 640,000 jobs, including 52,000 in clean energy.
‘Daunting’ Challenges
The cap-and-trade measure that the House of Representatives passed in June would limit emissions and establish a market in pollution allowances. Senate Majority Leader Harry Reid, a Nevada Democrat, said yesterday that Democrats “will tackle our daunting energy and climate challenges” with legislation that creates “good-paying, clean-energy jobs.” He provided no specifics.
“The election itself means the loss of one vote,” Nikki Roy, who monitors Congress for the Pew Center on Global Climate Change in Arlington, Virginia, said of Brown’s victory. “Obviously the bigger unknown is how it affects thinking by moderates. Most moderate members of the Senate were already feeling very cautious on this issue.”
Some lawmakers were describing passage of the cap-and-trade measure as unlikely this year even before Brown’s win, which gave Republicans 41 votes in the Senate and deprived Democrats of the 60-vote supermajority generally needed to pass legislation.
‘Climate-Friendly’ Measure
There won’t be enough political will left to undertake such a disputed measure after the fight over health-care legislation, Senator Byron Dorgan, a Democrat from North Dakota who recently announced his retirement, said Jan. 19 on a conference call with reporters.
“It’s my assessment that we will not do a climate bill, but that we will do an energy bill instead.” Dorgan said. “The energy bill will be climate-friendly.”
The Senate Energy Committee approved a measure last year that would require utilities to get as much as 15 percent of their power from renewable sources. That bill, which wouldn’t place a cap on greenhouse-gas emissions, hasn’t been taken up by the full Senate.
Carol Browner, Obama’s top adviser on energy and the environment, said last week that an energy and climate bill limiting emissions from power plants, factories and refineries remains a priority of the White House.
Kerry, Graham, Lieberman
Senator John Kerry, a Massachusetts Democrat who co- sponsored a climate-change bill last year, said he is beginning daily meetings with colleagues Lindsey Graham, a South Carolina Republican, and Joseph Lieberman, a Connecticut independent, to draft a compromise bill.
“The political atmosphere doesn’t reduce the urgency of dealing with pollution and energy,” Kerry said in an e-mail. “This is the single best opportunity to create jobs, reduce pollution, and stop sending billions overseas for foreign oil from countries that would do us harm.”
--With assistance from Simon Lomax in Washington. Editors: Larry Liebert,
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