Cantwell-Collins Bill Generates Lobbying Frenzy
Source: The New York Times
Companies and groups with deep coffers are lining up to change climate legislation emerging as an alternative proposal to cap and trade in Congress.
The growth in lobbying from well-funded players signals that the bill from Sens. Maria Cantwell (D-Wash) and Susan Collins (R-Maine) has potential to gain momentum on Capitol Hill, analysts say.
"Companies are lobbying because they think the bill has legs or they want to ensure against the possibility that it does," said Kenneth Green, an analyst at the American Enterprise Institute, a conservative think tank.
Since the two senators introduced their bill in December, more than 40 businesses and organizations announced plans to lobby on the measure via official disclosure forms filed with Congress.
That came on top of dozens of corporations already advocating on a similar "cap-and-dividend" bill introduced in the House of Representatives.
The lobby list includes a slew of natural gas companies and coal-fired utilities who say they want to toss out the Senate legislation entirely or change its key provisions. The bill creates financial difficulties for their industries or hurts regions of the country heavily reliant on coal, they say.
On the other hand, behemoths such as Exxon Mobil Corp. and the AARP are offering positive, if sometimes mixed, comments. Other companies like Duke Energy Corp. and Weyerhaeuser Co. are keeping quiet about their conversations with lawmakers.
A 'stand-alone' bill looking for 60 votes
Supporters of the measure, which include many small environmental groups, are trying to counter the weight of opposition dollars through grassroots operations after meeting in Washington, D.C., in January to coordinate advocacy efforts. They argue the bill has mass appeal because it is a simpler approach than cap-and-trade that blunts the influence of Wall Street traders and fills consumer pocketbooks.
"The fact that I'm not a lobbyist and that many of the bill's supporters are not lobbyists contributes to the appeal of this bill," said entrepreneur Peter Barnes, the creator of the cap-and-dividend concept who worked with Cantwell's office on the legislation.
A Cantwell aide said the office is "meeting with dozens of industries." The senator plans to push the bill as a stand-alone measure, despite recent meetings with Sens. John Kerry (D-Mass), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) who are working on separate global warming legislation, the aide said.
There was a "misperception" after the meeting that the senators agreed to some sort of compromise where competing legislative approaches would be merged into one legislative package, the aide said. Graham fueled speculation by saying he thought an ultimate bill likely would be a hybrid of cap and trade and cap and dividend.
The Cantwell-Collins approach essentially takes the "trade" part out of cap and trade and returns most of the revenue raised by a bill back to consumers in the form of a dividend. A typical family of four would get about $1,100 annually in payments, according to the senator's office.
The money would be raised by requiring companies extracting fossil fuels from the Earth to purchase "carbon shares" in a full auction for each ton of carbon they sell. The expectation is that those companies, such as coal-mining companies or natural gas producers, would pass on the cost to buyers and everyone else in the economy as a signal to move to cleaner sources of energy.
Cap but no trade
Cap and trade, by contrast, puts a cap on emitters throughout the economy rather than just the "upstream" producers of fossil fuels. It also would allow complex trading by requiring capped entities to buy and sell allowances to meet emission cuts.
The upstream cap in Cantwell-Collins is generating opposition from large gas producers that claim the cap penalizes them at a time of a credit crisis and limited cash flow. They say that they have little control over the price of natural gas, and that if they have to pay for carbon allowances at a time when they can't sell gas at a high price, it will create financial difficulties for the industry.
"The only way for us to deal with the additional costs in this bill is to reduce the amount of drilling for gas," said Chip Minty, a spokesman for Devon Energy Corp., the largest U.S.-based independent natural gas and oil producer.
Many natural gas companies can't raise the selling price for gas because they are bound by long-term contracts, said Lou Hayden at the American Petroleum Institute. Some of the Institute's members like the dividend part of the bill but are worried about the upstream cap, he said.
Yet the Cantwell aide said the bill addresses problems for the natural gas industry through language allowing companies in long-term contracts to modify the contracts.
The legislation also provides a grace period where companies can sell gas at a higher price -- if needed due to carbon regulations -- and use the resulting cash up to two years later to buy carbon allowances. That alleviates worries about limited cash flow with gas companies in the early years of the program, the aide said.
The aide added the office is waiting for gas industry members to provide suggested text that they said "could ensure that they could pass on the carbon share price" and not absorb the costs of purchasing allowances.
But Minty at Devon Energy said he worried that companies never would be able to recover the cost from paying for the carbon shares, despite the grace period.
Barnes said the worries are overblown considering that the carbon shares would effect a small portion of the revenues of natural gas producers.
An 'absolute daydream?'
Other large companies also are criticizing the bill. In a December interview, American Electric Power CEO Mike Morris called it an "absolute daydream." He expressed concerns that the money would never end up back in people's pockets and would somehow be used to pay for other government spending.
"Also, a cap-and-dividend approach would mean higher energy increases for residents and businesses in coal-dependent states more than those in the Northeast or on the West Coast, and the dividend likely wouldn't cover the additional costs," said Melissa McHenry, a spokeswoman for American Electric Power Co., one of the nation's largest utilities. The bill currently envisions distributing dividends to consumers without exceptions for regional differences in energy consumption.
Barnes countered that electricity prices account for only a part of the average person's energy costs. Consumers paying more for electricity in one region might be paying less for water, for example, so it's fairer to have the same dividend for everyone, he said.
And even though some large companies oppose the bill, two entities with fat lobbying wallets -- ExxonMobil and the AARP -- are saying positive things about Cantwell-Collins.
Exxon likes its "fresh approach" and price collar, placing a lid and ceiling on carbon prices, even though the company prefers a carbon tax, said company spokesman Robert Young. The collar would create certainty for businesses, Young said.
Similarly, AARP is planning to send a letter soon to Capitol Hill thanking Cantwell and Collins again for "introducing their legislation and for their leadership in the climate change debate on behalf of consumers," according to spokeswoman Mary Liz Burns. The organization is not endorsing the bill because it's not an environmental group, but believes "elderly people need to be shielded from spikes in electricity costs," Burns said.
Supporters of Cantwell-Collins, such as the Montana Environmental Information Center, are planning to push the bill "through all forms of media," according to Executive Director Jim Jensen. Barnes, the creator of the cap-and-dividend concept, said last week that proponents are writing letters and talking to members of Congress as much as possible.
The bill's backers argue that Cantwell-Collins offers a superior approach to controlling greenhouse gases than cap-and-trade bills circulating in Congress.
The cap-and-trade approach is seriously flawed because it relies on offsets, according to Barnes. Offsets allow companies to meet emission restrictions by paying for projects outside their own facilities, by say funding reforestation projects in Brazil.
A farewell to offsets
That will never force the worst emitters to clean up their act, Barnes said. The cap-and-trade program enshrined in legislation that passed the House of Representatives last year made matters worse by offering financial breaks to companies spewing a lot of greenhouse gases, he added.
There's no guarantee those companies will distribute money back to consumers, whereas a dividend will, Barnes said.
In a blog posting last week, Harvard University economist Robert Stavins offered mixed reviews of the proposal. He praised the upstream cap but said prohibiting carbon trading would reduce the efficiency of the program.
"The Senators' approach is akin to responding to a tragic airplane crash by concluding that the best way to protect consumers from air disasters in the future is simply to ban flying," Stavins wrote. He said the problems with the bill could be addressed "while maintaining its basic structure and political attraction."
Meanwhile, some environmentalists are referring to cap and dividend as "cap and divide" because they don't believe it can garner a filibuster-proof majority in the Senate or control emissions sufficiently. Other critics complain that offsets are needed to control costs in a climate regime or say the Cantwell-Collins approach doesn't provide enough money for the coal industry to develop technology to control its emissions (ClimateWire;, December 15).
To opponents who say the coal industry needs cap and trade to help it develop and technology to capture and store greenhouse gases from power stacks, Barnes said he had no problem with Congress distributing money to coal, as long as they didn't do it through a bill capping emissions.
"If senators want to go ahead and pass an energy bill and start spending on this or that technology, that's fine," Barnes said. "But keep the market mechanism that caps carbon clean and transparent. Don't muck it up with stuff that will kill it."
Next Article Previous Article