Not If, But When (Congress, global warming and K Street lobbyists)

By Margaret Kriz, National Journal
© National Journal Group Inc.
Friday, Feb. 16, 2007

Washington corporate lobbyists are debating how -- not whether -- to control greenhouse-gas emissions. After Democrats grabbed the House and Senate in last November's elections, K Street lobbyists scrambled to figure out how best to position their clients and themselves to benefit from what appears to be an unstoppable push to write global-warming legislation. "There's a mad rush to the finish line, but we haven't yet defined the finish line," said Jack Gerard, president of the American Chemistry Council.

Even ExxonMobil, a die-hard global-warming skeptic, has undergone what spokesman David Gardner describes as "an evolution." Just days before the United Nations' Intergovernmental Panel on Climate Change issued a long-awaited report [PDF] calling evidence of global warming "unequivocal," Gardner was on the phone explaining to National Journal that the oil giant has seen the light on climate change. "The science has changed," he declared, adding, "We've more crystallized our thoughts."

In the past, ExxonMobil bankrolled such groups as the Competitive Enterprise Institute and the now-defunct Global Climate Coalition, both of which attacked researchers who produced new evidence of Earth's warming or anyone who dared to call for controls on carbon dioxide emissions. (The combustion of gasoline and other fossil fuels is the prime source of greenhouse-gas emissions, the culprit in global warming.)

ExxonMobil's new thinking was on display on February 2, the day the U.N. report was unveiled. The world's largest publicly traded oil company issued a statement that, ironically, began by asserting, "ExxonMobil's position on climate change continues to be misunderstood." It then declared: "It is prudent to develop and implement strategies that address the risks [of global warming].... This includes putting policies in place that start us on a path to reduce emissions." The corporate behemoth went on to spell out how it wants policy makers to evaluate their options.

ExxonMobil is not alone in jumping aboard the climate-legislation train now starting to rev up its engine. Many business leaders were surprised by the public's growing insistence on action and by the high priority that the Democratic Congress is giving to global warming. "There are people who were not prepared for this level of activity and did not think they would need to engage on this until after the next presidential election," said energy consultant Linda Stuntz, a founding partner at the law firm Stuntz, Davis, & Staffier, deputy Energy secretary under President George H.W. Bush. Now even the most recalcitrant CEOs privately acknowledge that Congress seems certain to pass global-warming legislation within the next few years. The lobbyists for many of those companies are crisscrossing Capitol Hill in hopes of shaping whatever restrictions -- if any -- Congress votes to put on carbon dioxide emissions.

Several of the nearly one dozen global-warming bills already introduced this year would regulate all artificial sources of carbon dioxide emissions -- everything from coal-fired power plants to car tailpipes to industrial smokestacks. As a consequence, every sector of the economy has a stake in how Washington shapes its legislative response to climate change, and competing lobbying coalitions are emerging. "I expect there is going to be a cottage industry for people endorsing various positions on these bills," said Elizabeth Moler, who is head of public policy for Exelon, a Chicago-based electric company, and was deputy Energy secretary during the Clinton administration.

The economy-wide approach to carbon dioxide regulation is particularly popular within the electric industry. "We don't want to have the bull's-eye only on our forehead," said Alan Richardson, president of the American Public Power Association. The Edison Electric Institute, which on February 8 came out in favor of action to curb global warming, also favors including all parts of the economy. In fact, responsibility for U.S. carbon dioxide emissions is widespread: The utility industry accounts for 40 percent; transportation, 33 percent; manufacturing, 17 percent; residential sources, such as wood-burning stoves, 6 percent; and commercial business, 4 percent, according to the Energy Department's Energy Information Administration. The United States produces 22 percent of the world's greenhouse gases, more than any other country.

Experts disagree on how quickly Congress can finish work on climate legislation. Although many players think it could take four years to get a measure to the White House, some industry officials argue that business would be smart to cut a deal before President George W. Bush leaves office. "It seems to me we want to get at it sooner rather than later," said Edward Cohen, Honda's vice president for government and industry affairs. "There is a known political alignment right now in terms of the Congress and executive branch. In two years, you don't know what you're going to be facing."

House Speaker Nancy Pelosi, D-Calif., is also pushing for fast action. She has instructed the chairmen of the relevant House committees to report climate legislation by June 1, and she hopes to bring a bill to the House floor by July 4. Insiders say that Energy and Commerce Committee Chairman John Dingell, D-Mich., a longtime protector of the U.S. auto industry, is enlisting corporate leaders to work with him on his global-warming package.

Meanwhile, before its term ends in early summer, the Supreme Court is scheduled to rule on whether the Clean Air Act requires the Environmental Protection Agency to regulate greenhouse gases from new cars and trucks. The Bush administration opposes such regulation. But industry lobbyists predict that no matter how the high court rules, its decision will not slow -- and could speed up -- the pace of climate legislation.

Slapping controls on carbon dioxide emissions would have a huge impact on the electric industry, which must build more power plants to keep ahead of the nation's rising energy demands. Currently, coal-fired plants are the cheapest option, and more than 100 are on drawing boards across the nation. In Texas alone, TXU Energy is proposing to build 11 additional coal-fired power plants, a plan that has enraged environmental activists and triggered an unexpectedly powerful backlash.

But global-warming restrictions could make operating traditional pulverized-coal plants far more expensive, a prospect that worries Wall Street. "Investors are concerned because climate change has created a lot of uncertainty for their long-term investments," said Michael Wara, an energy lawyer in the San Francisco office of Holland & Knight.

Coal-powered utilities aren't the only businesses fretting that carbon dioxide limits could squeeze their profits. And companies aren't the only ones trying to calculate the future cost of doing business. An investor group called the Carbon Disclosure Project is pushing 2,400 corporations worldwide to assess the risks and the opportunities they face because of climate change and governmental responses to it. Early this month, the organization, which represents 284 institutional investors handling $41 trillion in assets, also demanded that the firms report their greenhouse-gas emissions to investors.

A Successful Model
Major environmental legislation hasn't been signed into law since 1990, when Congress sent the first President Bush sweeping amendments to the Clean Air Act. The package included a White House-proposed innovation to control acid rain by slashing sulfur dioxide emissions. Rather than clamp down on each electric power plant's emissions, the law set a cap on the total from all domestic utilities. The electric companies received emissions allowances, which they could buy or sell depending on how easily they could cut their own sulfur dioxide emissions. Over time, the overall cap on the pollutant was ratcheted down for a fraction of the anticipated cost. Today, that cap-and-trade program is considered to be one of the nation's most successful pollution control efforts: Between 1994 and 2005, sulfur dioxide emissions from power plants dropped 29 percent. In contrast, the amount of carbon dioxide emitted by those facilities rose 22 percent during that time.

Companies that have operated under the sulfur dioxide program say it's the model that Congress should follow in tackling global warming. "The Clean Air Act trading program has worked excellently," said Michael Morris, CEO of American Electric Power, which produces most of its electricity from coal. "It would work again [to curb global warming], if and when we get to that point." But Morris warns, "Laws that are passed without adequate discussion typically lead to incredible unintended consequences."

Although the sulfur dioxide emissions-trading program was a triumph, lobbyists who were involved in the legislative negotiations over its creation remember the fierce competition among the companies affected by the bill. These K Street veterans warn that the fight over global-warming legislation will be worse. "There's going to be an awful bloodbath over trying to figure out an economy-wide emissions-trading program," predicted one electric company lobbyist.

For one thing, although most electric utilities say that any cap-and-trade program to cut greenhouse gases should include all sorts of businesses, other sectors of the economy want no part of it. The automobile industry is split over whether to even join the global-warming debate. The Association of International Automobile Manufacturers, which includes Honda and Toyota, contends that the government should cut carbon dioxide emissions from cars by raising federal corporate average fuel economy standards. "CAFE is the way to move the needle on CO2," said Josephine Cooper, Toyota's North American group vice president for government and industry affairs. Honda's Cohen notes that it's easy to measure a car's output of greenhouse-gas emissions. "You burn a gallon of gasoline, you create 20 pounds of carbon," he said. "The relationship is inviolate."

But General Motors spokesman Greg Martin said that his company is not taking a position on global warming at this time. Neither is the Alliance of Automobile Manufacturers, which represents nine carmakers including Detroit's financially struggling Big Three.

Most automakers -- foreign and domestic -- have endorsed the Bush administration's proposal to overhaul the way that government sets federal fuel economy standards for cars. The White House wants Congress to allow the Transportation Department to institute different standards for cars of different weights. Currently, the fuel efficiency of each manufacturer's entire fleet of passenger cars must average at least 27.5 miles per gallon of gasoline. Bush's proposal would give federal regulators the power to decide whether to raise standards. Many Democrats oppose the measure, contending that it could result in no improvements in fuel efficiency -- and no reduction in carbon dioxide emissions.

Most industrial corporations have also been slow to embrace global-warming legislation of any sort. Paul Cicio, president of the Industrial Energy Consumers of America, which represents 31 large chemical or manufacturing companies, says that carbon dioxide controls would push electric companies toward building power plants that burn natural gas rather than coal. The increased demand for natural gas could cause its already high cost to skyrocket. That would hit the members of Cicio's association in the wallet because natural gas is a key component of many chemical and industrial processes. In Cicio's view, lawmakers should forget about directly cutting greenhouse-gas emissions and instead boost the availability of low-carbon sources of energy by expanding natural-gas development on federal lands, encouraging nuclear power, and promoting technologies to convert coal into a cleaner-burning gas.

The American Chemistry Council, whose membership overlaps that of Cicio's organization, takes a slightly different approach. Council President Gerard says that natural-gas policies should be included in the discussion of legislative responses to global warming. "A carbon cap-and-trade program is a very narrow part of the broader energy debate for a comprehensive energy policy," said Gerard, who previously headed the National Mining Association.

The mining association, which includes coal producers, is publicly taking a wait-and-see attitude, despite being urged by coal-state lawmakers to help negotiate global-warming legislation. "This is not going to be a one-year issue," says association spokesman Luke Popovich. "Let others organize themselves around one specific issue, and raise a lot of noise. We're just waiting to see how this shakes out before we take any concerted effort."

However, at least some of the association's members are preparing for the rush to write global-warming legislation. In December, Peabody Energy announced the hiring of Christopher Leahy to head its Washington office. Leahy will have a direct line to the House Energy and Commerce Committee, thanks to his having served as counsel and policy coordinator for the panel's ranking Republican, Joe Barton of Texas.

Divided They Stand
The lobbying battlefield has changed substantially since the 1990 rewrite of the Clean Air Act. Even trade associations within a particular industry can't present a united front on global warming, which promises to be the biggest environmental issue of the 21st century, because they are anything but unified. As a result, many of the trade associations that companies have traditionally relied upon to represent their interests in Washington are finding it hard to provide bold leadership on the question of what -- if anything -- Congress should do about climate change. "It's very hard for a trade association to do anything other than appeal to the lowest common denominator," one utility industry lobbyist observed.

Within the American Petroleum Institute, BP wants the U.S. government to control carbon dioxide emissions, but ExxonMobil has been slower to acknowledge the human role in climate change. "Our members are competitive with each other. And they're going to have different ways of addressing this," said Lou Hayden, senior policy analyst at the American Petroleum Institute. "Our job as an industry group is to find where we can be engaged." Meanwhile, the National Association of Manufacturers and the U.S. Chamber of Commerce say they want to be principal players in developing global-warming legislation, but their members report that the groups are too fractured to champion any major initiatives.

The trade associations lost considerable muscle on global warming when some of their members quietly began joining forces with the Pew Center on Global Climate Change and other progressive groups. While their trade groups continued to question whether greenhouse gases were dangerously harming the Earth, 42 key companies -- including Hewlett-Packard, IBM, Lockheed Martin, and Toyota -- joined Pew's Business Environmental Leadership Council. The council accepts global warming as scientifically proven and favors market-based solutions to cut greenhouse-gas emissions. "If you look at our 42 members, you've covered all the possible trade associations," said Eileen Claussen, president of the Pew Center on Global Climate Change. "The whole objective here was to split the industry so you could get people who were progressive to begin to do something" to address global warming. "Moderates -- Republicans and Democrats [in Congress] -- are so happy to see business support for meaningful proposals," she added.

The Pew Center and the World Resources Institute were instrumental in getting 10 CEOs and four environmental organizations to join forces in calling for fast approval of global-warming legislation. The new group, the U.S. Climate Action Partnership, covers a wide swath of American business: Alcoa, BP, Caterpillar, Duke Energy, DuPont, FPL Group, General Electric, Lehman Brothers, PG&E, and PNM Resources. In announcing creation of the organization on January 22, the companies declined to throw their weight behind a specific bill. Insiders say that the partnership is expected to add members, including Siemens.

Another lobbying group, the National Commission on Energy Policy, is revising its 2004 proposals to curb global-warming pollution. The group's earlier report was the model for legislation being championed by the Senate Energy and Natural Resources Committee's new chairman, Democrat Jeff Bingaman of New Mexico. The commission includes representatives of Exelon and the United Steelworkers of America, as well as an impressive bipartisan list of former government officials.

Some trade associations, fearing that global-warming legislation is moving ahead without their input, are scurrying to catch up. When the Edison Electric Institute held its annual CEO meeting in January, several utility industry officials pushed the group to endorse something more aggressive than voluntary curbs on greenhouse-gas emissions. In the past, EEI, which represents the nation's investor-owned utilities, sided with the Bush administration in opposing mandatory reductions in carbon dioxide emissions. But in early February, the EEI's executive committee agreed to back "federal action or legislation to reduce greenhouse-gas emissions." The group's change of heart is due in part to its chairman, James Rogers, Duke Energy's CEO and an outspoken supporter of federal controls on carbon dioxide emissions.

But the continuing tensions within EEI flared up in January, when MidAmerican Energy threatened to withdraw from the organization to protest the global-warming activism of Rogers and EEI Vice Chairman Jeff Sterba, CEO of PNM Resources. Both Rogers and Sterba are part of the U.S. Climate Action Partnership. Old bulls within the trade group have stepped in to try to resolve the conflict.

EEI isn't the only utility group getting religion on global warming. Days before Edison Electric stepped forward, the Electric Power Supply Association, which represents a third of U.S. power generation, announced that it is supporting federal caps on greenhouse-gas emissions. The association described its move as part of "a growing trend in energy producers and suppliers bracing for expected federal mandates."

The American Public Power Association, which represents community-owned utilities, is considering a similar step. APPA's Richardson described his members as "almost all there in terms of being past the stage of denial" on global warming. Predicting that climate legislation will pass, Richardson added, "If we're not there trying to offer some positive recommendations, then we're not doing what we need to do to protect our consumers." The National Rural Electric Cooperative Association, whose members are heavy coal users, is scheduled to take up global warming at its March meeting. Association officials say they will seek a seat at the table as global-warming legislation is drafted.

Multibillion-Dollar Decision
The real hand-to-hand combat on legislation is likely to involve splinter lobbying groups, some of which were organized a few years ago to handle other environmental issues and now are moving into the global-warming arena. Lobbyists for these combatants will be instrumental in deciding who wins and loses if climate legislation changes how America does business.

If Congress embraces a cap-and-trade bill, a multibillion-dollar moment will come when lawmakers decide how to parcel out the pollution allowances. Under the Clean Air Act, sulfur dioxide allowances were given free to utilities and were based on their past emissions. Electric companies that are big coal users want the same system to apply to allowances on carbon dioxide emissions.

But utilities that have invested in cleaner technologies say that the allowances should be handed out or auctioned off based on each company's electricity output. That approach would be expensive for coal-fired power plant owners because they would have to buy credits to continue operating. The electric companies that rely primarily on hydroelectric, nuclear, or wind power would enjoy a financial windfall. Natural-gas plants, which emit less carbon dioxide than coal-powered plants do, would also fare well.

Little wonder, then, that coal-dependent power companies are joining forces -- and sometimes linking up with more than one group -- to protect their interests. In late January, for example, representatives of American Electric Power, DTE Energy, MidAmerican, Southern Company, and TXU Energy met in Washington to discuss working together on climate legislation.

Another group, Generators for Clean Air, which was formed to push Bush's unsuccessful "Clear Skies" proposal, has now taken on global-warming lobbying duties. That organization represents seven companies that rely heavily on coal: Allegheny Energy, American Electric Power, DTE Energy, Duke, PNM Resources, Xcel Energy, and Wisconsin Energy. Although they oppose regulating carbon dioxide emissions, these power companies want to cut themselves the best possible deal if such pollution is going to be curbed.

The Electric Reliability Coordinating Council, which was organized to lobby on EPA's regulations governing expansion of coal-fired power plants, is also adding global warming to its issue agenda. That group consists of Duke, Progress Energy, SRP, Southern Cmpany, and TXU Energy.

Seven utilities that are far less dependent on coal-fired generation belong to the Clean Energy Group, which backed global-warming legislation introduced in January by Sen. Dianne Feinstein, D-Calif. The organization has also endorsed legislation sponsored by Sen. Thomas Carper, D-Del., to control power-plant emissions of carbon dioxide along with those of sulfur dioxide, nitrogen oxides, and mercury. The Clean Energy Group, which is expanding its membership as the push for global-warming legislation intensifies, comprises Avista, Calpine, Entergy, Exelon, FPL Group, PG&E, and Public Service Enterprise Group.

A Carbon Tax?
Last April, with Republicans in control of Congress, the Senate Energy and Natural Resources Committee hosted a climate-change conference featuring 29 speakers representing a cross section of companies, trade associations, environmental groups, and other interested parties. The session provided a barometer of public and industry sentiment at the time: Although the majority of the speakers said that global warming was real, many contended that government action was unnecessary. Back then, the GOP gatekeepers who controlled the flow of legislation agreed with those in industry who warned that any serious governmental attempt to slow or reverse global warming through mandatory curbs would bankrupt the U.S. economy.

But the winds have shifted. The Energy Information Administration has concluded that Bingaman's modest global-warming bill would cause little or no economic harm. And early this month, former Federal Reserve Board Chairman Paul Volcker, speaking in Egypt, warned the U.S. Chamber of Commerce that if the United States does not control greenhouse gases, "you can be sure that the economy will go down the drain in the next 30 years."

A carbon dioxide cap-and-trade program isn't the only global-warming option kicking around on Capitol Hill. Sen. Norm Coleman, R-Minn., wants to require electric companies to produce increasing amounts of their power from nuclear, wind, or other carbon-free sources. Sen. Chuck Hagel, R-Neb., opposes curbing carbon dioxide through a cap-and-trade program and is drafting an alternative, his staff says. Meanwhile, two Democratic presidential hopefuls -- Sens. Hillary Rodham Clinton of New York and Barack Obama of Illinois -- have become co-sponsors of the global-warming bill championed by Sen. Joe Lieberman, ID-Conn., and Sen. John McCain, R-Ariz., who is seeking the Republican presidential nomination.

Some industry officials are quietly mulling whether the time is ripe for a carbon tax, which would nudge companies and consumers toward cleaner energy sources and conservation. More than one utility official has privately suggested that an economy-wide carbon tax would be less cumbersome and more transparent than a similarly broad cap-and-trade program. "We would be happy to see either a carbon tax, which we don't think is politically feasible, or a cap-and-trade bill," said Exelon's Moler. Added APPA's Richardson, "Economists love the idea of a carbon tax, but politicians say no. Too many members of Congress have taken a 'no new taxes' pledge." However, half of the 40 Democratic lawmakers who participated in National Journal's February 3 Congressional Insiders poll [PDF] said that "a carbon tax" is among the remedies they could possibly support to reduce global warming. Just 3 percent of 31 Republican lawmakers agreed.

Whatever form global-warming legislation takes, U.S. companies and their lobbyists are quickly lining up on Capitol Hill to make sure that lawmakers understand the business consequences of the various approaches. "There's a fear of being victimized by someone else's bill," energy consultant Stuntz said.

Even the CEOs most reluctant to get involved in the jockeying over global-warming legislation know that their companies' long-term success could hinge on which proposal is first to the finish line. These executives crave certainty: They want to know the regulatory climate they'll be operating in five, 10, 15 years down the road. So they hope that Congress will pass the least intrusive global-warming legislation, and then be done with the topic.

"They want something," energy lawyer Wara said, "that is green enough to stick."

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Take the term global warming out, and this whole thing is just legislation to further stuck us as spoon fed couch potatoes who should know no better and to be demoralized for the foreseable future.

There is nothing wrong with pumping CO2 in the air and heat as it actualy activates global circulation, just like jogging heats up a runner for a healthy and well circulated body. This in fact would aid, in a sort of sling shot and sweat like effect, cool the planet. Yes, it might cause some accute irregularities, but clean heating of the planet is good for it. Cut off the heat suddenly and it will indeed sling shoot and freeze to near death and sickness.

We have in power wizard and apprentice sorcerers who know jack crap about what they do and their evil hearts will reflect the evil result and they will all perish just as quickly as the rest of us would, because they do not have the dynamics in mind. The recent slow down in population growth presage a catastrophic depopulation and misery already... but hey, a stupid "private freeper" need not the attention according to these mainstream fools.

It's an image of the whole "security" "zero-tolerance" "soccer mum" right-left liberal alliance mantra of over domestication of the American citizen. It's fine for the nuts in Arabia, but not here, we're not backwards and we need not be treated into equalitarian lowest animal "human" denominator backwardness so that some pompous idiotic lawyer can call himself scientist to a bunch of happless people who now are dumned down, have no clue, and bow over their Devil "information welfare" TV lazily and all to complacent and complicit with the set up, tempted thereof by the evil false prophets running the corridors of accademia, politics and court rooms.

Global Warmin is not going to kill us, it's them who are killing us as we are speaking here. Period.

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