Cap and trade boosters may regroup for another attempt later this year

By WES SANDER

Capital Press

While Senate Democrats have introduced a stripped-down energy bill because they didn’t have support for a cap and trade system, supporters may try to get a more comprehensive measure through Congress this year.

President Barack Obama, while criticized by environmentalists for not having pushed it hard enough, said this week he continues to support a price on carbon emissions, despite the concept having dwindled in popularity to the point that the latest Senate bill omits any climate-oriented proposals at all.

On July 27, Senate Majority Leader Harry Reid, D-Nev., introduced a bill that lacked both a cap and trade proposal and a renewable-energy standard. Instead it addresses energy efficiency and mitigation of the Gulf oil spill.

The bill expands the liabilities and financial burdens on oil companies, creates incentives for making homes efficient and increases conservation funding.

Meanwhile Rep. Henry Waxman — the California Democrat and energy committee chair who co-authored the bill narrowly approved by the House of Representatives last year — has said he will try to insert a cap and trade provision into a reconciliation between Senate and House bills this year.

Sen. John Kerry, who recently proposed legislation that included a scaled-down version of cap and trade, said after Reid introduced his bill that he’ll likewise continue pushing for a comprehensive bill.

Most observers have yet to give the effort much of a chance.

“The major thing would be the outcome of the election,” said Rick Krause, senior director of Congressional relations with the American Farm Bureau Federation.

If Democrats lose seats in the November elections, those voted out may feel little inhibition in pushing for unpopular climate measures, Krause said.

“I would say it probably won’t happen,” he said. “But by the same token, we’ve got an eye out. The possibility for mischief is there.”

A cap and trade system would limit the pollutants an operation could emit, but allow emitters to purchase carbon offsets to help meet those targets. An offset is a unit of carbon savings produced through emissions-reduction practices, including reduced tillage and other carbon-sequestering projects on farmland.

While many producers of orchard and row crops find relief in the fact that cap and trade seems dead for now, some in agriculture consider it a setback.

It was a disappointment to California dairy operators, who see opportunity for profit by selling power produced from methane digesters.

Cap and trade “is something we have to have,” said Michael Marsh, CEO of Western United Dairymen in the dairy-rich San Joaquin Valley. “You’ve got to be able to pay for infrastructure for these digesters.”

That’s because investment and financing depends on the promise of strong markets for renewable power and carbon offsets that a national cap and trade system would provide, Marsh said.

Marsh agrees passage of the concept appears unlikely if a reconciliation effort fails this year.

“It’s going to be tougher in the next Congress to get (a bill) out,” Marsh said.

There currently exist few ways for specialty-crop producers to capitalize on a carbon market, and growers have expressed little faith that carbon-sequestration techniques would be developed soon, despite legislative proposals to charge USDA with boosting their development.

Manuel Cunha, president of the Nisei Farmers League, says producers can’t afford more costs while air, water and labor rules have made compliance ever more expensive.

“Right now we can’t afford to hurt business any more than we’re doing,” Cunha said.

The Farm Bureau says cap and trade would increase fuel, transportation and other input costs.

But the National Farmers Union says it supports cap and trade. Although it would cost industry in the short term, studies have shown cap and trade would prove profitable in the long run.

NFU said that aside from cap and trade, a renewable energy standard of 25 percent — meaning utilities would be required to produce 25 percent of the energy they sell from non-emitting sources — could help drive the market for on-farm power.

But Reid’s proposal likewise omits that standard, and no Senate bill has proposed one greater than 15 percent.

Even if Congress doesn’t pass legislation imposing carbon caps, the Environmental Protection Agency is set to begin regulating carbon dioxide next year. A Supreme Court decision gave the agency the authority to regulate those emissions under the Clean Air Act.

EPA’s rules would come without the softening measures that legislation could offer, including renewable-energy incentives or a cap-and-trade system, observers say.

Krause of American Farm Bureau says the industry will support efforts next year to pre-empt EPA rules.

“It’s a lot easier to stop these regulations before they get going in the first place,” Krause said.