Implications of Massachusetts

A few reactions to the latest election in Massachusetts (which will make no pretense of comprehensiveness).

First, Geoff Styles:

In the course of a single month, from the conclusion of the Copenhagen climate conference to yesterday's special election in Massachusetts, the anticipated global response to climate change has shifted dramatically. What had once seemed a likely scenario of coordinated, mandatory cuts in global greenhouse gas emissions suddenly looks unattainable, at least any time soon, and the whole approach to addressing climate change is in urgent need of a rethink. While much of the attention in last night's election was focused on the prospect of a 41st Senate vote to block pending health care legislation, the same dynamic almost certainly applies to cap & trade, at least along the lines of the Waxman-Markey bill passed last June by the House of Representatives.

I'm probably in a minority of those concerned about climate change who welcome the demise of the Waxman-Markey approach. As I've noted before, it made little sense to adopt a methodology designed to create a level playing field for energy technologies based on their emissions, if it was established on such an intentionally-uneven foundation of excessive free allowances handed out to favored sectors and constituencies.

I've disagreed at length and on the record with Geoff on the efficiency of the Waxman-Markey version of cap-and-trade; suffice it to say here that I'll mourn its demise more than he does, partly because I thought it was a fine bill in practice and partly because the political winds don't seem to favor a robust alternative emerging in 2010. (and I think Geoff would agree with the latter)

The other thing I'll share is the gut reaction of ag/food blogger and Massachusetts resident Parke Wilde:

... it is true the Massachusetts is about 80% liberal by national standards, and only about 20% conservative. That makes Massachusetts much more liberal than most states. But the liberals are deeply divided. One half has working class and pro-union roots in manufacturing, construction, and government service industries, which are all suffering painful economic stresses. The other half is connected to the large higher education, financial service, biomedical, and software industries.

The Democratic candidate, Attorney General Martha Coakley, is a highly educated lawyer who failed to reach out well to liberals with working class roots, who are genuinely fearful about economic conditions.

All conservative voters went to the polls yesterday, while some fraction of liberals stayed home.

As a highly educated former resident of Massachusetts with a great job, I'm probably somewhat victim to this same myopia... so perhaps one good thing that can come of this result is for that short-sightedness to fall away, for me and for others who also suffer from it.

Thumbs up on cooperation, thumbs down on substance

The Kerry-Graham NYT op ed on climate policy is a welcome sign of collaboration across the aisle, but its substance is mixed. The five main points are:

1. "We agree that climate change is real and threatens our economy and national security." [good!]
   


2. "While we invest in renewable energy sources like wind and solar, we must also take advantage of nuclear power, our single largest contributor of emissions-free power." [fine]
   


3. "Climate change legislation is an opportunity to get serious about breaking our dependence on foreign oil." [i.e. we need clean coal and offshore drilling]


4. "We cannot sacrifice another job to competitors overseas." [i.e. we need carbon tariffs]


5. "We will develop a mechanism to protect businesses — and ultimately consumers — from increases in energy prices." [good]

As a friend points out, clean coal is nice, but it won't do much to displace oil imports, since the vast majority of oil is used for transportation fuel, whereas coal is entirely used for power. (NB: this could change if CNG or coal-to-liquids ever took off in the U.S., but the former is still a Pickens pipe dream for now, and the technology for the latter has bad economics even without carbon pricing, which would make it completely untenable).

But the worst point is clearly the nearly naked defense of climate-inspired trade protectionism. Kerry-Graham claim that such tariffs will incentivize other countries to adopt environmentally friendly policies; this is the best possible outcome, but sparking a global trade war is another one, and it’s not clear to me why the latter is any less likely.

There are 42 farm senators

I know I've wanted to refer to this before, and couldn't find it, so I'm posting it now (and expect to link back to it soon and often). The question is how many farm (or if you prefer, ethanol) Senators are there? One answer is here:

As former Sen. Bob Dole of Kansas once explained to Texas oil baron T. Boone Pickens, “There are 21 farm states, and that’s 42 senators. Those senators want ethanol.” And the influence of those senators — 15 states now have ethanol production capacity of at least 200 million gallons per year —will be hard to overcome.

So 42 farm senators, at least 30 of whom have a sizable incentive to support the continuation of "the ethanol juggernaut." That is a formidable force to overcome.

Protectionism in Kerry-Boxer

Like in Waxman-Markey, the new Kerry-Boxer bill features concerning provisions which hint at carbon tariffs.

The Boxer-Kerry bill devotes a single sentence to what has become an increasingly thorny question: Should the U.S. slap carbon tariffs on imports from countries that don’t curb their own greenhouse gases, as the House climate bill did? To wit:

"SEC. 765. INTERNATIONAL TRADE. ‘‘It is the sense of the Senate that this Act will contain a trade title that will include a border measure that is consistent with our international obligations and designed to work in conjunction with provisions that allocate allowances to energy-intensive and trade-exposed industries.’’

“Border measure” seems to mean “border adjustment,” which is how the House version of the bill labels tariffs on imports from environmentally-unfriendly countries. The House bill says those tariffs have to be “consistent with international agreements;” the Senate speaks of “international obligations.” Both appear to refer to the questionable legality of carbon tariffs under World Trade Organization rules.

This is triply concerning because the House has already passed a bill with similar provisions, and Obama hasn't exactly distinguished himself as the stalwart defender of free trade.

Better messaging

Proponents of the Senate climate bill are leading with the message that most of the proceeds go to reduce the burden on consumers:

Senate Democrats will initially devote 70 percent of the pollution allowances in their new climate measure to making it easier for people to pay their energy bills, Senate Environment and Public Works Chairman Barbara Boxer said in an interview to be aired Sunday on C-SPAN.

This is also the case in Waxman-Markey, but was not clearly marketed as such; this time around the spinmeisters seem to have corrected that particular mistake.

Senate shuffle and new ag chair

As a result of the Senate committee musical chairs following Ted Kennedy's unfortunate passing, Chris Clayton reports that Blanche Lincoln will likely assume chairwomanship of the Agriculture Committee. This looks like bad news for climate legislation and any sort of agricultural trade reform.

Lincoln will likely change some dynamics in agriculture policy. She has been a staunch defender of commodity payments and resisted tighter payment caps or income eligibility requirements in the 2007-08 farm bill debate. Lincoln also likely is going to be more skeptical of climate legislation because it may offer little benefit for rice growers or producers of other southern crops. She was quoted in mid-August saying Congress should just focus on a renewable-energy bill and drop the cap-and-trade emissions plan.

Political newspapers say Lincoln already faces a tough reelection bid for 2010 and may have come across as more conservative in Arkansas to keep her seat as well.

This could hurt climate bill efforts almost as much as the temporary loss of the 60th vote.

Update: Didn't take long for her to voice her skepticism:

Just minutes after taking the gavel of the influential Senate Agriculture Committee, new chairwoman Blanche Lincoln cast even more doubt about the future of climate legislation in the Senate.

"I think it's a heavy lift for the Senate," said Lincoln. "We have a tremendous amount of work to do, having been in the hearings today."

Update 2: Joe Romm echoes an optimistic NYT quote that “the new chairwoman said she does not expect her panel to hold a markup on any contributions to the climate bill.”