Fourteen Democratic Senators Stick Up For Coal
Fourteen Democratic Senators Stick Up For Coal
Today, fourteen Democratic senators, led by Sen. Tom Harkin (D-IA), affirmed their allegiance to the profits of polluting industry at the expense of the health and jobs of their constituents. In a letter to Senate leaders, a bloc of senators with powerful coal interests in their states called for “fair emissions allowances in climate change legislation.” Their definition of “fair,” unfortunately, turns out to be full taxpayer subsidies for global warming polluters. They call for the free allocation of pollution permits to electric utilities to be distributed “fully based on emissions“:
We urge you to ensure that emission allowances allocated to the electricity sector – and thus, electricity consumers — be fully based on emissions as the appropriate and equitable way to provide transition assistance in a greenhouse gas-regulated economy.
The signatories on the letter defending coal-heavy polluters are Senators Tom Harkin (D-IA), Al Franken (D-MN), Roland Burris (D-IL), Byron Dorgan (D-ND), Herb Kohl (D-WI), Russell Feingold (D-WI), Kent Conrad (D-ND), Michael Bennet (D-CO), Amy Klobuchar (D-MN), Mark Udall (D-CO), Robert Byrd (D-WV), Carl Levin (D-MI), Debbie Stabenow (D-MI) and Sherrod Brown (D-OH).
Their demand is a basic violation of a core principle of environmental economics — that companies should pay based on their pollution. The transition-period formula in the House bill, Waxman-Markey, and the current Senate legislation, Kerry-Boxer, at least distributes the free permits based 50 percent on electricity production. This formula was negotiated with the U.S. Climate Action Partnership and has received the endorsement of the Edison Electric Institute, the largest lobbying organization for the nation’s utilities. In contrast, President Barack Obama called for a full auction of pollution permits to avoid rewarding polluters at the taxpayers’ expense, instead dedicating the revenues to creating jobs, lowering taxes on the middle class, and building a clean energy economy.
The argument that the most “fair and effective,” “appropriate and equitable” way to help the constituents of their states is to increase subsidies to coal-powered utilities is frankly absurd.
Read the letter:
November 12, 2009
Dear Senators Reid, Boxer, Baucus and Kerry,
As the Senate formulates and debates energy and climate change legislation, it is clear that revamping our energy systems with alternative energy resources and technologies will be fundamental to our strategy for achieving energy security and reducing greenhouse gas emissions. A transition of this magnitude will take years to accomplish and will incorporate major changes to the way we produce and use energy. Both the House-passed “American Clean Energy and Security Act” (H.R. 2454) and the recently introduced “Clean Energy Jobs and American Power Act” (S. 1733) recognize the importance of helping individuals and firms by alleviating potential financial impacts as this transition takes place. This assistance, in the form of the allocation of greenhouse gas emission allowances, is an important tool for protecting consumers and businesses as we move to adopt new energy systems and decrease greenhouse gas emissions. To be fair and effective, any legislation must equitably allocate these allowances to individuals and across states and regions and economic sectors.
The House bill falls short of that equitable distribution goal with its formula for allocating allowances to local distribution companies based 50 percent on emissions and 50 percent on sales. Unfortunately, the Senate bill currently under consideration includes the same 50/50 allocation provision. Under the proposed 50/50 formula, utilities that are more coal dependent will need to purchase even more allowances than they would have if all allowances were allocated based on emissions, and those higher costs will be passed on to their customers. Meanwhile, many utilities with relatively lesser emissions will receive sufficient allowances to completely cover their initial requirements. Thus, their customers will experience no price increases resulting from the legislation.
We believe it is essential that we strive to formulate legislation that equitably distributes transition assistance across individuals, as well as states and regions and economic sectors. We urge you to ensure that emission allowances allocated to the electricity sector – and thus, electricity consumers — be fully based on emissions as the appropriate and equitable way to provide transition assistance in a greenhouse gas-regulated economy.
We thank you for your efforts to build consensus on the critical issue of energy and climate legislation. The change we recommend would contribute to a more balanced and equitable bill for the Senate’s consideration, and a better strategy for America.
Sincerely,
Senator Tom Harkin Senator Al Franken Senator Roland Burris Senator Byron Dorgan Senator Herb Kohl Senator Russell Feingold Senator Kent Conrad Senator Michael Bennet Senator Amy Klobuchar Senator Mark Udall Senator Robert Byrd Senator Cark Levin Senator Debbie Stabenow Senator Sherrod Brown
This, of course, is the worst approach possible to allowance distribution from a purely economic standpoint. Forget about the insane morality of the situation, in pure macroeconomic terms, you could not do worse than this.It also happens to be one of those self-fulfilling prophesies: they're scared witless about the costs of climate policy, so they come up with a climate policy that is guaranteed to be as costly as possible.
6 Responses to “Fourteen Democratic Senators Stick Up For Coal”
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Brad, are there any reasons that the November, 2009 Scientific American plan using floating renewable subsidies is not superior to cap-and-trade with 15% of permits auctioned? (warning: Subscriber paywall; more information available in Flash here)
Given that the EPA endangerment finding is now in effect, is there any reason that anyone should care about what Congress may or may not do about renewables? Presumably they could override the EPA, but I think that would not be likely to survive a veto, let alone the Democratic-controlled congress.
November 12th, 2009 at 10:02 pmI love the site and love the work you do, but I think you’ve missed something with this story. Minnesota and Wisconsin are NOT among the leading coal-producing states. In fact, they don’t even get a mention on either this list or this list. Ao, while the policy may be dumb, there must be another reason for the normally progressive senators like Feingold, Kohl and Franken to go this route.
November 13th, 2009 at 7:51 amRussell — this is about coal use by electric utilities. Minnesota is at 59% and Wisconsin at 63%.
In particular this is a lobbying priority of the National Rural Electric Cooperative Association, which is happy to scaremonger against this legislation in people’s electricity bills — and thus scare politicians into doing their bidding. Of the list signers, NRECA has contributed to Dorgan, Franken, and Stabenow this year. Klobuchar has received a cool twelve grand from Xcel Energy. And so forth.
November 13th, 2009 at 8:19 amI think there is reason for concern among these senators with regard to increasing bills on consumers. I don’t think most of them are concerned about this because of the profits of energy companies over the health of citizens. That is just not fair. If there will be additional fees on companies and consumers, I don’t see how that is scaremongering.
Plus, I’m not sure that rural electric co-ops are the devil of energy profiteers out there.
In any case, the goal should be getting rid of so much reliance on coal in these states. And any bill should make headway into doing that.
November 13th, 2009 at 10:31 amBrad is right. This isn’t about coal production, this is about coal consumption. States that burn a lot of coal to generate electricity fear anything that might make that generation more expensive.
Funny that Colorado’s Udall, the environmentalist, and Bennett, the educator, would support such a measure. Natural gas is the big energy industry in Colorado–not coal. Allocating allowances based on electricity production, not emissions, would benefit the home state industry. It is said that the natural gas industry doesn’t know how to lobby the climate change issue or how lobby Democrats. But how are these guys going to explain their position to progressive supporters?
In the meantime, it’s another example of the Democrats’ willingness to sell out clean energy and a progressive environmental agenda to the status quo.
Are you out there Move-on? This is the kind of narrow, easily targeted issue that’s perfect for you to take on.
November 13th, 2009 at 2:23 pmThank you for the clarification.
November 13th, 2009 at 4:11 pm