Cap-and-Trade Bill ‘Out of Control,’ Former Senator Wirth Says

By Kim Chipman

Aug. 18 (Bloomberg) -- Cap-and-trade legislation to limit U.S. carbon dioxide emissions has “gotten out of control” and needs to be scaled back in Congress, said former Democratic Senator Timothy Wirth.

“The Republicans are right -- it’s a cap-and-tax bill,” Wirth, a climate-change negotiator during President Bill Clinton’s administration, said in an Aug. 14 interview. “That’s what it is because they are raising revenue to do all sorts of things, especially to take care of the coal industry, and it makes no sense.”

A system to cap carbon emissions and then create a market for the trading of pollution allowances is the centerpiece of President Barack Obama’s proposal to fight global warming. Wirth, who helped craft an emissions-trading market two decades ago that cut sulfur-dioxide pollution causing acid rain, is among Democrats questioning House-passed legislation set to be taken up next month in the Senate.

“I’m not critical of cap-and-trade,” said Wirth, head of the UN Foundation, a philanthropy established in 1998 with $1 billion from Ted Turner, founder of the CNN cable network. “But it has to be used in a targeted and disciplined way, and what has happened is it’s gotten out of control.”

Wirth, who represented Colorado in the Senate, says the House-passed plan is “too broad across the economy.” Instead of capping carbon pollution generally, the measure should focus solely on coal-fired power plants, he said.

The House of Representatives passed its climate bill in June on a 219-212 vote. House Democrats won passage over the opposition of most Republicans by giving away 85 percent of the initial pollution allowances to energy producers and users.

‘Focus on Utilities’

Wirth also takes issue with auctioning permits as a way to generate federal revenue. Obama’s original plan called for auctioning all the permits to bring in about $650 billion by 2019, much of it for a middle-class tax cut.

“Just focus on the utilities and don’t use it as a revenue-raiser,” Wirth said. The trading permits will become “a narcotic for aging power plants.”

The measure faces more hurdles in the Senate, where regional and philosophical differences over its provisions divide Democrats.

The legislation would require 60 votes in the 100-member Senate. Most Republicans have said they oppose the cap-and-trade measure, and at least 15 of the Senate’s 60-member Democratic majority have said the House-passed version would hurt the economy and needs to be revamped to win their support.

Critics such as billionaire investor Warren Buffett say cap-and-trade would amount to a regressive tax and burden businesses and consumers.

Renewable Energy

Wirth says concentrating solely on a cap-and-trade system for power utilities, without an auction, would help resolve such concerns.

“The current cap-and-trade is just too much,” he said.

Four Democratic lawmakers have said the Senate should scrap attempts to pass the cap-and-trade provisions of the legislation this year, and focus instead on a narrower bill requiring the use of renewable energy. Senate Majority Leader Harry Reid, a Nevada Democrat, said he is confident an energy bill will be passed this year including climate provisions.

To win passage, the Senate legislation must include more agriculture-related provisions, a “better package” for nuclear power, a carbon-emissions standard for new power utilities, and a strong “natural gas piece,” Wirth said.

The former lawmaker says he and others are working “slowly but surely” to persuade lawmakers to alter the legislation, an effort that would fail “without the help of industry.”

EPA Awaits

The Senate remains under pressure to pass a cap-and-trade bill because failure to act would leave regulation of carbon emissions in the hands of the Environmental Protection Agency, which has asserted its right to do so, according to Nikki Roy, who monitors Congress for the Pew Center on Global Climate Change in Arlington, Virginia.

EPA regulations would trigger a raft of lawsuits, “delay regulatory certainty” for businesses and postpone the unleashing of low-emissions energy technology needed for a new, carbon-constrained world, he said.

“If you are a company and you want to build a plant, you are on thin ice until we get this law,” Roy said.