Creation of a cap-and-trade mechanism to combat global warming could mean hundreds of billions of dollars in new taxes. Small wonder so many want in on the game.
With policy makers preparing for a legislative battle this year over climate change, American companies, trade groups and environmental activists have called in battalions of lobbyists to help protect their interests in what one industry representative called "the super bowl of lobbying."
The Washington, DC-based Center for Public Integrity, combing through lobbying disclosure forms filed with the Senate, counted 770 companies and organizations that had hired about 2,340 lobbyists to work on the climate issue last year.
That amounted to more than four lobbyists for every member of Congress, even though the 2008 debate was widely viewed as but a dry run for the real knockdown later this year.
"The global warming debate involves so much potential transfer of money that every lobbyist worth his or her salt feels he can get a piece of the action," Frank O'Donnell, president of Clean Air Watch said. Many of the biggest names in Washington have joined the fray. Take former House Minority Leader Richard Gephardt, whose firm Gephardt Group is representing coal-producer Peabody Energy, electric utility Ameren and the FutureGen Industrial Alliance.
Climate change, Gephardt declares, represents the "toughest political transition in the history of the human species."
"This is our Darwin moment," Gephardt told Argus. "I think you could argue we could become extinct as a species if we don't solve this problem."
But measures to deal with this crisis, Gephardt tells his former colleagues, must be done in a way that "allows for proper economic growth," with sufficient time for the transition to a low-carbon economy to ensure we don't end up "shutting down large parts of our economy."
Because of coal's high carbon content, coal-dependent utilities could be especially hard hit by a botched implementation of a cap-and-trade mechanism. And unsurprisingly, then, the utility sector's lobbying expenditures have risen substantially, up 38pc in 2008 over the previous year, according to a second government watchdog group, the Center for Responsive Politics (CRP).
Southern Co., for instance, hired 13 separate lobbying firms and shelled out about $14 million in lobbying expenditures last year, according to the CRP database. That was actually down slightly from 2007. "It is Southern Company's policy to disclose all expenses related to our advocacy efforts," company spokeswoman Valerie Holpp said.
American Electric Power's lobbying spending exploded to $11.2 million last year, up nearly seven-fold from the previous year, while Duke Energy spent $5 million and Ameren nearly $3.6 million, according to CRP.
AEP spokesman Pat Hemlepp said part of his company's increase stemmed from changes in the disclosure laws. At the same time, company officials have teamed up with the International Brotherhood of Electrical Workers to propose language that would require importers from countries that fail to participate in international efforts to curb CO2 emissions to provide reserve allowances to cover the emissions attributable to the goods they are bringing into the US. Martin McBroom, AEP's director of federal environmental affairs, testified on Capitol Hill about that proposal last week. At the same time, Hemlepp said, AEP helped fund T. Boone Pickens' campaign to encourage use of renewables and other domestic energy sources.
The Edison Electric Institute, meanwhile, hired 13 lobbying firms and spent $7.5 million, while the American Coalition for Clean Coal Electricity — an alliance which includes Southern, AEP, Duke and Ameren — poured out nearly $10 million more, according to CRP.
Exactly how much money corporations and interest groups are spending exclusively on climate change lobbying, however, is unclear.
The Center for Public Integrity, which compiled a database from disclosure records filed with the Secretary of the Senate's Office of Public Records, identified 130 companies and groups known to have spent $23.5 million on lobbying teams focused solely on climate change. They represent only a fraction of the actual activity involved. Those figures would not count teams who spent part of their time on climate change but also dealt with other issues. The center calculates that if only a tenth of the lobbying dollars of the companies and groups known to have been involved at least partly in the climate debate last year are included, then climate lobbying expenditures would have topped $90 million.
All this in a year when the Senate held what virtually everyone knew would be an unsuccessful vote on the Lieberman-Warner climate bill, while House Democrats fought among themselves over a very different climate package.
Lawmakers were not "shooting with real bullets," Gephardt said.
This year is very different, as policy makers look toward the international climate negotiations slated for December in Copenhagen, Denmark.
President Barack Obama's climate proposal calls for reducing greenhouse gas emissions to 14pc below 2005 levels by 2020 and 83pc below 2005 by 2050. And his budget proposal assumes a capand- trade mechanism — featuring a 100pc auction of emissions credits to ensure the worst polluters "do not enjoy windfall profits — would be up and running by 2012.
House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) has vowed to get a bill out of his committee by Memorial Day. Over in the Senate, Environment and Public Works Chair Barbara Boxer (D-Calif.) has been working on her own climate legislation, although she has indicated she may well wait until the House moves before pushing out her bill.
With all this activity, many Capitol Hill watchers anticipate the number of lobbyists in the climate fight will only grow this year. "I can't imagine the numbers dropping," O'Donnell said.
Indeed, some have begun to liken all the excitement over the upcoming cap-and-trade fight to the feeding frenzy that surrounded passage of the $787 billion economic stimulus package. "People have called this the stimulus bill on steroids," said Marianne Lavelle, a staff writer for the Center for Public Integrity who examined the climate change lobbying expenditures.
Despite years of discussion about climate change, lawmakers are trying still to fully understand just how transformational regulating carbon would be for the US economy.
By its very nature, a cap-and-trade mechanism — which limits the amount of CO2 that can be released into the atmosphere — increases the cost of energy and, thus, raises prices for most goods and services. "The bottom line is that controlling carbon or doing something about reducing CO2, in the end, will cost all of us some money," Gephardt said. "If it were costless to control and capture carbon, then we would have done it a long time ago."
Estimates of how much vary widely.
Obama's budget proposal assumes a cap-and-trade mechanism would raise nearly $646 billion between 2012 and 2019 in new revenues. The Congressional Budget Office (CBO) on March 20 put that number at $629 billion. But Margo Thorning, chief economist for the American Council for Capitol Formation, told the House Energy and Environment Subcommittee last week the true figure could be double or even triple the administration's estimate. In fact, some projections range as high as $3 trillion over that time period.
CBO estimates American households will see their costs rise an average $1,600/yr if lawmakers adopt a cap-and-trade mechanism to curb CO2 emissions by 15pc from 1998 levels.
Obama already is running into broad opposition to his notion of auctioning off all the emissions credits, and not just from coal companies and electric utilities.
Representatives from energy-intensive manufacturers were on Capitol Hill last week, making a case for their companies to be granted emissions credits to ease the transition to a low-carbon economy and avoid a flight of US jobs overseas.
Industries widely viewed as being especially vulnerable include the iron, steel, aluminum copper, cement, glass, ceramics and paper industries, John McMackin with the Energy-Intensive Manufacturers' Working Group on Greenhouse Gas Regulation told the House Energy and Environment Subcommittee. Rep. Jay Inslee (D-Wash.) and Rep. Mike Doyle (D-Pa.), both members of that panel, are formulating a proposal designed to compensate companies hardest hit by the higher energy costs inherent in a cap-and-trade mechanism.
Inslee told Argus the two are still working on defining "more precisely" just how "energy intensive and how trade-sensitive" and industry would need to be to qualify.
Doyle told reporters last week he expects lawmakers will begin circulating a draft version of the capand- trade measure over the next week or so, and he anticipates the Inslee-Doyle allowance provision "will be part of the draft."
While cap-and-trade proponents may have their eye on the calendar as the Copenhagen meeting approaches, the huge influx of lobbyists could actually slow the process, as lawmakers try to accommodate the needs of various interests.
"The history is the more lobbyists, the longer it's likely to drag on," Clean Air Watch's O'Donnell said. "The lobbyists are going to demand the action continue, because they're paid by the hour."
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