NEWS

Candidates Agree On Warming, Not Tactics

07/30/2008

BY SEAN HIGGINS

INVESTOR’S BUSINESS DAILY

Posted 7/29/2008

Two things are certain about the next U.S. president: He will be a former senator, and he’ll push Congress to pass a cap-and-trade system to limit carbon emissions.

Both Sens. Barack Obama, D-Ill., and John McCain, R-Ariz., have declared global warming to be a serious issue that demands a bold new energy plan to move the nation away from fossil fuels.

They differ on details. Obama leans to big, far-off goals that would restructure the U.S. economy. McCain offers a more modest vision focused on producing more energy in the short term.

Still, both are ambitious.

Both candidates want cap-and-trade programs for carbon emissions. Obama wants emissions levels reduced to 80% below 1990 levels by 2050, while McCain wants them down to "just" 60%-65% below 1990 levels by that time.

Obama would require all pollution credits to be auctioned off by government. McCain is open to giving some away, at least to start.

Either plan would mean major economic change, legislators say.

"That is a very ambitious goal," said Sen. Jeff Bingaman, D-N.M., chairman of the Energy and Natural Resources Committee, when asked about Obama’s plan. "I don’t know if it can be achieved."

An International Energy Agency report recently said just maintaining current emission levels by 2050 would require significant economic changes, Bingaman notes.

Bucking The GOP Trend

McCain has been the rare Republican calling for big steps to deal with global warming. During the New Hampshire primary, when his campaign desperately needed a win, he nevertheless boasted of his green efforts to GOP crowds.

"I will clean up the planet," he told Concord, N.H., voters. "I will make global warming a priority."

McCain said and did little on global warming before his 2000 White House bid. Later, as chairman of the Senate Commerce Committee until 2007, he held hearings on it. He became a convert on the issue and a critic of the Bush administration’s policy.

In 2003, he and Joe Lieberman, I-Conn., sponsored the first Senate bill seeking to mandate cuts in greenhouse gas emissions. He co-sponsored similar bills in 2005 and 2007.

Speaking in Portland, Ore., in May, McCain called for limiting emissions by the utility, industrial, commercial and transportation sectors - about 85% of the economy - to 2005 levels by 2012. Emissions then would be mandated to fall to 1990 levels by 2020 and to 60%-65% below ‘90 levels by 2050.

McCain argues the targets could be achieved with his "cap-and-trade" plan to create a market in carbon emissions. Firms that cut emissions more than required could sell leftover allowances to other companies that do not meet the goals. The overall emission caps would tighten over time.

"As part of my cap and trade, I will also propose to include the purchase of offsets from those outside the scope of the trading system," McCain said. "This will broaden the array of rewards for reduced emissions, while also lowering the costs of compliance."

McCain rejects a tax on carbon emissions, as many greens favor.

Kyoto Revisited

He has called for joining Europe to create "a successor to Kyoto . . . that delivers the necessary environmental impact in an economically responsible manner."

But he says such a plan would have to include China and India. The two emerging economies are unlikely to join any plan that would cripple their growth.

McCain’s energy plan focuses on creating new energy sources, not efficiencies. He backs more oil drilling in the Outer Continental Shelf, but also favors more nuclear power, which produces no greenhouse gases. The McCain-Lieberman bill included about $3.7 billion in nuclear subsidies, financed from carbon permit auctions.

He has supported development of carbon capture and sequestration technology for coal plants.

But he has slammed ethanol subsidies as a waste of money. He did that even while campaigning in Iowa, a big ethanol-producing state. He lost the GOP caucus there.

McCain has promised a lottery-style prize of $300 million to an entrepreneur who comes up with a battery-powered car. He proposes $5,000 tax credits to consumers who purchase a zero-emissions car.

McCain ‘Still Falls Short’

His stances have won him only a few cheers from green groups. The League of Conservation Voters endorsed him for the Senate in 2004 but won’t for president.

"We give him credit for being better than the rest (of the GOP), but his currently stated position still falls short of LCV’s positions and where (the Democrats) are," Tony Massaro, the league’s political director, told IBD earlier this year. The league, which wants bigger greenhouse gas cuts, gives McCain a lifetime rating of just 24%.

Industries likely to be affected by McCain’s plan are lukewarm, too. National Association of Manufacturers spokesman Hank Cox said McCain voted with the group only 63% of the time in the last Congress, a middling grade.

Conservative groups grudgingly call him the least worst choice.

"McCain has been on the leading edge trying to promote global warming alarmism," said Myron Ebell, energy policy director at the free market Competitive Enterprise Institute. "Obama is more of a newcomer but he goes a bit farther."

McCain has put no price tag on the direct cost or economic impact of his proposals. Senior adviser Douglas Holtz-Eakin said a detailed plan, including costs, is being formulated.

Obama has less of a record on the issue, having served just three years in the Senate. His Web site notes only one legislative accomplishment: co-sponsoring a bill to provide tax credits for ethanol pumps.

Yet his agenda is far-reaching. He wants to spend $150 billion over a decade to spur investment in renewable energy, from biofuels to hybrid cars, and to update the energy grid.

His plan calls for doubling fuel economy standards to 52 mph by 2030. To hit his goals, Obama would give an unspecified amount of tax credits and loan guarantees to domestic auto plants and parts makers.

Like McCain, Obama seeks a cap-and-trade system to cut emissions. He would require utilities to produce 25% of power from renewables by 2025, and make fuel suppliers cut carbon emissions of their products by 10% by 2020. He wants all new cars to be able to run on biofuels.

He also wants all new buildings to be carbon neutral by 2030. All federal buildings would have to be carbon-neutral by 2025 and 25% more efficient overall in just five years.

Obama would attach strings to federal transportation funds requiring "smart growth" project provisions and higher state conservation goals.

He argues that these goals, though tough, are necessary for America’s future economy and its security.

"We can’t be afraid to stand up to the oil and auto industry when the future of our economy is at stake," he said in a speech late last year. "We cannot let these companies off of the hook. . . . It is killing their long-term chances for survival and threatening too many American jobs. The global market is already moving away from fossil fuels."

Environmentalists have applauded. The League of Conservation Voters endorsed Obama in June.

"This country must reinvent itself for a new energy future (and) we can imagine no better steward than Barack Obama," league President Gene Karpinski said in a statement.

Obama Nixes ANWR

Obama’s plan does virtually nothing to produce new energy. He opposes expanded domestic drilling in ANWR and elsewhere and expresses no interest in more nuclear power. He is open to a moratorium on new coal plants if cap and trade fails to slow plant construction.

The McCain camp hopes that new energy production will show the contrast between the candidates.

"Barack Obama has articulated a policy that says the U.S. will not have more energy as it tries to grow. It will simply have to live with higher prices," Holtz-Eakin said.

The line between mandates and goals is not clear in Obama’s plan. Most of the mandates would have to pass Congress, but Democrats are likely to control both houses.

Bingaman told reporters Monday that little progress on global warming is likely in Congress this year.

"The first two years of the next presidential administration will be the best opportunity we will have" to cut greenhouse gases, he said. "The new president’s leadership on climate change will be essential."