NEWS

Laggard states stand to win in new version of Lieberman-Warner

06/03/2008

Debra Kahn, ClimateWire reporter

Some new provisions in the emissions-capping bill on the Senate floor this week could help bring along states that are lagging in their efforts to address climate change, according to observers.

The bill is consistent with the previous version in that it does not pre-empt states wishing to enforce more stringent emissions standards. But it includes a number of additional incentives to entice them to give up their own goals in favor of the federal one, including more than $560 billion in free allowances over the next four decades (E&E Daily, May 22).

Other provisions aimed at those that haven’t done much include money for states that rely heavily on coal and manufacturing, as well as incentives for mass transit, rural utilities, energy efficiency and conservation, and funding for both cultural and resource adaptation.

Most of the incentives can be found in Title VI, which spells out partnerships with states, localities and tribes. Section 602 would start out giving 3 percent of allowances to states that depend on coal and manufacturing, ramping up to 4 percent by 2050. Section 621 has the same percentages for states’ and tribes’ adaptation efforts.

States Benefit from Cap-and-Trade Auction Revenues

Government "green" tries to pay the way for federal greenhouse gas standards. Graphic courtesy of the Center for American Progress.

Interestingly, the coal and manufacturing giveaway is based on data from 1988-92—so it doesn’t include many of the changes stemming from the 1990 Clean Air Act amendments. "You won’t see states like Wyoming that have a lot of coal now [benefiting], because you’re looking at historic coal production," said World Resources Institute research assistant Robert Heilmayr. Instead, the money will go to Appalachian and Eastern coal-producing states like West Virginia and Pennsylvania. For manufacturing, the provisions will help Rust Belt states like Ohio and Minnesota.

According to Pat Hogan of the Pew Center on Global Climate Change, the provision for coal- and manufacturing-heavy states is a bit broader in scope than it was in the original bill, which allocated money based on states’ share of mining and fossil fuel use relative to nationwide production.

Heilmayr also pointed out that although the new version of the bill includes potentially billions of dollars for early actors like California and the Regional Greenhouse Gas Initiative, it might not be enough incentive for those that have done the most to prepare for emissions caps.

"If you think about it, if they’re running their own cap-and-trade, they have full control of all the allowances," he said. "They’d be giving up that control to get control over a percentage of the federal allowances. I don’t know, value-wise, whether they’re actually gaining out of this program."

Figuring out exactly how much states would get by capitulating to a federal program will have to wait until U.S. EPA determines its scoring system for early action measures.

Southern states could also see their fortunes rise thanks to a number of provisions, as they are disproportionately coal-dependent, have a higher rate of development and urban sprawl than other regions and have a large amount of coastline vulnerable to hurricanes and sea level rise. According to the Southern Environmental Law Center, vehicle miles traveled in the South rose 48.9 percent between 1990 and 2005, a steeper rise than the national increase of 39.2 percent.

The states that have done less stand to benefit more, Heilmeyr said. "Most of the states we’ve spoken to would rather not deal with their own cap-and-trade program," he said. "Bigger states like California and New York might feel differently," but "a lot of the states haven’t done the same growth in their regulatory capacity."

Also, Montana and Virginia stand to benefit from Section 552 of Subtitle F, Title V, which sets aside for use in pilot projects 15 percent of the allowances that would go to rural electric cooperative utilities. The bill also mandates a study of the allocation’s effectiveness in spurring deployment of low-carbon-generating technologies in the two states.

The architect of the substitute amendment, Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.), said the provisions were designed to benefit all states.

"The whole notion and the reason we wrote the legislation is we want to make some states get help and that the states that are doing the right thing don’t get disadvantaged," she said. "You’re not going to have one state get all the money. That’s not the legislative intent."

Cap-and-trade not the only pre-emption issue

The liberal think tank Center for Progressive Reform is trying to get a jump on industry by calling for state autonomy to be preserved in such areas as energy efficiency, reduction of vehicle miles traveled and building codes. The group is worried that industry will continue its push to eliminate a potential patchwork of state regulations by trying to add amendments on the Senate floor, and also that House Energy and Commerce Chairman John Dingell (D-Mich.) might seek to override such state programs in his own upcoming climate bill.

"Capping and trading is only one piece of this," said CPR President Rena Steinzor in an interview. "It’s an incredibly big issue that’s like the elephant in the room, that could wipe out zoning laws, building codes, renewable portfolios, tailpipe standards. We expect that as the debate proceeds, pre-emption will surface because it’s a priority of companies. We’re extremely concerned that it could become a sleeper issue that people aren’t paying attention to."