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Climate bill stokes business debate
In Pennsylvania, the smoke rises over the future of fossil fuels
Monday, October 05, 2009

WASHINGTON -- While introducing her climate change bill Wednesday, Sen. Barbara Boxer, D-Calif., told a cheering crowd in front of the U.S. Capitol, "we have expanded our coalition in the business community."

In Pennsylvania, that coalition includes businesses that stand to benefit, such as energy-efficient windows manufacturer Serious Materials and wind turbine maker Gamesa.

But heavy industry concerns in Western Pennsylvania, including U.S. Steel, Alcoa and Consol Energy, expressed varying degrees of dismay and fear last week at what the Clean Energy Jobs and American Power Act could mean for their businesses -- and for energy consumers.

The bill, similar to House of Representatives legislation that narrowly passed in June, sets aggressive deadlines for greenhouse gas reductions and creates a cap-and-trade system in which a price is set to emit carbon above a certain level and the right to do so is traded in a newly created market for big polluters.

The result, according to foes of the bill, will be higher energy prices and job losses when utilities scale back because of increased costs.

"You run the risk of having a lot of major coal-fired power plants shut down," said Tom Hoffman, spokesman for Cecil-based coal producer Consol Energy.

But in the long run, argue environmentalists and officials with "green jobs" companies, energy costs will come down and jobs will be created in areas of renewable energy and efficiency that cannot be outsourced. In addition, the act could create momentum for a global consensus to reduce emissions and, perhaps, stave off global warming. And by spending less on foreign oil, they contend, the United States will reduce funding to potential enemies.

"This bill is the first of many steps toward a cleaner, healthier, safer world," said Adam Garber, an organizer for PennEnvironment.

A crucial detail to be filled in as the bill proceeds through Environment and Public Works, Finance and other committees, is how carbon offsets -- or emissions-reduction credits -- will be doled out in the cap-and-trade market.

Aluminum maker Alcoa also would like to see more guidance on how carbon payments would be phased in, and more concessions for companies that compete internationally.

Alcoa is a member of the United States Climate Action Partnership, a group of 30 companies and environmental organizations that lobbies for greenhouse-gas reductions coupled with protections for the economy. The group includes the National Resources Defense Council, as well as Ford Motor Co. and DuPont.

Lee Califf, a Washington-based lobbyist for Alcoa, said USCAP's lobbying efforts will focus on getting language in the bill to address "carbon leakage" -- in which emissions reductions in one nation result in increases elsewhere because production is moved. Mr. Califf said the House bill, through issuing free carbon rebates for certain industries, does this well.

Kate Jackson, senior vice president and chief technology officer of nuclear producer Westinghouse Electric, in an e-mailed statement, did not endorse or reject the Senate climate bill -- which promotes nuclear power in an apparent attempt to woo Republicans. In pitching support for the industry, Dr. Jackson noted that nuclear power provides 75 percent of the country's carbon-free energy.

Dr. Jackson wrote that legislation should address the need for more nuclear plants, as well as increases in power output and life span of existing plants, which are heavily regulated now. The Kerry-Boxer bill pledges a reduction in regulatory barriers to expansion of the nuclear industry.

Requests for comment from U.S. Steel were referred to the American Iron and Steel Institute, a trade association. In a news release Wednesday, it called the bill a disappointment.

"If we don't get climate legislation right, we'll harm the U.S. economy, outsource our manufacturing to China and see global emissions increase -- the exact opposite of the goals of climate policy," AISI president Thomas J. Gibson said in a release.

Consol jump-started its lobbying efforts last year and is continuing on a similar pace this year, having spent nearly $2 million through June to lobby on climate change, the stimulus package and the union card-check bill.

Mr. Hoffman said Consol is not against reducing emissions, but the company believes the aggressive emissions requirements -- a 20 percent reduction by 2020 and 83 percent by 2050 -- would sink the coal industry.

Consol has invested considerable funds to research technology that would capture carbon emissions from smokestacks and store them underground, but large-scale implementation of that technology is years away.

In March, Serious Materials reopened a shuttered plant in Vandergrift to make high-tech, energy-efficient windows. The company could expand considerably with passage of this legislation, which mandates stronger energy efficiency standards.

Vice President for Projects and Policy Robin Roy said the legislation would spur Serious Materials to "promote investment and keep hiring. It gives confidence that there is a will to address this issue."

Mr. Roy said the company would like to see stronger efficiency standards and incentives in the bill. This year, in its first foray into federal lobbying, California-based Serious Materials has spent $20,000.

Wind turbine manufacturer Gamesa, which employs 800 workers at plants in Ebensburg, Cambria County, and Fairless Hills, Bucks County, also would benefit from increased investment in energy sources that won't carry a carbon tax.

"The market depends on regulatory certainty," said Michael Peck, director of external relations. "When investors see that usage for renewable energy is guaranteed and a defined price of carbon, [they start] putting their money on the table."

The environmental lobby is increasingly turning to an economic argument to sway legislators. Repower Pennsylvania, a grassroots lobbying subsidiary of the Alliance for Climate Protection, pointed to a study released last month by the Center for American Progress showing that Pennsylvania would gain 72,000 green jobs within two years if the federal government invested $150 billion in efficiency and renewable energy. The pending legislation includes some of those ideas.

But economic benefits could be outweighed by the decline of fossil fuels.

The National Association of Manufacturers and the American Council for Capital Formation commissioned a study of the House bill that foretold losses of 71,500 to 97,500 jobs in Pennsylvania by 2030 as heavy industry struggles with higher costs and sends jobs to overseas markets where there are no pollution caps.

If a measure similar to the Boxer-Kerry bill becomes law, it will constitute a revolution in how Americans produce and use energy. But that's a big if, especially with a simultaneous battle on health care reform going on in both chambers and lobbyists and interest groups swarming lawmakers.

Daniel Malloy can be reached at dmalloy@post-gazette.com or 202-445-9980. Follow him on Twitter at PG_in_DC.
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First published on October 5, 2009 at 12:08 am