Block’s Indicator of Sustainable Growth

By Ray Block

The historic American Clean Energy and Security Act (ACTS) HR 2454 on Friday June 26, squeaked through the House of Representatives, with the compromise bill 219 to 212, avoiding defeat only through eight liberal Republicans crossing the floor and siding with the Democrat majority.

Although the tough minded Speaker of the House, Nancy Pelosi cracked her whip, 44 Democrats still either voted against it, or shied away from voting at all.

Senator Barbara Boxer, the Democrat chairwoman of the Senate Environment and Public Works Committee has announced that her committee will commence to “mark up” the climate and energy bill on July 27, (mark up is the process where the clerk of the committee reads aloud the proposed amendments section by section until there is unanimous support).

While the Democrat majority leader, Senator Harry Reid says he wants to hold a floor debate in the fall (ie September) on the climate and energy package-“though I still think it is unlikely the floor bill ends up on Obama’s desk this year”

Once the committee approves the bill section by section, it then goes to the “floor,” that is to the full Senate for debate and approval. To get the legislation to the President, the two houses in a conference process have to agree on the final mark up.

Somewhat more positive, Senator Mark Udall, Democrat from Colorado, said: “he would give global warming legislation “50-50 or better odds” of passing the Senate this year. There’s a lot of momentum over here to work on this. I think we’ve been tactically smart, letting the House go first. I think if they can find the sweet spot, it’s a very similar sweet sport over here. Stay tuned.”

This week, the Democrat numbers in the Senate rose from 59 to 60, with Minnesota Democrat, Al Franken, finally taking his seat. Franken had won his seat in the disputed election in November, but was unable to be sworn in until his opponent, former Senator Norm Coleman withdrew from further legislative appeals.

As the Republicans will redouble their efforts to have the legislation defeated, it would be essential that the Democrat majority can tighten their majority position to a point, where there is no dissent.

This will be difficult, if only because the Democrats don’t normally vote in a tight bloc, representing as they do such a diverse group of electoral interests. Otherwise, the Republicans will filibuster through to the end of the year to embarrass the President and the Administration will have nothing concrete to take to Copenhagen.

A major issue for the Senate is whether to follow the House bill in giving away 85 per cent of emission allowances free of charge, so that only 15 per cent of allowances will now be able to be auctioned. A greater number of allowances for auctioning would have given the Administration more funds for renewable energy projects and energy efficiency. As it stands, the Congressional Budget Office is estimating that the cap and trade legislation as it currently stands would cost $22 billion by 2020, or $175 for every household.

To get the legislation through the House, it was essential that Representative Collin Peterson’s amendments would be accepted, although the legislation will be less effective as a result. Rep Peterson is chairman of the House Agriculture Committee and his constituency is the highly protected sugar beet farmers of Minnesota. Although the Farm Bureau and 116 farm lobby groups were almost unanimously opposed to the Waxman-Markey bill, moderate Democrat Peterson received three major concessions in the legislation. These were:

Ø      The Environmental Protection Agency (EPA) is denied the right to hold an inquiry as to whether corn based ethanol consumes more energy in greenhouse gas than it yields. The EPA had previously announced it intended to study the issue. Ethanol is exempted from indirect land use analysis for five years.

Ø      The legislation gives farmers two million tonnes of offsets, which are specifically to be administered by the farmer- friendly Department of Agriculture (USDA) and not by the EPA. Farmers get more paybacks for management practices, which reduce greenhouse gases, such as injecting the soil with seed rather than ploughing the ground, leaving more surface crop residues to lock carbon in the soil, or planting trees to absorb carbon from the air.

Ø       Although not part of the Climate and Energy bill, the financial reforms in Washington had intended rolling the Commodity Futures Trading Commission into the Securities and Exchange Commission. This will no longer happen.