A Cloudy Forecast For Clear Skies
WASHINGTON, D.C. - President George W. Bush's Clear Skies initiative faces a big test in the Senate today. The outlook? Cloudy.
The Senate Committee on Environment and Public Works could even deadlock nine-to-nine on whether to recommend the bill and its possible amendments to the full Senate. A vote on the Clear Skies Act, or a healthy debate that welcomes a compromise would "breathe life into the establishment of a comprehensive air emissions policy," notes Robert LaCount of Cambridge Energy Research Associates.
Utilities such as Cinergy (nyse: CIN - news - people ) and American Electric Power (nyse: AEP - news - people ) are gearing up for "a suspense-filled markup," says Frank Maisano, a lobbyist for power-generating firms. Lobbyists for green watchdog groups are turning red. Even Christian leaders have offered input, telling Congress that Clear Skies, potentially the biggest change to the federal Clean Air Act since 1990, inadequately protects God's gift of air.
Industry, however, adores the three-year-old initiative. Among the more contentious aspects of the pending reauthorization of the Clean Air Act, Bush's Clear Skies proposal would replace mandatory controls on emissions from power plants with a national "cap and trade" system whereby utilities could buy and sell pollution allowances. The system would cover nitrogen oxides, sulfur dioxides and mercury. Altogether, annual compliance costs of Clear Skies could reach $3.7 billion in 2010 and $6.5 billion in 2020, projects the U.S. Environmental Protection Agency.
Just as significantly, the bill scheduled to come before the committee also repeals a requirement that plants install pollution controls when they undergo physical or operational changes that cause actual annual emissions to increase significantly. This so-called "new source review" rule--and its enforcement--has become a sore point with utilities. In 1999, Southern Co. (nyse: SO - news - people ) subsidiaries, including Georgia Power, were sued by the EPA for evading the rule.
The electric utility sector raised $6 million for Bush campaign efforts in 2000 and 2004; the industry produced two "rangers" and four "pioneers" in the last election cycle, according to Public Citizen research. Rangers are folks who raised at least $200,000 for the Bush campaign war chest, and Pioneers are those who collected at least $100,000.
Wall Street sounds favorable about the proposed changes in this way: The bill, if it passes, would bring more certain regulation, thus enabling better forecasts about the cash utilities must spend on pollution controls. Still, in a December report, Morgan Stanley analysts commented that capital spending requirements from environmental regulation for big coal burners should dwarf that of Entergy (nyse: ETR - news - people ), Exelon (nyse: EXC - news - people ) and FPL Group (nyse: FPL - news - people ), partly because of these firms' strong positions in nuclear energy. (If legislation is not passed in 2005, the Environmental Protection Agency intends to move forward with its Clean Air Interstate Rules, which amounts to an administrative means of achieving goals similar to those of the President's Clear Skies initiative.)
But reducing pollutants by 70%--as Bush proponents say Clear Skies aims to do--isn't enough to win over even some party loyalists. The bill would also weaken the rights of states to sue neighboring states for cross-border pollution (as North Carolina has done) and to create state regulations that are tougher than national ones (as California has done). In response, Governor Arnold Schwarzenegger (R-Calif.) submitted a letter last month to senators calling for the preservation of states' rights.
Meanwhile, Republican senators James Inhofe (Okla.) and Kit Bond (Mo.) have told reporters they won't support an eleventh-hour attempt to tack on caps on carbon-dioxide emissions, the heat-trapping chemical linked to global warming--even though the move would win over some Democrats and move the bill to the full Senate floor. (And never mind Bush's campaign promise in 2000 to cap carbon-dioxide emissions.) Environmentalists, who are pushing for CO2 controls, may try to drum up support for an alternative bill, dubbed the Clean Power Act by its architects, Sen. Susan Collins (R-Me.), Sen. Joseph Lieberman (D-Conn.) and Sen. Jim Jeffords (I-Vt.). Their bill puts caps on CO2, but faces an uphill battle with Bush loyalists on the committee.
Then there's the National Council of Churches, which dislikes the global warming omission and thus is distributing anti-Clear Skies information to its state and local members. But for now, God still doesn't get a vote in Congress.
Source: http://www.forbes.com/2005/02/16/cz_ms_0216beltway.html?partner=commentary_newsletter
