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Cap-and-Trade Bill Slows in Senate

November 17, 2009

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It appears unlikely that the Senate will complete work on its version of a cap-and-trade system to limit carbon emissions this year, despite pressure from the international community for the U.S. to address the issue before a global warming summit
Senators Lamar Alexander (R-TN) and Jim Webb (D-VA) Monday introduced The Clean Energy Act of 2009, which abandons the cap-and-trade concept.
Senators Lamar Alexander (R-TN) and Jim Webb (D-VA) Monday introduced The Clean Energy Act of 2009, which abandons the cap-and-trade concept.
in Copenhagen in December.

The Senate is considering a proposal by Sens. John Kerry, D-Mass., and Barbara Boxer, D-Calif., that is similar to a bill passed earlier this year by the House. The cap-and-trade mechanism would limit greenhouse gas emissions and set up a market in which emissions can be bought or sold. The idea is to make carbon-based energy more expensive in order to encourage investment in cleaner energy and promote more efficient use of energy, with the long-term objective of slowing global warming and decreasing U.S. dependence on foreign oil.

Strong opposition to the measure is slowing its progress. This week, Virginia Sen. Jim Webb and Tennessee Sen. Lamar Alexander introduced a new $20 billion energy bill that focuses on what they call "areas that are achievable," such as expanding nuclear power and funding research into alternative energy sources.



"This cap-and-trade is a turkey," said Sen. Kit Bond, R-Mo., at an October press conference. "I don't care how many gee gaws you put on it, that baby's never going to fly."

Trucking on Cap and Trade

Bond and Sen. Kay Bailey Hutchison, R-Texas, were unveiling a study that claims the Senate cap-and-trade proposal amounts to a $3.6 trillion fuel tax.

Also at the event was Barbara Windsor, President and CEO of Hahn Transportation. Windsor, who is First Vice Chairman of the American Trucking Associations and slated to become Chairman next October, said that cap-and-trade will not reduce trucking's carbon emissions because trucking is not a discretionary user of fuel.

"Proponents of an economy-wide cap and trade system believe that by increasing the price of fuel, fuel users will either purchase more fuel efficient vehicles or convert to alternative-fueled vehicles," she said. "These options are not currently available to the trucking industry in any meaningful manner."

Bond and Hutchison said their study shows the House cap-and-trade bill would impose a $2 trillion tax on gasoline, a $1.3 trillion tax on diesel and a $330 billion tax on aviation fuel, for the total of $3.6 trillion over 35 years. They said the Senate version of the bill would be even more expensive.

Winners and Losers

Neither is inclined to look for ways to work with a cap-and-trade system, mitigating its impact on core industries such as trucking and farming by carving out exceptions. It's the concept that's flawed, they said.

"When government gets in and tries to start picking winners and losers, who gets excepted, who doesn't, you're still going to wind up hitting people who should not be hit," said Sen. Bond.

Hutchison said it is hard to make exceptions because the proposal works by putting the cost of emissions on fuel refiners, who would have to pass that cost through to customers in trucking and elsewhere.

"We can improve the environment and economy through American ingenuity and technological advancement, not with taxes and mandates that increase costs and burden American families and businesses," Hutchison said.

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