Web Chat: Climate Change Legislation

April 28, 2010

The now delayed compromise bill on climate change showed promise, in that it would combine mandatory caps on carbon emissions with incentives to expand offshore drilling and explore nuclear energy. Charles Ebinger took your questions on the legislative hurdles to climate change in a live web chat moderated by David Mark, senior editor at POLITICO.

The transcript of this chat follows.

12:30 David Mark: Hello everybody, and welcome Charles Ebinger for our discussion on the intersection of climate change and immigration legislation.

12:30 [Comment From Mark: ] How does the delay on climate change action impact the future of the bill?

12:30 Charley Ebinger: It makes it very unlikely that we will have a bill this year.

12:30 [Comment From Eric: ] Do you agree with the decision to tackle immigration reform before climate change?

12:31 Charley Ebinger: No it was a very poor decision.

12:31 [Comment From Jennie: ] How vital is Graham’s sponsorship of the climate change bill? Could it pass without him?

12:31 Charley Ebinger: It is very important.

12:31 [Comment From Fred: ] Do you think there is hope for the UNFCC’s process? Can we expect any progress out of the upcoming meeting in Cancun?

12:32 Charley Ebinger: The UNFCC process is very flawed; it has too many actors. We need to regroup and start with getting the 10 biggest emitters to reach an agreement.

12:32 [Comment From Laurie: ] It seems like uncertainty regarding the economics of climate change serves as a big hurdle in negotiations. What are some of the main questions in regards to this issue?

12:33 Charley Ebinger: It is difficult because we have a number of states that are major fossil fuel producers so if you put on a carbon tax these states may lose jobs; also people do not want higher prices especially during a recession.

12:34 [Comment From Tyson Slocum: ] For all their posturing and publicity, the K-L-G coalition has secured the support of the same number of republicans as Sens. Cantwell-Collins CLEAR act. Given the most recent collapse of the K-L-G efforts, what are the prospects of the next congress restarting the climate debate modeled on the successful work of Cantwell-Collins?

12:34 Charley Ebinger: I think it will be more difficult in the next Congress because it is likely to be more polarized.

12:35 [Comment From Bill, Va.: ] I see your Institute had an event today on solar power. Is there a market for solar power or would the government have to subsidize the entire thing to make it worthwhile?

12:36 Charley Ebinger: Solar has a tremendous future but right now in many applications the technology is still more costly than conventional fuels so subsidies are needed to get the industry moving. This will change over time. Already in some states the cost of solar is at what we call grid parity meaning it can compete against traditional fuels.

12:36 [Comment From Ely: ] What was the thinking behind tackling immigration ahead of climate?

12:37 Charley Ebinger: It was a sad decision and reflects the fact that Senator Reid needs the Hispanic vote for re-election. Senator Graham also is reluctant to force an immigration vote that might hurt his friend Senator McCain.

12:37 [Comment From Ted: ] Do you see fall back options for some kind of climate or climate/energy legislation this year? The CLEAR Act? The American Clean Energy Leadership Act of 2009?

12:38 Charley Ebinger: The best we can hope for is an energy bill such as theo ne that sits in the Bingaman Committee that helps advance clean energy while avoiding a cap and trade program at least for now.

12:38 [Comment From Bill, Va.: ] Another question, more generally about “alternative” forms of energy (wind, solar, etc.), how can these possibly compete against King Coal?

12:39 Charley Ebinger: The main thing we need is a price increase on carbon and then it will be easier for these new energy forms to compete.

12:39 [Comment From Georgia: ] It seems that there is so much skepticism about climate change anyway (“e-mail gate” and just flat out opposition to the idea), how could Pres. Obama have expected to get a bill through this Congress …. or ever?!?

12:40 Charley Ebinger: I believe in the President, and I agree with him – he believes that climate change is real and that anyone who takes the time to look at all the scientific literature will agree; he underestimated the power of big lobbies to convince people otherwise.

12:40 [Comment From Paul: ] Are Graham’s threats to drop his support legit? Or do you think he is just making a fuss?

12:41 Charley Ebinger: He is making a fuss.

12:41 [Comment From Chris, NY: ] Where do you think this administration will go with the nuclear issue?

12:42 Charley Ebinger: The administration has announced $54 billion in loan guarantees but this will only help maybe up to 10 plants. They have killed Yucca Mountain. They should now look at WIP as an alternative for nuclear waste and get legislation changed so that it can take civilian waste. Overall the Obama team is split on the nuclear issue.

12:42 [Comment From Marie: ] If you were going to propose a climate change bill, what elements would you include in your proposal?

12:44 Charley Ebinger: I would give major tax incentives for energy efficiency, and go for a carbon and gasoline tax to fund it. I would put more money into proving CCS technology and work with India and China to prove this technology.

12:44 [Comment From Wes: ] Why was Copenhagen so unproductive?

12:45 Charley Ebinger: There was complete chaos both from an organizational and substantive perspective. Delegates were left out in the cold and there should have been more preparatory work so that when the leaders arrived they had something to sign that was already negotiated. The UN team really blew this one.

12:45 [Comment From Amy: ] How are the midterm elections going to impact climate change?

12:46 Charley Ebinger: The election will probably see some senior members of both houses ousted and will probably see a reduction in Democratic support leading to no climate change bill in the near future.

12:47 [Comment From Arnold: ] What if the Senate fails to do anything on climate change?

12:47 Charley Ebinger: We will muddle through with piecemeal legislation that does not address our long-term problems.

12:47 [Comment From Leann: ] Can you talk a little about how the failure of climate change legislation in the US will impact world negotiations?

12:49 Charley Ebinger: It depends on what we do by the time of Mexico. If we live up to our agreement to put large funds into a fund for emerging nations to deal with climate mitigation and adaptation we will keep some credibility. We also will have an opportunity to move forward on the protection of rain forests but we will not be a leader at the talks.

12:49 [Comment From Ted: ] Regarding Georgia’s comment, do you see Obama giving public leadership in a serious and consistent way, as is necessary to counter the ill-informed and deliberate attempts to keep the US hooked on dirty energy by coal and oil, Fox News, etc.?

12:50 Charley Ebinger: Obama has to go to the nation on this one; whether he wins or loses will be a defining moment of his presidency since he has made this such a keystone issue.

12:50 [Comment From Ely, VA.: ] By making a fuss (Graham), does this mean Graham wants to tackle climate ahead of immigration? If his motive is to protect McCain from getting hurt on immigration?

12:51 Charley Ebinger: Graham is deeply committed to climate change and thinks he got blindsided by Reid.

12:51 [Comment From Susan: ] Where is Al Gore in all of this? It seems like he fell off the map!

12:51 Charley Ebinger: It is probably best for Mr. Gore after “climategate” (even though it was silly) to adopt a low profile at this time. He will only inflame the skeptics.

12:52 [Comment From Jeff: ] Regardless of one’s views on climate change, the end result of using non-renewable energy sources is depletion, and therefore the need for renewable energy. Why wait until it’s a crisis?

12:53 Charley Ebinger: This is of course true in the abstract. Fossil fuels will disappear someday but not for a very long time and in no time horizon that any policymaker cares about. Each of these old industries employs thousands of people and accounts for huge tax revenues. Any politician that opposes them will have them fund his/her opposition so it is easier to play it safe.

12:54 [Comment From Dan: ] How will the EPA enforce regulation on carbon dioxide, and when will they have the ability to do so? What impacts will this have on the power generation industry?

12:55 Charley Ebinger: The EPA was given this authority by the Supreme Court but members of Congress who oppose going this route may try to enact legislation taking this power away. They could do it now and see what happens.

12:55 [Comment From Guest: ] How much weight does international pressure carry with the administration and Congress for getting climate legislation and a price on carbon?

12:55 Charley Ebinger: None.

12:55 [Comment From Chico: ] It’s sad that with all the coverage over the recent coal mine disaster the media seem to have not expanded the focus beyond the personal tragedies and mine inspections. Seems like a ripe foundation for a discussion about energy. Any thoughts on what it might take for voters to focus more solidly on energy and climate issues?

12:58 Charley Ebinger: The West Virginia and Gulf Coast tragedies demonstrate that no energy technology is safe absolutely. In point of fact globally more people die from dams failing than any other technology. Nuclear has an excellent safety record but many people are afraid of it. We simply are crazy when we come to energy policy formulations and do not want to stare facts in the face. Coal accounts for 50 percent of our electricity; it will take years to change this even though we all know we have to change.

12:58 [Comment From Amy: ] What specific areas would you propose for cooperation – research or political – with India and China?

12:58 Charley Ebinger: Clean coal research – CCS; nuclear safety and security; advanced biofuels; electric cars.

12:59 [Comment From Joe: ] Do you think this year was our best chance at getting climate change done?

12:59 Charley Ebinger: Yes, it will only get tougher.

12:59 [Comment From Ryan: ] This immigration over climate change decision makes no sense. Wouldn’t Congress want to tackle climate change first considering the House had already approved something? Why do they want to waste time starting from scratch on something so controversial?

1:00 Charley Ebinger: You are assuming that the majority want climate change; there are 26 states that produce coal, which makes a lot of senators who do not want to hurt the industry; there are also oil states that want access to the OCS and OCS states that want no drilling.

1:01 [Comment From Arnie: ] In the midst of our financial meltdown, it would seem that adding GHG reduction to GDP or the various indexes contained in section 12:10 of the UN Systems of National Accounts, will do two things– allow for greater productivity in GHG reduction, and help the US financially– of course assuming that Goldman Sachs’ current hedge is betting on the demise of the UN economy:)

1:01 Charley Ebinger: I agree 100%.

1:01 [Comment From Jason: ] There were so many good ideas out there in this bill. It seems like such a waste to delay the process and force everyone to start over next year. Do you think that the bill was missing any key components that contributed to this fiasco?

1:02 Charley Ebinger: The bill was better than nothing and would have started us on the correct path but it was also filled with too many giveaways which may have resulted in setting a carbon price that was too low to really spark the development of alternatives.

1:02 [Comment From Caitlin: ] What do you believe the most substantive part of the bill to be?

1:03 Charley Ebinger: Do not really have a strong opinion, but probably the efficiency portions.

1:03 [Comment From Jeff: ] Perhaps that begs the question of why the Republicans are allowed to get away with pretending climate change doesn’t exist. They are supremely concerned about the future when it comes to the burden of the deficit/debt on our children and grandchildren, but when it comes to issues that could potentially have a negative effect on their purse strings, they are suddenly only worried about the here and now.

1:04 Charley Ebinger: It is not only the Republicans—several Democrats are on the fence especially vis-a-vis offshore drilling and nuclear.

1:04 [Comment From Trey: ] Did the “tripartisan” nature of the bill cause any dems to defect? Was it a good incentive for republicans to support the bill?

1:04 Charley Ebinger: No opinion.

1:04 [Comment From Dan: ] In your view, what events do you think needs to take place to achieve a drastic departure from coal and oil as energy sources? Is it purely economics and once energy prices rise there will be a shift, or is society too complacent and will just pay more?

1:06 Charley Ebinger: When we pay the real price of energy meaning the damage done not only from carbon but also other pollutants. We need a gasoline and carbon tax with rebate mechanisms for the poor; the money in the near term should be earmarked for deficit reduction and nothing else. Once we pay this off it can go into renewable energy development.

1:06 [Comment From Matt: ] You mention that we’re “afraid” of nuclear energy. Why? Doesn’t France get nearly all of its energy from nuclear sources?

1:07 Charley Ebinger: France gets in excess of 80% of its electricity from nuclear; while public support for nuclear in the U.S. is growing there is still concern among many voters on nuclear waste management and safety.

1:07 [Comment From Danny: ] Do you think Republicans were more amenable to compromise on the climate change bill than on health care?

1:07 Charley Ebinger: A bit.

1:08 [Comment From Ted: ] Electric cars?! I don’t think the auto/oil/gas industries would ever let that happen seriously. Do you think a major shift to electric cars is really possible?

1:09 Charley Ebinger: We will move toward the electric car and maybe other fuels in niche markets such as biofuels and CNG. The problem is that we have 246 million vehicles on the road so the transition will be a very long one.

1:09 [Comment From Gary: ] Harry Reid has indicated he is willing to move forward on the Climate bill, however, Graham seems reluctant to return, is there a chance that the climate bill will move forward this year?

1:09 Charley Ebinger: 20% chance of moving forward; 0% chance of passage.

1:09 [Comment From amaltra: ] We need Bush and our self confidence back.

1:10 Charley Ebinger: Sorry I disagree; he bankrupted the country with his tax cuts and wars.

1:10 [Comment From Marcus: ] Do you know what Obama’s reaction to the climate change delay was? Last I heard, he was on vacation! Doesn’t he have an opinion?

1:11 Charley Ebinger: I suppose he is very disappointed since climate change was a signature issue of his campaign and his state of the union address.

1:11 [Comment From Ben: ] Did the last minute collapse of the legislation ruin the credibility of Kerry?

1:11 Charley Ebinger: It does not help it.

1:11 [Comment From Danny: ] Just a follow up to my question on compromise – why were the Republicans “a bit” more willing to cooperate on climate change than on health care?

1:12 Charley Ebinger: Because they were given some compromise on offshore oil drilling and accelerated funds for nuclear loan guarantees.

1:12 [Comment From Ely, VA.: ] If this year is the best chance move on the climate bill, then the key is to pressure Sen. Reid to stand down on immigration. This will allow climate to move ahead in Congress, and regain Graham’s support on climate.

1:12 Charley Ebinger: Financial reform is now the flavor of the day; the legislative calendar is against us.

1:12 [Comment From Mara: ] You said earlier that fossil fuels will still be around for a very long time, but one hears some sources say that we’ll hit the peak oil point in as little as 50 years. While I suppose that is a long time to most policymakers, what’s your estimation on the actual longevity of fossil fuel production?

1:15 Charley Ebinger: I totally disagree with the peak oil crowd and my old friend Matt Simmons. Unless you tell me your price and technology assumptions there can be no real discussion of peak oil. It was when the oil price collapsed in 1986 and the industry had to get lean and taught to survive that it developed new technologies which have dramatically lowered the cost of finding oil. Clearly what and where we can look for oil is very different at $150/bbl than it is at 50.

1:15 [Comment From Randy: ] Did cash for clunkers end up doing anything productive?

1:16 Charley Ebinger: It gave some needed short term jobs but was one of the worst programs in terms of dollars expended for oil import saved that one can imagine.

1:16 [Comment From Dan: ] Is there a technical barrier in the US stalling more development in renewable energy technologies? The US lacks far behind India and China in graduating engineers, do you think this is a concern?

1:17 Charley Ebinger: Engineers are surely in shortage but we are moving to rectify this issue. The real issue is the relative cost of labor and the fact that the industries get much more generous incentives in both countries than our industry receives.

1:17 [Comment From Terry A.: ] How long do you think the immigration bill will delay climate change? Is there any hope at all? Perhaps a long shot scenario that could benefit the legislation?

1:17 Charley Ebinger: At least through this Congress.

1:18 [Comment From Jeff: ] When climate change turns out to be real, will it be the end of the Republicans as we know them, or will they be able to survive, just as they survived their ignorance and bigotry when it came to civil rights?

1:19 Charley Ebinger: If we do not have the situation on a downward trajectory in terms of emissions by 2050 based on what we believe we know today it will be too late unless geoengineering saves us. We will all go down with the ship.

1:19 [Comment From Kim: ] Are there any other countries out there who have it “right” when it comes to climate change? Any other strategies that have seemed to work elsewhere?

1:20 Charley Ebinger: Denmark, the Netherlands and Japan are to be envied.

1:20 [Comment From Arnie: ] Much of this debate is focused on centralized energy production and distribution. Has there been a study that examines whether or not local communities would prefer decentralized energy production and distribution? With new generation hydrogen fuel cell technology and waste management, there appears to be an opportunity for local communities to pursue this.

1:21 Charley Ebinger: There is a great deal that local communities can do with distributed generation but for this to happen we need a complete dissemination of the smart grid from which we are at least 15 years away.

1:21 [Comment From Linda: ] There’s a lot of economic debate surrounding climate change. Couldn’t implementing new energy sources and technology be a great source for new jobs?

1:23 Charley Ebinger: Absolutely, but if we go to extreme in fighting carbon we could see a huge loss of jobs in the oil, gas , and coal industries. Remember that after the IRS the oil industry is the largest contributor to federal revenue and the only energy industry that is a net contributor to the budget; it is also the nation’s largest single employer.

1:23 [Comment From Dan: ] Is it likely that any other Sens. will get on board with Kerry to help the cause?

1:23 Charley Ebinger: Best hope lies in Maine.

1:23 [Comment From Frank: ] Do you have any thoughts on the economics of cap-and-trade? It seems like a dangerous time in economic terms to be making drastic changes like that.

1:25 Charley Ebinger: It will raise prices and that is why supporters want a cap to keep it from becoming too onerous; I am against this idea. I would put on a carbon tax with no free allowances, see where the price goes, what changes in behavior it causes, and then if it hits the poor too much have a rebate system for people below a certain economic threshold.

1:25 [Comment From Arnie: ] How can we pursue “smart-grid” when legislation (in Los Angeles and I presume other cities), do not allow for power sharing?

1:26 Charley Ebinger: There are a number of regulatory and legal issues that have to be addressed but there are smart grid pilot projects underway from which we should learn more about how to remove the obstacles to its national implementation.

1:28 [Comment From Guest: ] What about smart meters and variable pricing in the home? Major impact? Especially with plug ins?

1:29 Charley Ebinger: Down the road this will be transformative but there are critical issues as to who will provide them—the utilities, IT companies, phone companies and how they will be regulated.

1:29 David Mark: Thanks for joining us today.