Yesterday, the Senate Environment and Public Works (EPW) Committee held a hearing on S. 1733, the Clean Energy Jobs and American Power Act.  The hearing started with opening remarks by Chairman Boxer and Ranking Member Inhofe.  As expected, they expressed radically different views of the bill.  Senator Boxer (D-CA), who coauthored the bill and released her chairman’s mark on Friday, opened the hearing with a remark that the cap-and-trade legislation will reap many benefits at a small cost to the public.  She referenced the EPA analysis of the bill, which predicted a cost of approximately 22 to 30 cents a day per family.  Senator Inhofe (R-OK) expressed the view that the bill would “fundamentally redesign” the United States’ 14 trillion dollar economy.  He characterized the legislation as a tax that would inflict “economic pain” and lead to fewer jobs, relying on recent CBO testimony to the effect that cap-and-trade legislation would result in a net loss of jobs.   The Committee heard testimony from two panels of witnesses: Senator Kerry (D-MA), the lead sponsor of S. 1733; and a second panel comprised of Energy Secretary Chu, Transportation Secretary LaHood, Interior Secretary Salazar, EPA Administrator Jackson and FERC Chairman Wellingoff. 

Senator Kerry explained that, by actively addressing climate change, we will improve every sector or our energy economy, achieve energy independence and increased national security, and create millions of new jobs and new industries that cannot be exported.  He asserted that cost analyses of cap-and-trade legislation do not factor in the cost of inaction and that the world risks catastrophic consequences if temperatures continue to rise.  He added that only 7,500 entities will be covered by the legislation, representing 2% of businesses, with small business, agriculture and portions of the transportation sector exempt. 

In the second panel, the Obama Administration officials offered strong support for the legislation.  Secretary Chu stressed that addressing climate change presents a significant economic opportunity to capitalize on the development of new energy sources.  He argued that a cap on emissions is the most critical step to drive investment decisions for clean energy.  Additionally, he said sustained commitments to research and development will be necessary for the country to meet its energy goals.  Secretary LaHood noted several promising initiatives in development in his Department to reduce GHG emissions, including improving the understanding of aviation emissions on climate and expanding access to public transportation.  Secretary Salazar emphasized the need for energy efficiency and clean energy jobs. He noted that his Department has moved to fast forward solar energy on 1,000 square miles of public land by fast tracking the application process.  He also noted that the Geological Survey is currently developing protocols for carbon capture and sequestration (CCS) technologies. 

Administrator Jackson explained that EPA did a full economic analysis on the House energy and climate change bill (H.R. 2454, the American Clean Energy and Security Act), upon which S. 1733 is based, and a similar analysis of S. 1733.  Notably, she remarked that the region-to-region cost differences for both bills would be small.  Chairman Wellingoff said that FERC is working to remove barriers to low carbon sources of energy and to reduce emissions from energy generation.  He claimed that the cost of greenhouse gas emissions is currently a market externality, but that S. 1733 would internalize this cost and thereby diversify the fuels used to generate electricity. 

A spirited question and answer session followed with Senators of both parties seeking to score points on issues of perceived importance to their constituents.  Some of the more interesting issues involved the extent to which EPA would have a role in regulating GHG emissions under the Clean Air Act (CAA) if comprehensive cap-and-trade legislation were enacted.  Administrator Jackson expressed the view that the CAA would continue to play an important role, but that is an issue that bears watching.

To view Part 2 in the series, please click here.

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