Next week, the U.S. Senate plans to take a deep breath and dive into a topic that's seen years of debate but little action: how to slow climate change.
The focus of the debate will be a new bill, the Climate Security Act, which would put a national cap on greenhouse gases created by burning coal, oil or natural gas. The measure is a bipartisan creation sponsored by Sens. Joe Lieberman (I-CT), John Warner (R-VA) and Barbara Boxer (D-CA), who heads the Senate's Environment Committee.
The legislation would require factories, power plants, refineries and other heavy industry to pay the government for permits to emit greenhouse gases, mostly carbon dioxide. Companies also could trade permits among themselves and even bank them to use when needed. Economists who've analyzed this "cap-and-trade" program say it could generate about $6 trillion by 2050 — most of it from industry coffers.
A Complicated Debate
"It's an unbelievably complicated piece of legislation that will literally transform the entire energy sector of the U.S. economy," says economist Ray Kopp of the Washington think-tank Resources for the Future. "You are basically controlling emissions from literally millions of sources."
Trucking companies, manufacturers, electricity producers — any industry that uses fossil fuels — would be subject to the CO2 cap and feel the cost of permits. And that cap would get progressively lower over the next several decades, increasing the cost of the permits.
The legislation has been long in coming and shows the work of many hands. Lobbying records, for instance, show that climate change is being cited almost 20 times more often than three years ago, according to the Center for Responsive Politics, which tracks lobbyists in Washington.
Who Will Pay?
Industry groups are taking a close look at the legislation. Some see cap-and-trade as a way to bring some predictability to the future cost of dealing with climate change.
"We want to be able to predict what the financial consequences will be," says Preston Chiaro, the chief of energy and minerals for Rio Tinto, one of the world's biggest mining companies. "Particularly for a company like ourselves, when we make an investment in a large new mine, that's billions of dollars' worth of investment."
But Chiaro says businesses likely will pass along the extra costs. He says the trillion-dollar question is this: Who will end up paying the financial consequences in the end?
"Is it going to be the taxpayers? Is it going to be industry? Is it going to be consumers who buy products?" Chiaro says. "We're talking about reallocating trillions of dollars' worth of value, and someone's ox is going to be gored and somebody is going to make money on it." That, he says, is what the tussle in Congress is going to revolve around.
Cutting Carbon at a Cost
The bill's chief sponsors, Lieberman and Warner, point out that the possible multitrillion-dollar windfall to the government will be spent in part to ease the pain of higher energy costs for industries and consumers. The government also would spend some of the money to push green technologies such as solar and wind power.
But the cost of capping carbon will outweigh the benefits, says environmental analyst Kenneth Green at the American Enterprise Institute, another Washington think-tank.
"It's going to raise the cost of everything that depends on energy," Green predicts. "That's going to involve making us less competitive against countries that don't emulate that, which is going to be most countries."
He says those countries include China and India, which are fast becoming serious economic competitors with the U.S. but don't limit CO2 emissions.
If the bill becomes law, Green says, "it's also going to entail simply having less — your dollar will go less far: less food, less housing, less transportation, less of everything."
But also less carbon dioxide.
Both supporters and opponents of the bill expect a long and torturous debate that might not be settled this year.