Third Quarter 2008

The Presidential Race Is Heating Up: A Look at the Candidates’ Positions on Climate Change and Energy Policy

Holland & Knight Newsletter
Michael Galano

The primary season is complete and it appears that the nominating conventions are mere formalities for presumptive Republican nominee John McCain and Democrat nominee Barack Obama. In addition to national security, the economy and health care, the issues of climate change and energy policy are likely to be important topics for the upcoming presidential debates. This article will examine the stated positions of these two candidates.

According to the Energy Department, one quarter of the world’s coal reserves are found within the United States, and the energy content of the nation’s coal resources exceeds that of the entire world’s known recoverable oil.1 In 2006, there were 616 facilities with 1,493 individual generators that used coal as the predominant fuel source for generating electricity in the United States. About 92 percent of the coal used in the United States is for generating electricity.

Senator Obama argues that in order to confront climate change, the United States must prevent new traditional coal facilities from being built and work aggressively to transfer low-carbon coal technologies around the world. Senator Obama has indicated that he would “significantly increase the resources devoted to the commercialization and deployment of low carbon coal technologies.”2 Senator Obama indicated he will use whatever policy tools are necessary, including standards that ban new traditional coal facilities, to ensure that the United States moves quickly to commercialize and deploy low-carbon coal technology.
Senator McCain proposes to commit $2 billion each year for clean-coal research and development.3 In one address on the issue, Senator McCain stated that “[b]urning coal cleanly is a challenge of practical problem solving and human ingenuity, and we have no shortage of those in this country. Perhaps no advancement in energy technology could mean more to America than the clean burning of coal and the capture and storage of carbon emissions.”4

Oil and Alternative Fuels
The United States imported about 60 percent of the oil we consumed during 2006.5 According to the Energy Department, oil provides more than 40 percent of our total energy demands and more than 99 percent of the fuel we use in our cars and trucks.6 The federal government has prohibited oil and gas leasing on most of the outer continental shelf (OCS) since the 1980s. Congress has enacted OCS leasing moratoria every year since 1982 allowing leasing only in the Gulf of Mexico (except near Florida) and parts of Alaska. In 1990, a presidential directive ordered the Department of the Interior not to conduct offshore leasing or preleasing activity in areas and President Clinton extended the offshore leasing prohibition until 2012. On July 14, 2008, President Bush lifted the presidential moratorium. The move by President Bush is viewed as largely symbolic in the absence of action by Congress.
Senator McCain believes the government should lift the federal drilling moratorium on these areas and allow the local stakeholders and states to decide whether or not to permit exploration. McCain says, “[w]e’re going to produce more, conserve more, and invent more.”7 On a related issue, McCain has also criticized the current corporate average fuel economy (CAFÉ) system on the grounds that it is lightly enforced by a small fine. “CAFE standards should serve large national goals in energy independence, not the purpose of small-time revenue collection.”8 With regards to alternative fuels, McCain argues that “[i]nstead of playing favorites, our government should level the playing field for all alcohol fuels that break the monopoly of gasoline, lowering both gasoline prices and carbon emissions. And this can be done with a simple federal standard to hasten the conversion of all new vehicles in America to flex-fuel technology – allowing drivers to use alcohol fuels instead of gas in their cars.”9 McCain also said he will issue a Clean Car Challenge to the automakers of America, in the form of a single and substantial tax credit based on the reduction of carbon emissions. Under the plan, the government would commit a $5,000 tax credit for each customer who buys a zero-emissions car. Additionally, McCain has suggested offering a $300 million prize for the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.
Meanwhile, Senator Obama is generally opposed to offshore drilling, stating, “[o]pening our coastlines to offshore drilling would take at least a decade to produce any oil at all, and the effect on gasoline prices would be negligible at best since America only has 3% of the world’s oil.”10 Rather, Obama has indicated he will make it a top priority of his climate change and energy independence agenda to reduce oil consumption by at least 35 percent, or 10 million barrels per day, by 2030. To meet this goal, Obama would, among other things, establish a national low carbon fuel standard, repeal tax breaks for the oil and gas industry, increase auto fuel efficiency standards, promote transportation alternatives, and invest $150 billion over 10 years to advance the next generation of biofuels and fuel infrastructure.11

Currently, the United States has 104 nuclear reactors generating approximately 19 percent of the total electricity produced in the nation, an amount comparable to all the electricity used in California, Texas and New York.12 There are 443 nuclear reactors worldwide. In 2006, the United States had 100.1 million kilowatts of nuclear capacity, more than any other nation in the world. France ranks second, third is Japan and fourth is Germany. While no nuclear reactors have been ordered in the United States since 1978, China, India, Russia, South Korea and other countries have brought new reactors into service in recent years.
Senator Obama has not called for a specific expansion of nuclear power, though he notes in his campaign literature that “it is unlikely that we can meet our aggressive climate goals if we eliminate nuclear power from the table. However, there is no future for expanded nuclear without first addressing four key issues: public right-to-know, security of nuclear fuel and waste, waste storage, and proliferation.”13
Senator McCain has called for building 45 new reactors by the year 2030, with the ultimate goal of having 100 new plants. McCain has noted that in Europe there are 197 reactors in operation “[a]nd if all of these nations can find a way to carry out great goals in energy policy, then I assure you that the United States is more than equal to the challenge.”14

Renewable Energy
According to the Energy Information Agency, in 2006, renewable sources of energy accounted for about 7 percent of total U.S. energy consumption and 9.5 percent of electricity generation.15
Senator McCain supports a system of tax credits that will remain in place until the market transforms to the point where renewable energy is commercially viable. “I’ve voted against the current patchwork of tax credits for renewable power because they were temporary, and often the result of who had the best lobbyist instead of who had the best ideas. But the objective itself was right and urgent.16 

Senator Obama proposes to establish a 25 percent federal renewable portfolio standard (RPS) to require that 25 percent of electricity consumed in the United States is derived from sustainable energy sources, like solar, wind and geothermal by 2025.17 He also will require that at least 30 percent of the federal government’s electricity comes from renewable sources by 2020.

Climate Change
Senator McCain proposes a cap-and-trade system that would encompass electric power, transportation fuels, commercial business and industrial business.18 Small businesses would be exempt. Initially, participants would be allowed to either make their own GHG reductions or purchase “offsets.” Offsets would only be available through a program dedicated to ensure that all offset GHG emission reductions are “real, measured and verifiable.” The fraction of GHG emission reductions permitted via offsets would decline over time. Under McCain’s proposal, the greenhouse gas emission targets and timetables would proceed as follows:

  • 2012: return emissions to 2005 levels (18 percent above 1990 levels)
  • 2020: return emissions to 1990 levels (15 percent below 2005 levels)
  • 2030: 22 percent below 1990 levels (34 percent below 2005 levels)
  • 2050: 60 percent below 1990 levels (66 percent below 2005 levels)

Senator Obama supports implementation of a market-based cap-and-trade system to reduce carbon emissions by 80 percent below 1990 levels by 2050.19 Obama’s cap-and-trade system will require all pollution credits to be auctioned on the theory that “a 100 percent auction ensures that all polluters pay for every ton of emissions they release, rather than giving these emission rights away to coal and oil companies.” Some of the revenue generated by auctioning allowances will be used to support the development of clean energy, to invest in energy efficiency improvements, and to address transition costs, including helping workers affected by this economic transition.

View From the Hill
Regardless of which candidate wins the White House, Congress is poised to play a major role in the climate change and energy policy debates during the next session. Senate Democrat leaders pulled a major global warming bill off the floor earlier this summer after falling a dozen votes short of defeating a Republican-led filibuster. The 48-36 vote against invoking cloture effectively ended a week of work on the Senate floor on climate change legislation. Seven Republicans joined 39 Democrats and two independents to move toward passage of the legislation, falling short of the 60 needed to cut off debate.
During the 110th Congress, Senator Barbara Boxer’s (D-CA) Environment and Public Works Committee controlled debate on the cap-and-trade climate measure, culminating in the failed cloture vote on S. 3026. In 2009, however, additional committees will likely join the fight for jurisdiction over portions of the debate. The Agriculture Committee chaired by Senator Tom Harkin (D-IA) may want to consider legislation that deals with domestic and international offsets. The Banking Committee chaired by Senator Dodd (D-CT) may debate the benefits of public transit in reducing carbon emissions. The Commerce, Science and Transportation Committee chaired by Senator Inouye (D-HI) and the Energy and Natural Resources Committee chaired by Senator Bingaman (D-NM) are also likely to want a seat at the table. Assuming Democrats still control the Senate in 2009, Majority Leader Harry Reid (D-NV) would make the final decision on whether to split the next climate change bill into multiple jurisdictions.
The House will also play a more active role in climate change going forward. Key players in the next Congress include House Energy and Air Quality Subcommittee Chairman Rick Boucher (D-VA), and House Energy and Commerce Committee Chairman John Dingell (D-MI). Chairman Dingell has already indicated he would like to build upon two bills next year: Rep. Waxman’s (D-CA) measure, H.R. 1590, the “Safe Climate Act,” which calls on U.S. EPA to set up a cap-and-trade program that would reduce midcentury emissions by more than 80 percent; and Rep. Markey’s (D-MA) bill, H.R. 6186, the “Investing in Climate Action and Protection Act,” which would require an 85 percent reduction in emissions.
Several allies of House Speaker Nancy Pelosi (D-CA) recently introduced a climate change bill that was referred to the Ways and Means Committee. H.R. 6316, the “Climate MATTERS Act” (Climate Market Auction Trust and Trade Emissions Reduction System) is a cap-and-trade bill designed to reduce greenhouse gas pollution. This is the first bill that falls primarily within the jurisdiction of the House Ways and Means Committee. Notable cosponsors of the legislation include Democratic Caucus Chairman Rahm Emanuel (D-IL) and Democratic Congressional Campaign Committee Chairman Chris Van Hollen (D-MD), the fourth and fifth highest-ranking House Democrats.

In less than six months, we will have a new president and begin a new session of Congress. As a result, climate change and energy policy will receive significant attention over the next 48 months. The final product will produce opportunities and challenges for businesses, local governments and individuals. For anyone interested in shaping the final product, the time to engage is now. 


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4 Id. 



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John McCain campaign site  


The Hill  




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