Is the Climate Legislation Worm Starting to Turn?

If you look at crude oil prices, still bobbing around in the high $60's, you might think that not much happened last week. But I think we may look back 10 years from now and realize that last week the needle began to move towards dramatic changes in U.S. energy and climate policy.

First, on the foreign policy front, the U.S. was forced to recognize that it cannot enforce sanctions on Iran without China's support, and China is too wrapped up in its oily relationship with Iran to push hard. In front of our very eyes, the great constellations of power and energy have realigned. (And we're not EVEN getting into the lost Russian ship, the pirates/ecologists, and the supposed missiles that may or may not have been bound for Iran. Not that the "pirate's" story makes any sense either.) Dominating the oil market as the world's greatest consumer is no longer enough to get what we want; this means that a dramatic about-face towards creating low carbon trading blocs might be a cheaper way to consolidate power in a more multi-polar world.

On the home front, two climate sticks: the EPA is going to regulate CO2 emissions from large emitters, and Senators Kerry and Boxer released a less wimpy climate bill. Together, these two actions almost make Waxman Markey--with its big free carbon credit allocations for utilities-- look carrot-ish.

Which leads to the third plot point. Last week, utilities PG and E, Exelon, and PNM broke with the US Chamber of Commerce, which has gotten increasingly histrionic about CO2 emissions reductions to the point of calling for a  "Scopes Monkey Trial" over the scientific proof of man-made global warming before dialing it back a few days later. (Here's the Chamber's own blog on the utilities who left, kicking off with a pugnacious quote from PJ O'Rourke's Parliament of Whores.) And now, Politico reports, more than 150 business leaders from utilities, manufacturers and clean-energy companies plan to "swarm" Capitol Hill on Tuesday and Wednesday.  They're swarming, or love-bombing Congress with the message that they want clear climate change regulation, sooner rather than later, simpler rather than complex, and they intend to profit from it. Among them are all of the companies that left the Chamber of Commerce last week.

The fourth plot points can be found in the graphs at the EIA's Short Term Energy Outlook, which show that U.S. carbon emissions shrank 6 percent over the past year. In the first half of the year, U.S. petroleum consumption fell by an almost unprecedented 6.3 percent, electricity use fell by 4.4 percent--largely the result of a shrinking economy--but a huge divergence from year on year rises in the past. Interestingly, coal fired electrical generation fell by 12 percent--more than twice as fast as the electricity demand drop. Huge!  Nobody wants to shrink carbon emissions by shrinking the economy (precisely what all the fuss is about) but since we're already in the midst of a major reorganization of energy, capital, and labor, this is a logical time to lay the new ground rules, even much as the financial regulatory agencies are trying to figure out the new rules for banking.


Photo Credit: Flickr User Pfala