Visions - Fall 2008 - 16

The View From Washington Climate Change, Energy Policy, and the Environment W ith energy policy remaining among voters’ top concerns this election year, no matter who moves into the White House in January 2009, one thing would seem to be certain: the next president of the United States will arrive in Washington committed to a radical new approach to energy policy. Both Senator John McCain and Senator Barack Obama have pledged to take climate change more seriously than the current administration, and both support some type of comprehensive climate-change legislation similar to a bill President Bush threatened to veto earlier this year. Both major party candidates promise to curb greenhouse gas emissions, both advocate an array of measures to promote energy conservation, and both are believers in the use of alternative fuels. Although global warming did not dominate the television ads that ran during the Democratic and Republican national conventions, both Senator McCain and Senator Obama have kept climate change, and energy, on the list of key issues they cite frequently during stump speeches on the campaign trail. In fact, climate change is an issue that spills over into the candidates’ positions on a number of other broad-based issues, from energy to the environment to food and commodity prices. The Candidates’ Specific Policy Positions the labor costs of transitioning to new technologies. In addition to climate change measures, Senator Obama opposes the building of additional nuclear reactors, and he opposes dumping nuclear waste at Nevada’sYucca Mountain. While still favoring proposals to require oil companies to use existing drilling leases, Senator Obama recently reversed his anti-drilling position to support some offshore oil exploration. Senator Obama would impose tougher controls on oil speculation, end tax breaks for the oil and gas industry, and impose a “windfall profits” tax on oil companies. He favors tougher fuel economy standards, backs federal ethanol mandates, and seeks greater federal support for the production of ethanol from non-food crops. The Potential Policy Response from Washington As one might expect during an election year, Senator McCain and Senator Obama are currently emphasizing their differences on energy/climate change/environmental policy. While Senator McCain talks about his support to lift restrictions on offshore drilling for oil, Senator Obama has spoken on the need to crack down on energy speculation and institute a “windfall profits” tax on oil companies. Whether achievable or not, their aim is to give the country what both candidates say it now wants: energy security, energy independence, affordable fuels, and a global leadership role in the effort to fight climate change. According to the National Journal, Senator McCain favors controlling greenhouse-gas emissions by capping U.S. global-warming pollutants and allowing companies to buy and sell emission “credits;” polluters would have until 2050 to cut their emissions by 60% below 1990 levels. Under the McCain plan, credits would be distributed free of charge to polluting companies, and the money raised from the eventual auctioning of some credits would be dedicated to new energy technologies. In addition to climate change measures, Senator McCain’s energy policy would seek to build 45 additional nuclear power plants by 2030, and create an international repository for commercial radioactive waste; would support new oil and gas development off U.S. shores; would oppose mandating tougher fuel-efficiency standards for cars and trucks; and while supporting the development of new alternative energy technologies, it would oppose federal subsidies for ethanol. Senator Obama backs legislation to cut global-warming pollution 80% below 1990 levels by 2050. Under the Obama cap-andtrade proposal, the federal government would auction emission “credits,” and the money from the auction would be used to develop clean-energy technologies, increase efficiency, and underwrite 16 visions Fall 2008 Because Senators McCain and Obama have laid out specific proposals to create a cap-and-trade system, and Congress has already held hearings on similar plans, some form of cap-and-trade legislation is likely to find its way to Capitol Hill regardless of who is elected president. Support for Sen. McCain’s proposal to build more nuclear power plants, and Sen. Obama’s plans to require that 25% of electricity come from renewable sources remain in doubt. Whether a cap-and-trade bill will pass Congress is less certain.Although last year’s Warner-Lieberman cap-and-trade bill narrowly passed through committee, it was defeated by the full Senate on questions concerning its impact on the overall economy, the burden it could place on individual tax payers, and President Bush’s pledge to veto the bill. With an increasing number of businesses and industries supporting a cap-and-trade system, and many utilities stating that they would be better off with a standard national plan rather than having to deal with multiple regional systems, many Washington-based policy analysts see some form of cap-and-trade finding its way to the president’s desk as early as late 2009. Conclusion Although a cap-and-trade system seems likely to pass sometime during the 111th Congress, neither Senator McCain nor Senator Obama seek to commit the U.S. to a rehashing of the old Kyoto protocols. While stating that the U.S. should assume a leadership role in global climate change talks, both candidates say they will seek pollution-reducing commitments from emerging nations, notably China and India, before committing the U.S. to a new plan. For more information, contact Jamie Winslow at james.winslow@sumitomocorp.com. Sumitomo Corporation of America

Visions - Fall 2008

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