Sunday, October 25, 2009

Climate Change Initiatives Still Face Major Hurdles

In a speech at MIT Friday, President Obama praised the efforts of Congressional leaders to move forward climate change legislation, ahead of hearings this week in the Senate Environment and Public Works Committee on the Kerry/Boxer cap and trade bill. Environment and Public Works Chair Barbara Boxer will preside Tuesday, Wednesday and Thursday over hearings which will include 54 witnesses from various federal agencies to be involved in administering the proposed legislation, business and industry leaders who will be affected by the measure, and analysts involved in predicting its costs to various sectors of the American economy.

Boxer hopes to mark up the bill in her Committee the first week in November, but Environment and Public Works ranking member James Inhofe is threatening to withhold the required quorum for a markup unless the complete text of the bill is released, together with details of the USEPA cost analysis of the proposal. Other government climate change initiatives also face strong opposition.

Wisconsin Congressman David Obey is heading up a contingent of Great Lakes Democrats seeking to block a new USEPA rule on ship diesel fuel sulfur content, The EPA proposal would prohibit ships operating within 200 miles of US coastlines from burning high sulfur diesel fuel. The effect of the 200 mile limit would mean all lakers would be required to burn only low sulfur diesel, significantly increasing shipping costs over competing rail and highway transportation of cargo. James Weakley, president of the Lake Carriers Association, estimated that compliance would cost $210 million annually in increased fuel costs, bankrupting 24% of the lake carrier fleet. On the opposite hand, EPA estimates the rule will prevent at least 13,000 air pollution related deaths by 2020.

Paper mill “black liquor” burned as alternative fuel at the mills, produces tax credits of $2.5 billion annually for the paper industry. An IRS memo made public last week appeared to qualify black liquor for a $1.01/gallon tax credit as a cellulosic biofuel, which would magnify tax credits for paper mills by a factor of ten. However, before that can happen, USEPA will need to approve black liquor under the Clean Ari Act, and the agency has no procedure for registering non-transportation fuels. Current technology makes it impossible to use black liquor as a motor fuel.

President Obama wants to end the existing tax credit for black liquor, and Senate Finance Chairman Max Baucus and ranking member Charles Grassley have drafted legislation to do just that.

Some Senate leaders are pressing the committees with jurisdiction over climate change legislation to report out their bills by Thanksgiving, so the bills can be combined and brought to the Senate floor before the end of this year. After that, a conference committee would have to merge any Senate bill with the measure already passed by the House, and bring it up for final votes in both chambers.
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