Carl Levin Senate Floor Statement on the Lieberman-Warner Climate Security Act of 2008, S. 3036

June 6, 2008 -- "Mr. President, I vote to invoke cloture in order to move forward with the debate and break the Republican filibuster so that we can amend and improve the bill in order to begin to address the problem of global climate change. I oppose it in its current form and would have voted “no” if the vote were on whether to pass the bill.

For this reason, I joined with other Senate colleagues in a letter [PDF] identifying many of my concerns and outlining a way to move forward. A copy of this letter is included at the end of this statement.

Chairman Boxer, and Senators Lieberman and Warner have taken on a matter of global significance, which will impact both present and future generations.

We are in agreement on the fundamentals: Global warming is occurring, and human activity is causing it. Scientists tell us that we need to act with urgency to attain the levels of global greenhouse gas concentrations in the atmosphere that will prevent catastrophic impacts from occurring.

The impacts of global climate change are being realized already. We have already been experiencing more heat waves, shorter winters, and more frequent severe weather events.

In the future, the EPA estimates that an acceleration in heavy rainfall events will cause more runoff, stressing the sewer infrastructure and harming water quality. Other projected future impacts are even more alarming: portions of countries and entire islands could be lost to rising sea levels, crop yields could significantly decline, water shortages are expected, and droughts, hurricanes, and floods will likely increase.

Most experts agree that these phenomena will have a huge impact on people living in less developed countries, and could result in the mass dislocation of millions throughout the world. Along with dire environmental and economic consequences, climate change could also impact our national security. Heightened domestic and international tensions caused by competition for scarce resources such as fresh water or agricultural land may result in armed conflict in and between nations.

While we agree on the fundamentals of the problem, I have some differences with the approach of this bill regarding how to confront the immense and complex problem of global climate change. I have consistently argued that the best way of addressing global warming is through an effective and enforceable international agreement that binds all nations to reductions in greenhouse gases, including developing nations such as China and India. Proponents of this bill have argued that U.S. action through this cap and trade bill will prompt action by other countries to reduce their emissions. The international provision in this bill that attempts to level the playing field may put some pressure on other countries to act, but it will not automatically get these countries on board with us to reduce greenhouse gas emissions at levels comparable to ours. Unfortunately, if we do not get these other countries on board, what we do in the U.S. as a result of this bill will only have a marginal impact on controlling global greenhouse gas emissions, and could create a severe economic disadvantage to us.

This bill does not adequately assure American manufacturing a level playing field. A recent Energy Information Administration (EIA) analysis projected manufacturing job losses in the hundreds of thousands each year if the Lieberman-Warner bill were signed into law. Cumulative job impacts in the manufacturing sector through 2030 are estimated at between 2 to 14 million manufacturing jobs. We’ve already lost 3.3 million manufacturing jobs since 2001, about 250,000 in Michigan alone. We cannot afford to lose any more because of an unlevel playing field. Significantly, EIA’s projected manufacturing job losses can be attributed to manufacturers moving to countries with less stringent environmental standards. Without the proper protections, our actions may ship manufacturing facilities, and the greenhouse gas emissions that go with them overseas, providing no environmental benefit while needlessly hurting our economy.

The substitute amendment offered by Senator Boxer makes few improvements to the Lieberman-Warner bill that was reported from the Environment and Public Works Committee. The cost containment auction will help to moderate emission allowance prices and help contain compliance costs, which will ultimately help control prices that hard-working consumers face. More assistance is provided to energy-intensive manufacturers to transition to a carbon-constrained world, and more allowances are provided to reward early action. The substitute amendment provides additional flexibility for covered sources to use EPA-verified offsets, which will also help control the costs of this bill. The substitute also includes some carbon market oversight mechanisms that will help monitor the new emission allowance trading market created by this bill. However, one of the changes in the substitute could have damaging impacts to our domestic auto industry because it could lead to potentially conflicting state regulations for greenhouse gas emissions from mobile sources and potentially highly unfair discriminatory impacts on U.S. manufacturers as a result of those state regulations.

I’ve filed a number of amendments and have cosponsored others that will strengthen the bill to protect American jobs, reduce the burdens on working families and consumers, and also protect the environment.

One of my amendments would provide Americans with protection from economic disruptions in case the costs of the bill exceed a certain level. Specifically, my amendment would suspend the compliance requirements of the cap and trade program if the emission allowance price reaches a prohibitively expensive amount. This amendment would provide an effective backstop if the various cost containment mechanisms included in the bill turn out to be less effective than expected, and would prevent harm to the U.S. economy.

Another amendment I filed would protect the competitiveness of U.S. manufacturers in international markets. While I am pleased that the bill sponsors included an important provision that would help level the international playing field between U.S. manufacturers and international competitors not facing similar greenhouse gas limits, if this provision does not survive a WTO challenge, the bill provides no recourse to correct the situation. My amendment would suspend this program and compliance obligations of manufacturers that face global competition if a foreign country retaliates against the international allowance requirement that would be imposed by this bill. Also, additional allowances would be provided to these manufacturers to compensate for their higher production costs that would result from this bill. This amendment would help keep manufacturers and jobs in the U.S. if the international reserve allowance program in Title XIII results in retaliation by other countries.

I also joined Senators Specter and Brown in filing an amendment that would strengthen the international reserve allowance program to ensure that importers bear the same responsibility as American manufacturers with respect to limiting greenhouse gas emissions. The bill attempts to do this by requiring certain importers to submit emissions allowances to account for the greenhouse gas emissions of their products if the product comes from a foreign country that has not taken comparable action to limit greenhouse gas emissions. However, the bill defines “comparable action” in such broad terms that it would likely exclude many countries that in fact have not taken similar actions. The bill gives discretion to the International Climate Change Commission that would be established by the bill to determine that a foreign country has taken comparable action if they are using state-of-the-art technologies to limit greenhouse gas emissions, without considering the magnitude of the reductions achieved by these technologies.

The Specter-Brown amendment would determine that a foreign country is taking comparable action only if actual greenhouse gas reductions are comparable to those achieved in the U.S. The amendment would also broaden the types of imports that would be required to submit emission allowances by including both direct and indirect emissions generated in the course of manufacturing the product. The substitute amendment only includes direct emissions and emissions associated with the electricity used to manufacture the product, which fails to account for emissions associated with other inputs used to make downstream products. The Brown-Specter amendment corrects the competitive problem that would be faced by U.S. manufacturers.

I also filed an amendment that would provide more allowances to fossil fuel-fired electric utilities whose prices are regulated. A coal-fired power plant is limited in its ability to reduce its greenhouse gas emissions because this depends entirely on the efficiency of the generating plant. A Congressional Research Service analysis found that efficiency improvements on the order of 4 to 6 percent could be achieved by improving an existing unit, which would in turn have a 4 to 6 percent reduction in carbon emissions. The only way to further reduce emissions from a power plant would be to install carbon capture and sequestration technology, which is not expected to be commercially available until sometime after 2030. Because the electric utilities can do very little to address greenhouse gas emissions at existing plants, it is only fair to provide emission allowances to these facilities that power homes, retail establishments, and industry with vital electric power. Limiting additional allowances to utilities whose prices are regulated will prevent companies from realizing windfall profits, which occurred in the European Union.

Mr. President, I continue to be concerned about provisions of this bill that could result in both conflicting cap and trade systems and conflicting underlying regulations for greenhouse gas emissions. I believe that Congress should adopt a mandatory federal economy-wide cap and trade program that will be the single regulatory regime for overall control of greenhouse gas emissions. Existing state laws and initiatives should be integrated into the federal cap-and-trade program where the policies do not conflict, but in areas where the regulations or programs conflict or overlap, there must be a single clear national authority. Federal authority in this area should be made clear in the statutory language to prevent conflicts in regulation, preserve overall efficiency, and ensure harmonization of regulations.

I am also concerned about other provisions of the Boxer substitute. These provisions, taken together, seek to preserve state authority and to reward states that have been leaders in the effort to reduce greenhouse gas emissions and increase energy efficiency. I applaud efforts to encourage energy efficiency, and I have no concerns about that aspect of these provisions. I am very concerned, however, that rewarding states for leadership in greenhouse gas emission reduction efforts in the way laid out in this bill may have the effect of setting up an unworkable system that will result in confusion, at best, and regulatory chaos, at worst.

Section 614 would provide additional allowances to states that are “leaders” in the effort to reduce greenhouse gas emissions and increase energy efficiency. A leader is not defined by the Act, however, and the EPA Administrator is given the task to establish a system, by regulation, for “scoring historical State investments and achievements in reducing greenhouse gas emissions and increasing energy efficiency.” To qualify as a leader under the terms of the bill, it appears that a state must have set more stringent standards than the federal government. To receive the reward of additional allowances, however, a state must either have never established a cap and trade system or have terminated its cap and trade program. In other words, on the one hand, the bill is encouraging states to set their own standards in order to qualify for additional allowances – but then, on the other hand, the states are told to terminate their programs in order to receive the additional allowances. That sounds to me like regulatory chaos. Worse still, the bill does not actually require states to terminate separate cap and trade programs – it simply provides a financial incentive to do so. Therefore, if the financial incentive is not sufficient for the state to decide to terminate its program, there is too great a likelihood there will be conflicting and confusing federal and state cap and trade systems.

It simply does not make sense to have competing federal and state cap and trade programs. It simply will not work. If a state were to implement a more stringent cap-and-trade program that allowed regulated entities to purchase Federal emissions allowances to satisfy state compliance requirements, this would in turn increase demand for the Federal allowances, which would increase the price of Federal allowances. Thus, such an action by a state would affect entities in other states because the Federal allowance trading market is nationwide.

Another provision of this bill that gives me cause for concern is section 1731, entitled Retention of State Authority, which purports to be a savings clause that simply preserves authority under existing provisions of law. I am concerned, however, about language in Senate Report 110-337, the report accompanying S.2191, which states in part, “The purpose of this section is to make it absolutely clear that this bill does not affect the validity of these state and local greenhouse gas emissions laws and regulations (and any related laws or regulations), so long as these laws require state and local reductions of greenhouse gas emissions at least as stringent as those required by federal law. There will be no express, implied, field, or conflict preemption of these regional, state, or local efforts.” The report language concludes by saying, “In interpreting the scope of this savings clause, the courts should follow the applicable precedent that calls for a narrow reading of federal preemption of state and local authority and a broad reading of this savings clause.” Because of that concern, I have filed an amendment that would make clear that nothing in this Act confers authority on either the Federal government or State government to establish new standards in this area.

Lastly, I want to speak to why I am so concerned about the potential for conflicting state and federal regulations in this area, particularly as it relates to greenhouse gas emissions from vehicles. The State of California has already issued regulations to limit greenhouse gas emissions from vehicles by establishing fuel economy standards that would apply to vehicles sold in that state. A number of other states have either adopted similar regulations or indicated that they intend to do so. The net effect of these regulations adopted in many states across the country – if allowed to go into force – would be a patchwork of potentially conflicting regulations because the average fuel economy standard required in each state would be driven by the sales mix of vehicles in that particular state.

Moreover, the regulations adopted by the State of California – the model regulations that other states would adopt – include a provision that is highly discriminatory against our domestic manufacturers. The California regulations have an exemption for manufacturers who sell less than 60,000 vehicles in the State. The effect of this exemption is that the California law would only regulate vehicles made by Ford, GM, Chrysler, Toyota, Honda, and Nissan. Other manufactures, such as Volkswagen, which is the fourth largest automaker in the world, would be exempt from the California law. In addition, automakers from Korea, India, and China and their vehicles would be exempt from the California constraints. Surely, we do not want to perpetuate such a discriminatory state law around the country. However, if the provisions of this bill confer new authority on state governments to set separate standards, we may do just that.

In response to questions I posed to Senator Boxer, the manager of the bill for the Majority, concerning the scope of state and federal authority in this bill, I have obtained from Senator Boxer answers to my questions to her, which clarify her intent as the author of the language in question. I ask that the text of the questions and her answers be printed at the end of my statement.

I have highlighted a number of ways this legislation could be repaired. I filed amendments and co-sponsored other filed amendments, which would do that. I agree with many provisions in this bill. The bill attempts to provide the necessary funding and technical resources so that we can successfully transition to a low carbon economy, and recognizes at least in part the burdens of this transition. I am pleased that the Substitute Amendment provides more funding for manufacturing states to implement a variety of programs and measures that would help mitigate any negative impacts from global warming or the regulatory requirements of this bill. I am also pleased that the bill funds advancements in technology that could provide jobs and also reduce greenhouse gas emissions.

The bill establishes a National Wildlife Adaptation fund with mandatory funding that could be used for a very broad range of activities including Great Lakes restoration projects. In developing a plan for wildlife adaptation, the bill specifically requires the President to consider the Great Lakes Regional Collaboration Strategy which was developed with extensive public involvement. I have long supported the Great Lakes Regional Collaboration Strategy, but the lack of funding has presented a serious impediment to implementing it. The President’s plan must include measures to protect, maintain, and restore coastal ecosystems to ensure that the ecosystems are more resilient to withstand the additional stresses associated with climate change, including water level and temperature changes in Great Lakes. The National Wildlife Adaptation Fund would be distributed to federal agencies for a series of wildlife programs, and the Great Lakes are eligible to receive funds through many of these programs. Each agency has the discretion to allocate funds to its various programs so it is unknown how much money the Great Lakes would receive.

To be sure, far ranging action is needed to confront the daunting challenges of global climate change. While we are just now beginning to see the preliminary impacts of global warming, most scientists agree that the problems of climate change will only worsen in the future. I am hopeful that this debate has laid a foundation for us to move forward and for the U.S to lead in what may be the defining issue of our planet’s future environment. The potential costs of global climate change are tremendous, and these costs will only mount if we wait too long to address this critical problem. Clearly, we need to act to avert a global catastrophe. However, this action must be taken in a way that does not needlessly sacrifice additional American manufacturing jobs and further burden the working men and women of our country with higher gas, food, and energy prices. We need to invest in advanced technology that will help create jobs and spur our economy as well. With significant investment in research and development, public-private partnerships and incentives for manufacturers to invest in new technologies, we can make great technological leaps to reduce greenhouse gas emissions not only here, but around the world. "

Source: Senator Carl Levin

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