STEVENS, MURKOWSKI ENDORSE CLIMATE CHANGE

LEGISLATION

Alaska Senators Ted Stevens and Lisa Murkowski have joined a bipartisan group of senators to introduce major legislation to address global climate change by reducing carbon emissions, encouraging technological innovation, and developing alternative fuels.

The Low Carbon Economy Act of 2007, sponsored by Senators Jeff Bingaman (D-N.M.) and Arlen Specter (R-Pa.), would establish a “cap and trade” program which sets annual targets for carbon emission reduction. Companies could buy, sell and trade credits for the right to release carbon dioxide.

Refineries, natural gas processing plants, LNG facilities, large coal plants and importers of fossil fuels would be regulated by the bill. Businesses would be allowed to buy, sell, and trade credits equal to their emissions to reach their target emission levels. Facilities that capture and store carbon would receive a credit for every ton of CO2 sequestered.

To ensure these industries are able to meet their targets, the cap and trade program also establishes an allowance system, which would initially grant 76 percent of the credits for free and make all remaining credits available for purchase through auctions.

The cost of buying emission credits should slow the growth of, and ultimately reduce, domestic carbon output. The objective is to cut carbon output by nearly 60 percent below last year’s levels by 2050.

“There is little doubt Alaskans are feeling the effects of climate change more than anyone else in our nation,” said Senator Stevens. “Regardless of whether these changes are caused solely by human activity, we must take steps to protect people in the Arctic. This bill would help accomplish that goal by taking a balanced and realistic approach which reduces carbon emissions without damaging our economy. It would direct much needed resources to Alaska to deal with the consequences of climate change.”

“It is responsible for us to take actions to reduce carbon emissions, as long as we can do it without harming our economy,” said Senator Murkowski. “By starting now with a program that funds and spurs technological research and development we can purchase an insurance policy against catastrophic climate effects at relatively little cost.”

The legislation would send clear price signals now that carbon will cost more in the future and would encourage new technology, alternative energy, and consumer purchases that will cut emissions. In contrast to other proposals, Murkowski and Stevens said this legislation would avoid drastic economic repercussions.

Under the plan, by 2020, $35 billion will be provided to encourage coal-fired power plants to retrofit or build new plants that can store carbon underground. That could help spur a new generation of clean coal development in Alaska, which leads the nation in coal reserves.

Funding also will be provided for cellulosic ethanol production, potentially including biomass from wood fiber, and advanced vehicle technology, such as the development and promotion of “plugin” hybrid electric vehicles.

In addition, $25 billion per year would be available to provide assistance to states to help pay infrastructure damage costs which result from climate change. This adaptation funding is particularly important to Alaska, which has been affected by climate change more than any other state.

Under this proposal, Alaska would receive tens of billions of dollars, with funding starting in 2009, to cover the cost of highway and airport damage, water and sewer line repairs, seawall construction, port and pipeline repairs, and village relocation costs caused by climate-induced erosion or thawing.

The state could get an additional $130 million or more a year to offset rising energy costs in rural areas.

According to a preliminary review by the University of Alaska’s Institute of Social and Economic Research (ISER), the bill could help get an Alaska natural gas pipeline project built by increasing the relative value of natural gas.

While the bill would result in allocation of significant federal funds to Alaska for climate change impacts and for new energy technology projects, it would also result in higher energy costs.

Chuck Kleeschulte, Murkowski’s Legislative Assistant, said that according to a study by ISER, natural gas prices could increase 12% by 2030 and gasoline pump prices could rise by up to 20 cents a gallon over the next 23 years as a direct result of the program.

There are at least four other carbon reduction bills before Congress. Kleeschulte noted those bills are “frontloaded” and would pose significant impacts to the U.S. economy. He said the Bingaman legislation is “back-loaded” and is designed to provide for a more gradual transition to soften impacts to the economy.

Many Democrats and major environmental groups support a carbon reduction bill sponsored by Senators Bernard Sanders and Barbara Boxer. Kleeschulte said momentum is building in Washington for substantive carbon-reduction legislation, and if Democrats gain more ground in 2008, it could be difficult to stop a hard-line bill.

The Bingaman bill has won the support from a number of large corporations, national unions and Lower 48 utilities. RDC members are currently analyzing the Bingaman legislation.