Senate Halts Effort to Cap Emissions

By: Stephen Power, The Wall Street Journal

Commentary:

This decision is going to please very few given the complexity that has surrounded the issue for the last several years. For the most part the manufacturing community it happy with the fact that the bill seems to be going nowhere for the time being but they are certainly not heaving a sigh of relief as the EPA has been aggressive in its interpretation of the Clean Air Act and in many respects has gone far beyond what the legislation would have called for. The ideal outcome would have been for the bill to be passed but with significant modification that would have outlined what the EPA could and could not do with the issue.

Those most concerned about the impact of emissions on the greenhouse gas issue were obviously not happy with the outcome either but they preferred this to a modified bill that would weaken their arguments. The bottom line for many in the Senate was that this was not an issue they wanted to contest in an elections year as it left too many of them vulnerable to attacks from both sides. If the law was too stringent there would be immediate and painful reactions in the employment sector as many businesses affected by the law would end up reducing staff to handle the costs imposed, shut down altogether or they would move production out of the US to avoid the imposition of these new costs. If the legislation was too weak the advocates would be upset and vilify the Senate for taking a poor stance on the subject.

There will be immediate reactions and there will be long term ones as well. The most important short term impact is that many of the energy solutions that had been developing in reaction to the reduction in emissions will lose the urgency they had before. This may weaken demand for wind and solar and other alternatives. The high cost conversions will be delayed as well and that could help many companies get themselves out of the recession they have been fighting.

The issues have not gone away and the legislation will certainly make its appearance again in 2011 but that could well be a very different Senate and House and the focus of the bill will likely change drastically. Few argue that climate change is not an issue but the cause still provokes debate and certainly the means by which the issue will be addressed.

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