Senate to debate bill regulating greenhouse gases

— -- Shrinking glaciers and rising sea levels are usually the stars of any climate change debate. But amid a growing consensus on the need to curb greenhouse gas emissions, attention is shifting to how to blunt global warming without putting key U.S. industries at a competitive disadvantage.

The Senate next week is scheduled to debate legislation that represents the most comprehensive climate measure to date. Sponsored by Sens. Joe Lieberman, I-Conn., and John Warner, R-Va., the bill would establish a "cap and trade" system, limiting greenhouse gas emissions while allowing companies to buy and sell the right to emit specified amounts of pollution.

The measure, which the White House opposes, is unlikely to become law in an election year. But with all three remaining presidential candidates supporting the bill, the Senate debate should offer important clues as to the shape of eventual U.S. action. "This is the most serious treatment of the issue on the Senate floor ever," said Dave Hamilton, a Sierra Club lobbyist.

The U.S. is viewed globally as a laggard on climate change since, alone among major nations, it chose not to ratify the 180-nation Kyoto treaty. The 1997 accord required advanced nations to reduce carbon emissions below 1990 levels but exempted developing countries such as China from reducing greenhouse gas output.

China, now the world's largest source of carbon emissions, issued its own 63-page climate change policy last year. But Beijing says countries that have been heavy polluters since the industrial revolution began should do the most to tackle climate change. China's emissions are still low on a per-person basis, and its leaders, while mindful of the costs of environmental damage, are focused on further development of their still-poor nation.

In the USA, political momentum behind domestic measures to counter climate change is building. But reducing greenhouse gases will impose significant costs on energy-intensive industries such as steel, cement and chemicals. Many of their foreign rivals are based in developing countries, such as China or India, that don't have any carbon limits. And further international measures to address climate change aren't due until a planned Copenhagen summit in December 2009.

To prevent foreign makers from enjoying an advantage in the U.S. market — and to keep U.S. companies from moving abroad in search of looser regulation — the Senate bill would require importers to purchase emissions allowances at the border. Supporters say the requirement also would encourage developing countries to enact their own greenhouse gas limits.

But opinions are split on whether the so-called border adjustment is the most effective way to cushion the competitive blow from new greenhouse gas limits. American Electric Power, one of the nation's largest utilities, says yes. The American Iron and Steel Institute instead favors barring imports from countries whose steel production is dirtier than that of the USA.

Even among those pushing for climate change action, there are differences. The Sierra Club backs the border levy, for example, while a new study co-sponsored by the World Resources Institute, another environmental advocate, criticizes it as poorly conceived and likely to be ineffective.

The WRI study, done in collaboration with the Peterson Institute for International Economics, says a border fee is unlikely to compel developing countries that emit large volumes of carbon to match any new U.S. limits. Only 1% of Chinese steel production is exported to the USA, giving Washington little leverage over Beijing. "There's not much reason to think China will respond positively. And there's every chance it will do more harm than good," said WRI's Rob Bradley.