Landmark climate change legislation passed the House of Representatives on Friday by a narrow 219-212 margin after President Barack Obama personally lobbied moderate Democrats who feared economic and political fallout from the legislation.
The focus now shifts to the Senate where the chances of a similar bill being passed by the fall remain uncertain.
The Waxman-Markey bill passed by the House will create a carbon emissions market by 2012, putting a price on carbon for the first time. It will give away for free 85% of emission credits in the first decade and a half to allow industries enough time to adapt to lower-carbon technologies.
The mandatory market would ultimately make every major industry pay for carbon pollution. The hope is that higher energy prices will bring about a 17% reduction in greenhouse gas emissions by 2020, compared with 2005 levels. The targeted reduction would rise to more than 80% by mid-century.
"This bill is one of the most significant acts any of us will take in the US Congress," said House Majority Leader Steny Hoyer (D-Maryland) just before the final vote. "We have an opportunity to take action and make a major difference in the security and independence of this globe and this country."
Democrats, including Obama, spent much of last week rounding up dissident members of Congress representing energy-producing districts that would be penalized by the bill. Still, 44 Democrats voted against Waxman-Markey. That does not augur well for the chances of similar legislation in the Senate, where the votes of 60 of the chamber's 100 members are needed.
The speed with which House Speaker Nancy Pelosi (D-California) pushed the legislation through means Senator Barbara Boxer (D-California), head of the Environment and Public Works Committee, can introduce a bill as early as next week. This may leave enough time for several legislative hearings and briefings before final passage by the committee in August.
Fireworks can be expected between Boxer and senior Republican Senator James Inhofe of Oklahoma, a leading critic of cap-and-trade and a skeptic when it comes to the science behind climate change.
Inhofe wrote in a Jun. 15 op-ed article that the bill in its current form "will have a devastating impact on the economy, cost millions of American jobs, push jobs overseas and drastically increase the size and scope of American government."
While Democratic leaders acknowledge that energy prices will rise as a result of the cap-and-trade program, two reports issued last week by the nonpartisan Congressional Budget Office (CBO) and the Environmental Protection Agency (EPA) suggested a carbon trading system would cost less than previous estimates had suggested.
The EPA put the cost for the average household at less than $200 a year by 2020, much lower than pervious estimates, while the CBO estimated the cost of carbon in 2020 at $28 per ton.
The new cost estimates, though challenged by Republicans, gave House Democrats protection from critics last week and may do the same for Democratic Senators from states like Indiana, Arkansas, West Virginia and North Dakota which depend heavily on coal mining and coal-fired electricity.
Senate Majority leaders want committee action completed by mid-September, setting up a battle on the Senator floor in October.
In an effort to cobble together enough votes for passage, several protectionist measures were added to the House bill that were not supported by Obama. The president warned on Monday against "sending any protectionist signals" through the legislation.
Given the size of the bill -- over 1,000 pages -- Congressional leaders have the flexibility to strip much of it away while retaining its core feature: a carbon price.
"You could water a lot of things down and still get cap-and-trade that gets the government into the energy business as it never was before," said Dan Kish, senior vice president for policy at the Institute for Energy Research.
"By setting the bar so high, with so many different aspects, you could cut three-fifths of the bill and get 90% of what you want," said Kish, a former chief of staff for the House Natural Resources Committee.
ConocoPhillips, a member of the US Climate Action Partnership (USCAP) which broadly supports climate change legislation, criticized the bill passed by the House. Conoco, the second-largest US refiner, says the bill may force refiners to import more fuel into the US.
Bill Murray, Washington
