U.S. economy could worsen climate bill prospects

WASHINGTON Tue Oct 6, 2009 4:00pm EDT

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WASHINGTON (Reuters) - Global warming legislation, already facing difficult odds in the Senate, looks even tougher to achieve because key lawmakers fear taking big steps on the environment when the economy is still shedding jobs.

"I think standing in a deep economic hole is a difficult time to do big policy things that cause uncertainty," said Democratic Senator Byron Dorgan.

Dorgan, who is up for re-election next year, is one of a few dozen undecided senators who will be courted by Democratic leaders seeking support for a bill to reduce industrial emissions of carbon dioxide, which are blamed for climate change.

On Friday, White House climate and energy coordinator Carol Browner predicted President Barack Obama was unlikely to sign a bill fighting global warming before a U.N. global warming conference in Copenhagen in December.

That would significantly reduce the chances of striking a meaningful deal in Denmark to fight global warming, as other industrialized countries are following the U.S. lead.

U.S. climate legislation is being attacked from many sides and work has slowed in the Senate because of Congress' preoccupation with healthcare reform legislation.

With unemployment at a 26-year high, economic concerns are gnawing at some Senate moderates, even though the climate bill's supporters say it will actually create millions of "green" jobs over the long-term and have little impact on consumer energy prices.

Like Dorgan, fellow Democratic Senator Blanche Lincoln has embraced the need for reducing carbon emissions that scientists say are causing global droughts, flooding and the spread of disease.

But Lincoln also faces voters in the November 2010 elections and has been hinting recently at the need for more modest legislation, such as just encouraging expanded use of alternative fuels, without mandating carbon reductions.

"In this economy, it is important to take it one step at a time," Lincoln said last month.

JOBLESS RATE

Private economists predict the U.S. jobless rate will soon surpass 10 percent and recede only grudgingly during the second half of 2010, dashing hopes of a fast economic turnaround.

And that is emboldening those who opposed climate change legislation even during vibrant economic times.

A full-page ad in Sunday's Washington Post paid for by Energy Citizens, an offshoot of the American Petroleum Institute and other industry groups, pictured a worker with the words "2 million jobs lost" emblazoned across his chest.

Not to be outdone, House Republican leader John Boehner said on Monday, "The American people are asking, 'Where are the jobs?'" adding that cap-and-trade climate bills Democrats are pushing "will raise energy costs and also cost us 2.5 million jobs a year each and every year over the next decade."

Even if worries about the economy do not kill the climate bill in the Senate, they could weaken its goals for cutting carbon emissions.

"A weak economy -- especially in the heartland -- helps the argument that the 14 percent target (for carbon reductions) may be a bigger vote-getter than 20 percent or even 17 percent," according to an analysis by Robert W. Baird and Co., an international financial services firm.

For all the negative talk about climate legislation prospects, some still see chances for some kind of progress this year, building on June's passage of a bill in the House of Representatives.

They point to Wall Street's eagerness for what could become a gigantic, lucrative market in carbon trading; growing business support, as evidenced by some major companies taking the unusual step of quitting the U.S. Chamber of Commerce because of its active opposition to climate legislation; and public support for growing the ailing U.S. manufacturing base with solar, wind power and other new energy technologies.

"When you stop and look at this, the specter of doom portrayed by the opponents just does not exist as a reality," said Maggie Fox, head of the Alliance for Climate Protection, which was founded in 2006 by former Vice President Al Gore.

(Editing by Alistair Bell and Cynthia Osterman)

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