Q & A: On the Hot Seat
Rep. Ed Markey Confronts Climate Change — and Politics
Rep. Ed Markey (D-Mass.) arrived in the House in 1977, the same year Jimmy Carter became president. Carter was determined to enact strong energy legislation, and even as a junior Member, Markey was a key Congressional partner.
Now with Barack Obama in the White House and committed to enacting energy reform and climate change legislation, Markey, from his perch as chairman of the Energy and Commerce Subcommittee on Energy and Environment, is once again a major player in the debate. With Energy and Commerce Chairman Henry Waxman (D-Calif.), he has introduced a sweeping bill on climate change that House leaders hope to move quickly.
Markey spoke last week with Roll Call Executive Editor Morton M. Kondracke about the legislation and the evolution of the debates over energy and the environment in Congress through the years.
ROLL CALL EXECUTIVE EDITOR MORTON M. KONDRACKE: Let’s go to the [climate change] bill. The schedule, as I understood it, was that you’re hoping for a vote in the House by Memorial Day.
REP. ED MARKEY: I don’t know. The Speaker announced her intention to have a vote on the House floor before we break for the August recess.
ROLL CALL: Before August recess. OK.
MARKEY: [Energy and Commerce Chairman] Henry Waxman [D-Calif.] and I have announced our intention to complete consideration of the bill by Memorial Day in the Energy and Commerce Committee.
ROLL CALL: What is the schedule between now and Memorial Day?
MARKEY: [This] week we are going to commence an intensive series of hearings, beginning with the secretary of Energy and the secretary of Transportation. So it will be Steven Chu, Ray LaHood and Lisa Jackson, the administrator of the EPA, and we will proceed day by day, having these comprehensive hearings on the legislation that we are now considering for markup.
ROLL CALL: This is your subcommittee or the full committee?
MARKEY: That’s the subcommittee. Well, again, Henry and I are working together on this. Part of it might be full committee, part of it might be subcommittee, but we’re working hand in glove to just construct the best strategy for all of the hearings. It’s still to be determined, but we might have six hearings in one week. It’s still to be determined.
ROLL CALL: The Senate voted specifically that cap-and-trade was not going to be part of reconciliation. Do you need it to be part of reconciliation to get it passed?
MARKEY: No, we are going to put the legislation through the regular process.
ROLL CALL: What do you rate the chances in the Senate?
MARKEY: I think the chances in the Senate will very much be guided by the action in the House. We’re working to create formulas to deal with the impact the legislation would have upon trade-exposed energy-intensive industries. We are working to create a formula to deal with the impact on electricity ratepayers so that they are protected, and we are working on other parts of the legislation that ultimately, if formulas can be constructed, will enhance the likelihood that the legislation could pass in the Senate as well.
ROLL CALL: The president said recently that he wanted it this year, but he said he was willing to have a gradual phase-in of cap-and-trade, in order to help it pass. Does that mean that they’re talking about extending the dates? What are they talking about?
MARKEY: He may be — if you don’t mind, I’ll say this advisedly — he may have been talking about the fact that all of the carbon credits might not be auctioned off immediately, and in the near term, a certain percentage of the carbon credits would be allocated in order to ensure that the trade-exposed energy-intensive industry and that electricity consumers were protected. I think that could be what he was referring to.
ROLL CALL: Are you open to that idea, that’s basically giving away credits?
MARKEY: That’s what Henry and I have built into our draft.
ROLL CALL: What percentage will be auctioned and what percentage will be given?
MARKEY: That is going to be determined by a set of conversations that we have with the Members as they return from recess. We gave the Members a copy of the bill on the Tuesday before we broke, and we asked them to think about these issues, informed by the hearings which we’ve already had on the subject, 13 hearings so far this year. Ultimately the percent that will be set aside and not auctioned immediately will be determined by those conversations.
ROLL CALL: Last year, your bill provided for nothing given away.
MARKEY: No, it didn’t. My bill last year set aside 6 percent of the credits to be used for the trade-exposed industries.
ROLL CALL: Trade-exposed — this is aluminum, steel?
MARKEY: That’s steel, paper, glass, concrete. There’s about six or seven industries.
ROLL CALL: But still, the vast majority would be auctioned?
MARKEY: Again, we have to talk to the Members, and, again, part of the formula that we’re trying to create will be how we rebate electricity ratepayers, the increase that otherwise would occur for them. The exact percentage that ultimately will be auctioned will be very large, but the precise number has yet to be determined.
ROLL CALL: What do you figure that this bill, cap-and-trade, will raise? Who gets the money and how much is it going to be, do you think?
MARKEY: The amount of money is not completely knowable. For example, a carbon credit in Europe at the beginning of last year was running at $40 a ton, and now I think it’s slipped down to $8 a ton because of the recession. But again, it’s market-adjusted, and the market itself determines the price in this auction system. There is a range.
ROLL CALL: What is your estimate of the range?
MARKEY: I’d have to figure out the math right now and try to do an equivalency to what is going on in Europe and where the price is per ton in Euro terms. We are going to determine what happens with the allowances, and we’re going to give some to the local distribution companies —
ROLL CALL: Who are the local distribution companies?
MARKEY: They are like the Pepco’s — in order to insulate the ratepayers.
ROLL CALL: So you’ll rebate some of the utilities so they don’t have to raise utility bills?
MARKEY: That’s right, for ratepayers.
ROLL CALL: What else?
MARKEY: Again, some to trade-affected industries, some for energy technology research and development. But the majority will be auctioned off. Until we know what the market will look like in terms of the recession or recovery and exactly the percent that we are going to auction off, it’s difficult to give you a number.
ROLL CALL: Last year when I interviewed [Sen.] Joe Lieberman [ID-Conn.], who was the sponsor of the bill, he was talking in terms of $7 trillion between now and 2050.
MARKEY: Was he using 2050 dollars? I’m being serious with you. You could buy a Popsicle for 7 cents when you and I were a kid. I don’t know. But if you divide it by 43 years into $7 trillion, I don’t know what it comes out to, but I also don’t know what the numbers are that he was using.
ROLL CALL: I was trying to get an order of magnitude, whether you had calculated how much money you’re going to be expensing under these various categories.
MARKEY: I don’t know the number.
ROLL CALL: What the Republicans are obviously saying is that there is going to be a huge tax on utility bills and even President Barack Obama, during the campaign, said things like, “If you say to a power plant that you have to use energy in a different way, that’s going to cost money. They’re going to pass it on to consumers, which means that everybody’s electric prices are going to go up, something that is not very popular.— He said at another point that utility bills might skyrocket. So his various opponents are using his own words to dampen enthusiasm for the bill. Are consumers going to be protected 100 percent?
MARKEY: Our goal is to protect electricity consumers 100 percent. By the way, which the opponents leave out, Americans have already been paying an energy tax for too long, in the form of high gas prices because of our dangerous addiction to foreign oil. Last year alone, we spent nearly $400 billion buying foreign oil. That means for 120 million American households, that’s about $3,000 per family to foreign regimes in 2008. That’s tax on American consumers. It also happens to be that Exxon Mobil and foreign regimes are the tax collectors.
ROLL CALL: OK, so you’re going to rebate 100 percent of the additional utility bills to consumers?
MARKEY: That’s correct.
ROLL CALL: You wanted to do it on a means-tested basis last year, didn’t you?
MARKEY: Our formula here is to take care of all consumers. That’s the goal that Henry and I have established.
ROLL CALL: Who is going to select the alternative energy industries that money gets invested in?
MARKEY: The Department of Energy has the responsibility for making those decisions.
ROLL CALL: Is there a danger of picking winners and losers here, like the Synfuels Corp. or ethanol investments and stuff like that, where we’re choosing one industry over another instead of letting a market determine?
MARKEY: Well, our tax policy already picks winners and losers. Price-Anderson is a protection for the nuclear industry. Depletion allowance is a protection for the oil industry. We envision this being constructed in the same way that peer-reviewed grants for the National Institutes of Health are constructed, so that these new technologies are competing for the grant money.
ROLL CALL: You want 25 percent of all electrical energy to be generated by renewables by 2025, right?
ROLL CALL: As I understand the bill, it’s distributed among wind, solar, biomass and geothermal.
MARKEY: And others. Kinetic — there are other renewable sources that also could qualify.
ROLL CALL: The question is, and various people have asserted this, that the technology just isn’t there. We produce 1 percent wind now, and .1 percent is solar right now. How do you know that by those dates we’d have the technology to do that?
MARKEY: Well, let’s just take 2008 as an example. In 2008, 8,300 new megawatts of wind power was constructed in the United States, 400 new megawatts of solar, 200 megawatts of geothermal, 100 megawatts of biomass. So about 9,000 new megawatts of electricity in that area.
ROLL CALL: How many megawatts do we use a year?
MARKEY: Well, wind alone was 40 percent of all new electrical generating capacity installed in the United States in 2008. Forty percent. So there’s two ways of looking at the issue. You can look in the rearview mirror after a generation of doing very little. You can say, what a small percentage renewables is in our total portfolio. Or, you can look at 2008 and you can say, if the United States constructed 9,000 megawatts of renewable electricity, representing upwards of 43-44 percent of all new electrical generating capacity, with the bulk of the remainder being natural gas, which produces half of the emissions as coal, perhaps that Boone Pickens formula will work, that natural gas and renewables is a viable formula for the future. What people do is, to get an accurate projection of what is possible in the renewable field, rather than looking at an area in which we see very little benefits for a generation and then saying, look how small it is in a total percentage of existing generating capacity, what if for 20 years, it produced 40-50 percent of all new electrical generating capacity? What percentage would it then represent in 2025? By the way, 8,000 to 9,000 is at a point before President Barack Obama is sworn in as president, and could double the production of electricity in our country over the next three years.
ROLL CALL: What do you think the future for nuclear is?
MARKEY: Nuclear is a technology which received enormous benefits in the 2005 Energy Act. It continues to benefit from reauthorization of the Price-Anderson insurance coverage, government guaranteed. There were, I think, $18 billion worth of loan guarantees for nuclear that was authorized in 2005. But the money has now been put into the budget for the loan guarantees for the nuclear industry. I think it’s important, though … to keep in perspective that by the time we reach the switch being pulled for the first nuclear power plant to be generating their first 1,000 megawatts, we will probably have an additional 150,000 megawatts of renewables 10 years from now, at the rate it’s now growing. Just so that there’s an idea, a kind of proportion that can be constructed in people’s minds, because of the time delay in the construction of these plants.
ROLL CALL: The time delay is basically due to local opposition, isn’t it?
MARKEY: It’s mostly that Wall Street, after Three Mile Island and Chernobyl, felt that their investment dollar was at great risk over a 10-year period, where it was much lower risk — the capital risk has been much lower for coal, for natural gas, for wind and for solar. And so the decisions were made on Wall Street and because of the shorter time frame, where their capital is exposed, where in most instances it’s a couple of years to build a coal, gas, wind or solar facility.
ROLL CALL: Speaking of coal, what is the future of coal?
MARKEY: In the legislation, we actually build in a $10 billion fund for research on carbon capture and sequestration. We’ve included the language that Rep. Rick Boucher [D-Va.] was interested in seeing included, and we have done so.
ROLL CALL: There are various environmentalists who think that there’s no such thing as clean coal and that that technology will never work. What do you think?
MARKEY: The provision in the legislation establishes a program. Henry and I are supplying the establishment of a program for the demonstration and the early deployment of carbon capture and sequestration technologies.
ROLL CALL: You’re going to try it out and see if it ever does work. You’re going to pay for it.
MARKEY: That’s right. We authorize the nation’s fossil-based electricity distribution utilities to hold a referendum on the establishment of a carbon storage research corporation. The corporation will be operated as a division of the Electric Power Research Institute and would assess fees, totaling approximately $1 billion annually, to be used to fund the large-scale demonstration of carbon capture and sequestration technologies in order to accelerate the commercial availability of the technologies. This is something that we’ve included in the draft legislation. It is the language which Rick Boucher suggested. And it is the approach that the coal-burning facilities had asked for and support.
ROLL CALL: So you think that coal state Congressmen likely will support the bill?
MARKEY: We’re working with the coal state Members, led by Rick Boucher, in constructing a formula that ensures that the research and deployment of carbon capture technologies is possible, so that coal has a future. Yes.
ROLL CALL: The EPA is about to, if it hasn’t done it already, regulate carbon, CO2, as a pollutant. How is this going to affect the whole process of legislation and the process of coming to terms with CO2? Are you going to displace them or are they going to displace you? What’s going to happen as result of this ruling?
MARKEY: Two years ago — April of 2007 — the Supreme Court rendered the most important environmental decision in their history. In Massachusetts v. EPA, it ruled, in a 5-4 decision, that the EPA had a responsibility to determine whether CO2 posed a danger to the public health and well-being. The Bush administration ignored that mandate from the Supreme Court until Jan. 20, 2009. My investigation in 2008 revealed that it was actually Dick Cheney’s office that stopped the EPA from moving forward. Now, Lisa Jackson, the new administrator at the EPA, has announced her intention to begin the process of determining whether or not an endangerment decision should be issued. The decision could be announced in the next two weeks.
If the EPA determines that there is a danger, then it is required to do something about it. If that happens, then the choice presented will be: Should the United States Congress and the elected Members of the House and Senate make a determination as to how CO2 is regulated or should the EPA administrator make that decision? That, in my opinion, will put more pressure on the political process to use the discretion which it has to protect trade-exposed industries, to protect consumers, to create time tables that work effectively to deal with the problem.
ROLL CALL: The opponents of this all argue, why should the United States be imposing all this on itself when the Chinese and the Indians are not going to go along, and they’re not just going to give up development and stop pumping CO2 into the atmosphere?
MARKEY: We have to act for our own national security reasons. We cannot continue to import 13 million barrels of oil a day from parts of the world that are very dangerous. We cannot allow the Chinese, the Germans and others to capture this new technology field. We are falling further and further behind in the development of an area that could ultimately produce 3 million to 5 million new jobs for the American economy. For us, this is a national security and a job creation opportunity that we have to take advantage of. If we expect the Chinese to ever cooperate in the construction of an international agreement, we as a nation have to go to [international global warming talks in] Copenhagen as a leader and not a laggard.
If we want sectoral agreements in steel, in cement, in glass, in other areas, which could in fact be put in place and monitored because the locations are so few in number in our country and in countries around the world, then we must show some leadership. This is an opportunity for us. If $147 a barrel oil didn’t scare people sufficiently, if the collapse of different parts of our manufacturing didn’t scare people sufficiently, then unfortunately, as our economy recovers, they are doomed to repeat that fate as the price of a barrel of oil creeps back toward $100.
We have an opportunity here to take action, to demonstrate that America has the capacity to be able to recognize its vulnerability, which is that we are 4 percent of the world’s population, 3 percent of the world’s oil reserves and we consume 25 percent of the world’s oil. We have to decide where we are as a nation in relationship to the rest of the world. With 4 percent of the population, what will be our relationship with the other 96 percent of the world in the 21st century? We surely must be the innovation and technology giants. That has to be our role.
If we miss this opportunity, it will be as though we missed the same opportunity that the Telecommunications Act of 1996 presented for our country.
I’m very proud of that act, because it created 3 million to 5 million new jobs in our country …We’re in a race now with the Germans, which, after automobiles, wind turbines are now their second-greatest export. China, which is now the greatest exporter of renewable technology in the world. If we miss this opportunity, we not only will undermine our national security, but our manufacturing base in the United States.