Could the bad economy help the climate bill’s chances?

A few days ago, I noted that ClearView Energy Partners’ analyst Kevin Book doesn’t buy the conventional wisdom that the sour economy has dealt a blow to prospects for climate and energy legislation in 2010.

The consulting and analysis firm -- which Book launched with two former Bush administration officials last year -- circulated a new research note Thursday that fleshes his views out further, and more generally sets the table for this year’s Democratic efforts on climate.

ClearView expects a climate and energy bill to emerge in the second quarter of 2010 (the House passed a sweeping bill last June but the Senate hasn’t acted). The underwhelming outcome of the Copenhagen climate summit won’t sink the bill, according to ClearView.

“A total meltdown in Copenhagen might have reduced our odds, but that didn’t happen,” they note.

Back to the economy: ClearView’s basic view is that with states hurting for cash, the prospect that cap-and-trade bills will provide a revenue stream means, in a nutshell, that the bad economy creates an opening for a bill.

That’s especially true, they argue, because new direct spending to help the economy has become less fashionable on Capitol Hill.

Here’s how they put it:

“What has changed: political support for new spending programs, as exemplified by House passage of a $155 billion ‘mini-stimulus’ package on December 16, 2009, a significant downtick from the February 2009 stimulus package ($787 billion) and the October 2008 TARP program ($700 billion). As we have noted in the past, cap-and-trade would create a new currency, a ‘below the radar’ monetization of the economy in its own right, even if the program involved a ‘full auction’ of emissions allowances. Directed spending of auction proceeds increases the political value of cap-and-trade as a stimulus mechanism. We estimate that Waxman-Markey and Kerry-Boxer, by directing no-cost allocations of emissions allowances to affected emitters and stakeholder constituencies, would inject an ‘off-books’ total of approximately $1 trillion into the economy (this figure incorporates conservative allowance price and discount rate assumptions detailed in our December 16, 2009 publication).”