Enviros, industries look to SOTU for hints on climate agenda

Climate change activists and industry officials are eyeing President Obama’s upcoming State of the Union speech Wednesday for signs of whether the White House will spend political capital in 2010 on sputtering legislation that imposes mandatory limits on greenhouse gas emissions.

In his first major speech to Congress last February, Obama backed up his campaign trail push for a cap-and-trade system, asking lawmakers to “send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America.”

But as Democrats nervously eye the mid-term elections and Obama plans a heavy focus on the economy Wednesday, some predict a more general endorsement of creating jobs in “clean energy” sectors that omits an explicit plea for emissions limits.

Dirk Forrister, who chaired the White House climate change task force under President Clinton, said the speech will provide an important signal about White House intentions this year.

“There are an enormous group of businesses and environmental NGOs [nongovernmental organizations] that are watching the State of the Union very closely to see whether Obama still has the fire in the belly for the climate issue that he had in Copenhagen, or whether he is going to back off at all,” said Forrister, referring to Obama’s personal diplomacy to help salvage a limited climate agreement at teetering international climate talks in Copenhagen last month.

Forrister is managing director of New York-based Natsource LLC, an asset management and advisory firm that does business in emissions trading markets, and he is also an official with the International Emissions Trading Association.

Obama could also address emissions curbs more subtly. White House officials like climate czar Carol Browner uses the phrase “comprehensive” energy and climate legislation to refer to cap-and-trade coupled with new support for low-carbon energy sources. 

Environmental groups are pushing to keep climate legislation on the 2010 agenda. “If he [Obama] said ‘comprehensive’ energy and climate bill, that would be good,” said Marchant Wentworth, a lobbyist for the Union of Concerned Scientists. “We would be looking for both the carrot and the stick.”

The trajectory of climate change and energy legislation in the Senate is uncertain following House passage of a sweeping, economy-wide cap-and-trade and energy bill in June. 

Business interests are divided. For instance, a number of large utilities are seeking climate legislation this year, while major swaths of the oil and coal sectors are opposing the bill.

Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) hope to craft a compromise package that includes emissions limits of some kind – they’ve been vague thus far on the architecture – and support for nuclear power and offshore drilling.

But emissions caps are highly unpopular among Republicans and some centrist Democrats. Lawmakers including Blanche Lincoln (D-Ark.) – who faces a tough reelection battle this year – and Byron Dorgan (D-N.D.) want the Senate to take up a package of energy efficiency and domestic production incentives while shelving mandatory emissions curbs. 

A White House official last week deflected questions about whether the administration would endorse moving ahead with energy measures while dropping emissions caps.

“The administration remains committed to comprehensive energy and climate legislation that includes cap-and-trade,” said Gary Guzy, deputy director of the White House Council on Environmental Quality, at a briefing Thursday.

Another former climate aide in the Clinton White House said discussions about climate and energy legislation include emissions proposals that are narrower than the sweeping plan the House approved, such as a cap-and-trade system that applies to only the electric utility sector. 

“There are many very important options between economy-wide cap-and-trade and no mandatory climate legislation,” said the former aide, who remains involved in the issue. “There are so many options out there that to pretend it’s economy-wide cap-and-trade or an energy bill and those are the only two options is simply not accurate.”

Bill Whitsitt, an executive vice-president with oil and natural gas producer Devon Energy Corp., said Obama’s speech could provide clues about what’s next.

“To the extent that there may be signals as to whether we are moving to a more incremental and/or evolutionary approach to some of the policy areas that we are concerned about, I am going to be watching with great interest,” he said.

This post was updated at 2:26 p.m. to correct formatting errors.