But the upheavals of 2008-2009 led climate policy to more broadly become industrial policy. The major proposals not only give out most of the valuable emissions allowances for free to various industries, but they also include other federal support and mandates.
And the economic downturn sapped demand for fuels and power.
“Suddenly, USCAP stakeholders were competing for share of a smaller market at the same time that they were competing in a zero-sum contest for federal support. In this context, USCAP members facing the worst outcomes under Waxman-Markey and Kerry-Boxer may have greater incentives to go it alone. Or, as one Washington source suggested to us, some aspects of the emerging Kerry-Graham-Lieberman compromise may have diverged from these corporations’ strategic goals and hasten the departures,” the research note states.
So what does this mean for climate legislation? “A small number of corporate defections from USCAP doesn’t end the coalition any more than a small number of corporate defections from the Chamber of Commerce ends pro-business advocacy,” ClearView states.
ClearView has been less willing than some others to bury cap-and-trade’s chances this year, largely because the major bills would steer plenty of money to fiscally crunched states, and also because EPA regulation of greenhouse gases under its existing power remains a threat.
“It is therefore not out of stubbornness, but out of dispassionate logic, that we reiterate that the window of opportunity for a comprehensive bill has not yet closed. Once again, we suggest that this latest chorus of death knells for cap-and-trade may be premature,” they write.
“What would change our tune? If the Edison Electric Institute abandoned cap-and-trade (they haven’t) or key electric utility members dropped out of USCAP (they haven’t, either), we would suggest that political sentiment had shifted, perhaps irretrievably, towards an energy-only ‘Plan B’ bill or other alternative,” they add.
The analysis also notes that there could be more efforts to strike a deal – or ram one through – as Democrats see their majority waning in the November elections.