The Four Biggest Battles in the Upcoming Climate-Change Bill

Last Updated Apr 22, 2010 11:50 AM EDT

The highly anticipated "compromise" climate-change bill is just days away from its unveiling and already there a fights brewing between federal and state lawmakers, government agencies, environmentalists and industry folk.

The obstacles that await the climate-change bill -- and the tripartisan trio of senators who drafted the legislation -- are massive. Just putting the words "climate" and "change" together sends some into fits only a two-year-old can appreciate. But there are a few issues that promise to be particularly sticky and could derail the bill's passage altogether.

Trade protections: This gets to the heart of what many U.S. companies fear: competitive disadvantage. Meaning, how can I compete as a company if I have to adhere to much stricter and costly emissions laws than my competition in China? Some fear companies will move their operations to China, India or other developing countries where environmental laws are lax.

The fight will be in the solution. Some want trade sanctions placed on imports from countries that don't have greenhouse gas emission laws. Just last week, 10 Senate Democrats said the climate and energy bill must include a number of pro-industry provisions if the legislation has any chance of winning their vote. Two of the three were related to trade, including a measure to automatically slap a fee on imports from countries with weak environmental standards.

The crux will be crafting legislation that protects domestic business without being too protectionist and inadvertently starting a trade war.

The EPA, the Clean Air Act and states rights: Some call it preemption. But let's toss the jargon aside for a moment. If Congress passes a climate bill can the EPA still regulate greenhouse gas emissions under the Clean Air Act, and do states have the right to pass their own tougher environmental laws that limit greenhouse gases?

Businesses will have difficulty operating under a hodgepodge of state laws. But states want the right to go beyond Congress, especially if the climate bill falls short. And the enviros want -- and will fight for -- the EPA to retain its Clean Air Act authority . Meanwhile, some lawmakers and industry folks would like nothing more than to take away all of the agency's power. Efforts to block the EPA from regulating greenhouse gases are already well underway. Sen. George Voinovich, R-Ohio, has put contingencies on his "yes" vote and is working with other senators to craft an amendment that would block states and agencies from acting on greenhouse gases.

Offshore drilling and shared revenue: The expansion of offshore drilling is already divisive and, so far we know, it's not even in the climate-change bill. That's because President Obama, via the Interior Department, has already issued its offshore drilling plans that include opening up the Atlantic coast and eastern Gulf of Mexico to oil and gas exploration. But, what to do with all of that royalty revenue generated from oil and gas companies bidding on leases? Coastal states say if you expand drilling they deserve a piece of the royalty-revenue pie. And the climate-change bill is expected to include language that would do just that.

But opposition is already building against the idea. Senate Dems Jeff Bingaman of New Mexico, Jay Rockfeller of West Virginia and Byron Dorgan of North Dakota say sharing the royalty revenue with coastal states would drain the U.S. Treasury of billions of dollars. Coal versus natural gas: It'll be a lobbying war for the ages. The climate-change bill is expected to place an emissions cap on electric power utilities by 2012. This bodes poorly for the coal industry considering many utilities use coal-fired power plants. Natural gas is a likely winner under a bill that promotes or requires utilities to switch from coal to gas-fired power plants, something that's already happening in a few states.

A typical political scenario would have senators from coal-producing states threatening to hold back their votes unless some protections and concessions were added for the industry. And that will happen. But in the wake of the Massey Energy (MEE) mine explosion that killed 29 people, coal's clout is waning.

Photo of rock 'em sock 'em robots from Flickr user Bruce Turner, CC 2.0