Climate legislation is designed to benefit politically connected

By Rather than stopping the rise of the oceans, President Barack Obama’s push for greenhouse gas regulations is turning into another all-you-can-eat porkfest. As Rep. Henry Waxman, D-Los Angeles, prepares to introduce a climate bill in the House Energy and Commerce Committee he chairs, big businesses and their well-connected lobbyists are lining up with the hope of becoming rich off these regulations.

An early winner looks to be power companies, represented in Washington, D.C., by the Edison Electric Institute. Automakers, soon to be controlled in part by the labor unions who so generously fund the Democratic Party, are also among a handful of likely beneficiaries of this legislation.

Waxman’s bill is centered on a cap-and-trade mechanism for curbing greenhouse gas emissions. Under cap and trade, the government requires many greenhouse gas emitters, such as power plants and factories, to “pay” for their emissions using special credits, with government controlling the supply.

If an emitter needs more credits, he buys them on the open market from someone — another emitter or a dealer — who has excess credits. The question for lawmakers: How do they allocate the credits originally? Environmentalists want Washington to auction them off. Affected industries want credits given away.

Considering the anti-business and pro-environment rhetoric of ruling Democrats, you might expect all businesses would have to pay for all emissions. But the rule of thumb in D.C. is that no important bill passes unless a well-connected special interest benefits from it.

Currently, Waxman’s bill gives away about half the credits, with most freebies going to the power industry. Edison Electric has endorsed this bill.

It’s unsurprising the power companies should get their way. Data compiled by the Center for Responsive Politics show that the electric utility industry’s political action committees contributed $12.3 million to candidates last election — more than the PACs of the oil and gas, commercial bank, investment, real estate or telecom industries, and nearly as much as all defense PACs.

Last quarter, Edison Electric spent $2.6 million on lobbying, placing it 28th overall, just ahead of defense giant Boeing. The group retained 17 outside lobbying firms and employed at least 11 in-house lobbyists.

Then there’s the issue of how government should spend auction proceeds. General Electric bailed out automakers promising green cars, and wind and solar investors are at the front of the queue to dig into this new trough of pork-barrel funds.

Cap and giveaway is not a matter of toothless regulation as much as an instance of regulatory robbery. The companies being given free credits are not being given free passes from new regulations, they are actually being given free money.

The price the government charges for credits doesn’t determine the price at which they will sell on the open market. The price will be set by supply (how many total credits, auctioned or given away, are in circulation) and demand (the difficulty of reducing emissions and the fine for overemitting).

So, when government gives credits to electric companies, it is simply giving money to those companies while making it more expensive for everyone else to do business.

Waxman’s current bill will be touted as an industry-environment compromise, making some observers believe it’s a moderate regulation. In truth, it’s burdensome on consumers and electricity users. But instead of government pocketing all of these added costs, some businesses will receive a cut.

This climate change bill is more about enriching the companies with the best political connections.

Timothy P. Carney is The Washington Examiner’s lobbying editor.