June 5, 2009 Volume 110 Number 11

Labor deeply involved in cap and trade debate

By DON McINTOSH Associate Editor

Congress and the Oregon Legislature this year are looking at laws to cut greenhouse gas emissions. Scientists say greenhouse gases, chiefly carbon dioxide and methane, are causing a rise in average global temperatures that could total 10 degrees Fahrenheit by 2100. The warming is having dramatically disruptive effects on the environment and the economy.

Representatives of organized labor are involved in those discussions at both levels. Their agenda is to maximize the creation of decently-paid “green jobs” and to minimize economic harm to workers in polluting industries.

The proposal being debated by Congress is HR 2454, the American Clean Energy and Security Act of 2009, also known as the Waxman-Markey bill after its sponsors, representatives Henry Waxman (D-Calif.) and Edward J. Markey (D-Mass.) The bill creates a “cap-and-trade” system that would gradually reduce greenhouse gas emissions, but allow emitters to do so in the least expensive way possible.

Bob Baugh, executive director of the national AFL-CIO’s Industrial Union Council, said framers of the bill took seriously union concerns that the response to global warming not lead to further offshoring.

Waxman held a series of hearings on the bill in late April, and invited testimony from representatives of organized labor, including United Auto Workers, United Steelworkers, United Mine Workers, and the union-backed groups Apollo Alliance and Blue-Green Alliance. [The Blue Green Alliance is a coalition of United Steelworkers, the Sierra Club, the Laborers Union, the Natural Resources Defense Council (NRDC), the Communications Workers of America (CWA), and the Service Employees International Union (SEIU).]

“Global warming is already destroying the livelihood of workers everywhere,” testified Yvette Pena, director of legislation at the Blue Green Alliance. “For example, thousands of Steelworkers who used to make aluminum in the Pacific Northwest have lost their jobs because years of declining snowfalls in the Cascade Mountains meant less water in reservoirs and higher-cost electricity from the mighty dams that Henry Kaiser built more than 60 years ago.”

But Pena cautioned members of Congress that any action to restrain greenhouse gas emissions has to do something to prevent polluting industry from simply jumping borders.

“A ton of steel manufactured in the U.S. today results in one ton of carbon emissions,” Pena said. “A ton of steel manufactured in China results in 2.5 tons of emissions. It would be a tragedy for both workers and the environment if our solution to global warming resulted in closing U.S. steel mills and importing needed steel products from China.”

Baugh said the bill ended up listening to that concern, and incorporating a number of provisions important to working people, including some taken directly from drafts written by AFL-CIO staff.

  • To guard against competition from countries that aren’t limiting greenhouse gas emissions, 15 percent of the allowances would be given to companies in trade-sensitive industries; proceeds from the sale of these allowances would pay to install technology to reduce emissions. Also, importers of energy-intensive products made in countries that don’t have equivalent greenhouse gas limitations would have to purchase allowances before selling into the U.S. market.
  • Workers who lose jobs as a result of the law would get up to three years of benefits, including 70 percent of their wages and 80 percent of the cost of their health benefits; this would be funded by giving the Department of Labor 0.5 percent of the greenhouse gas emission allowances, which would be sold into the new carbon market, earning $400 million to $800 million a year.
  • A “cash for clunkers” program would incentivize consumers to scrap older, less fuel efficient vehicles and purchase new vehicles with better fuel economy.
  • The federal government would make major investments into research and development of “carbon capture and sequestration” — technology to catch carbon dioxide exhaust and bury it underground.
  • Private construction projects getting public subsidy would pay workers the federal “prevailing wage.”

The bill’s sponsors also heeded AFL-CIO cautions about creating an unregulated market in greenhouse gas allowances — the “trade” part of “cap and trade.” Instead the market would be regulated to prevent speculative abuses.

The bill passed the House Energy and Commerce May 21 and is expected to go to the House floor this month.

In Oregon, one group of union workers may be especially vulnerable — the 80 or so members of International Brotherhood of Electrical Workers (IBEW) Local 125 who work at PGE’s 550 megawatt coal-fired electricity plant in Boardman, Oregon. It’s an old plant by industry standards, built in the mid 1970s. To comply with already-existing Clean Air Act requirements, PGE has to make a decision — close the plant, or install hundreds of millions of dollars worth of scrubbers. The company says it is reluctant to install scrubbers if a new framework on greenhouse gases might make the plant too expensive to operate anyway.

Based on that argument, PGE, joined by Pacificorp and Local 125, testified against Senate Bill 80. SB 80 would have authorized Oregon’s participation in a regional cap-and-trade system. The bill was introduced at the request of Oregon Gov. Ted Kulongoski. The governor’s staff has taken part in a year’s worth of talks with those of the seven other states and Canadian provinces in the Western Climate Initiative.

The Western Climate Initiative was a response to federal inaction on curbing global warming, but as yet no state has passed laws setting up the cap-and-trade system. Washington Gov. Christine Gregoire was unable to pass enabling legislation, and instead took action by executive order.

Leading the opposition to the Oregon bill was Oregonians for Balanced Climate Policy, formed by Republican lobbyist Mark Nelson. The group is a coalition of over two dozen business groups, plus IBEW Local 48 and the Oregon State Building and Construction Trades Council.

The Oregon AFL-CIO also weighed in against the bill, because framers had not heeded the labor federation’s call for revenues generated by sale of the emissions allowances to be used to help workers who would be displaced, or for minimum wage and benefit standards for jobs that would be created with public investment.

“They didn’t incorporate any of our concerns into the framework,” said Oregon AFL-CIO Secretary-Treasurer Barbara Byrd, who has taken the lead on crafting a union response to climate change.

Facing opposition from many sides, the cap-and-trade part was amended out of the bill. Labor leaders met June 1 with co-chairs of the Western Climate Initiative to talk about what kind of cap-and-trade program labor could support the next time the Legislature meets.

Legislators may yet pass two climate change bills, though. SB 80, in its amended version, would give the Oregon Department of Environmental Quality and the Public Utility Commission the authority to make rules limiting greenhouse gas emissions. House Bill 2186 would do the same, except applied to vehicles.

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