In meetings I’ve had recently with folks representing industries from automobiles to energy to private equity, I’ve heard it over and over again. They want a price on carbon.

They want it because they want to make money through alternative energy. For that, they need predictability in supporting the companies that take risks and need capital to design and develop alternative fuel technologies.

They want it because they, their children, their grandchildren, their employees and their shareholders, like everyone on the planet, will suffer the externalities of a carbon-dependent economy.

And they want it because they’re good corporate citizens, and they want to do their part in easing the nation toward a lower-carbon future.

The question is whether carbon pricing will get any traction in the coming weeks from a White House that seems more intent on political calibration than on shaping the landscape itself.

Given the dynamism of the carbon-pricing movement, the twin mysteries today are, first, why the president didn’t press harder for what seems to be the consensus, industry-friendly position on carbon — a simple pricing mechanism — in his Oval Office speech last week, and second, whether he will do so in the coming weeks.

The politics of carbon have changed dramatically in recent weeks, as the nation continues to watch the spill billow in the Gulf. (If you haven’t yet done it yourself on your computer, click here for BP’s own mesmerizing and terrifying live feed). A recent, post-BP poll found that 63 percent of Americans support a bill with a carbon price, while only 29 percent oppose it. The environment has also improved for proposals like the “cap-and-dividend” bill recently offered by Sens. Susan Collins (R-ME) and Maria Cantwell (D-WA) (and explained here on P-Fix by Danny Morris), which would price carbon with a net-neutral return to the taxpayers in the form of checks.

Meanwhile, the nation’s leading corporations continue to support a price on carbon. In April, before the spill, three of the nation’s largest oil companies — Shell, ConocoPhillips, and BP (this is even pre-oil spill) — as well as the Edison Electric Institute, a consortium of utilities whose members provide the bulk of the nation’s electricity, all announced their support for the Kerry-Lieberman legislation with a “hard price collar” for the price of carbon (including both a floor and a ceiling).

The fact is that many private corporations want a price on carbon. They want it because they believe the future is headed in a direction where carbon-producing technologies will simply have to be reduced, and they’d rather build their businesses around that future quickly rather than slowly.

However, there was no such leadership last week from the Oval Office. Of the transition from carbon, the president said:

There are costs associated with this transition. And some believe we can’t afford those costs right now. I say we can’t afford not to change how we produce and use energy — because the long-term costs to our economy, our national security and our environment are far greater. So I am happy to look at other ideas and approaches from either party — as long they seriously tackle our addiction to fossil fuels.

This clinical framing scarcely captures the urgency of the task. There is a golden opportunity now finally to get business and clean energy on the same page. The question is whether it will billow by and disperse, like the oil we’re all watching in the Gulf.

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If, as appears likely, cap-and-trade legislation is not going to be enacted this year or any other time soon, it represents more than a setback for the Obama administration (or for the environment). It’s also another blow to the high concept of using market mechanisms rather than direct government control to address major public policy challenges.

Cap-and-trade was originally designed, after all, as an alternative to command-and-control environmental regulations, which is why it was once championed by Republicans, particularly during and after its successful use in reducing acid rain in the 1990s.

But as the New York Times‘ David Leonhardt (with an exclamation point from Jonathan Chait) explained this week, Republicans have abandoned cap-and-trade just when it might be most useful, with some former advocates, ironically, embracing command-and-control:

[T]he great economic strength of market systems like cap and trade also happens to be their political weakness. They set prices and allow people to react. In the process, market systems acknowledge that reducing pollution may actually cost a little bit of money.Politicians don’t like to admit this, because voters don’t like it. Accepting higher costs is especially hard when the economy is weak. So Congressional Democrats have been repackaging their energy bills to make them look less and less market-oriented. Senator John McCain, who supported a permit system for carbon as the Republican presidential nominee, no longer does. Senator Lindsey Graham, the South Carolina Republican, has reversed his position as well.

What does Mr. Graham now favor? A series of command-and-control regulations. He has introduced a bill with Senator Richard Lugar, an Indiana Republican, that would mandate specific standards for cars, trucks, homes and offices. It would also give the energy secretary the power to award loans to companies he thought could do a good job of setting up programs to retrofit buildings. State officials would do the same for factories. The bill, in short, puts more faith in government than the market.

Leonhardt clearly believes that the transparency of cap-and-trade when it comes to costs is its major political flaw. That’s definitely a factor, but I’d argue that something more fundamental is going on. Once Democrats embraced cap-and-trade, Republicans began retreating from it as a simple matter of politics. And this distancing effort has been immensely reinforced by the rightward trend in the GOP during the last few years, in which leaders who simply denied there was any climate change problem, and/or that government had any useful role to play on the issue, have been in the ascendancy. So “cap-and-tax” was demonized and essentially placed off-limits for Republican politicians, to the point where those like Sen. Lindsay Graham (R-S.C.) and Sen. Richard Lugar (R-IN) who weren’t quite in the “denialist” camp found it easier to just support direct federal regulation.

We saw a similar dynamic play out on health reform, where a market-based managed competition model long supported by Republicans, and championed quite recently by Mitt Romney, became toxic the moment it was fully advanced by Barack Obama. And even as they savaged ObamaCare as “socialized medicine,” Republicans saw little irony in posing as last-ditch defenders of Medicare, a relic of an earlier Democratic drive for a government-run single-payer system.

On both health care and climate change, it’s not surprising that many progressives are impatient with Obama’s determination to promote market-based approaches that the supposed party of market-based policy, the GOP, will no longer support. But nobody should for a moment mistake the identity of the prime mover in shifting the political ground away from the once-promising “centrist” convergence on using market mechanisms to address public sector challenges. The GOP could have declared partial victory and celebrated the Democratic Party’s abandonment of big government solutions, and then fought it out over the details. Instead, Republicans have burned down every structure on the potential common ground that Americans seem to crave. They may be able to succeed for a while in opportunistically deploring the inability of Democrats to get anything done. But if and when Republicans regain power, they may well discover that the GOP policy arsenal has been emptied by their own hands.

This item is cross-posted at The Democratic Strategist.

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As we await the next step on energy legislation in the Senate, Ezra Klein makes an extremely important if fairly obvious point about the Obama administration’s apparent determination to get something passed even if it doesn’t include a cap-and-trade system or some equivalent carbon pricing mechanism. If the Senate won’t pass such provisions now, it won’t pass them later, either:

There’s nothing magic about [a House-Senate] conference that allows controversial policies that couldn’t pass the Senate the first time around to pass on the second go. The advantage of a conference report is that it can’t be amended, which means you might be able to sneak in some small concessions to the House that aren’t important enough for anyone to sink the whole bill over. But it can be filibustered. So if you add anything major to the bill that would’ve killed it on the pre-conference vote, it’s a good bet that it’ll kill it on the post-conference vote as well.

Carbon pricing almost certainly falls into that category. It’s not a side policy or a bit of pork. It’s the core of a climate bill. If it doesn’t pass in the original Senate bill, that’s because it can’t pass the Senate. Adding it in during conference won’t change that. It’ll just mean the conference report can’t pass the Senate, either. I can’t see any permutation of this in which a conference strategy for carbon pricing makes any sense.

This doesn’t, of course, mean that Congress can’t pass worthwhile energy legislation this year. But it’s not going to magically become a real climate change bill somewhere down the road, particularly with Republicans now monolithically opposing a cap-and-trade approach they once championed.

It’s fine to wheel and deal on legislation, but sometimes the only deal available is one that turns the wheel to an entirely different outcome. That’s probably where things are headed on energy this year.

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This item is cross-posted at The Democratic Strategist.

The president had a gilt-edged opportunity last night to show leadership on energy and climate policy. Most everyone who has written about the speech agrees that he let it slip through his fingers.

The president started, of course, with a discussion of the Deepwater Horizon spill and cleanup efforts, only linking the spill to larger questions of energy, energy security and climate towards the end of the speech:

When I was a candidate for this office, I laid out a set of principles that would move our country towards energy independence.  Last year, the House of Representatives acted on these principles by passing a strong and comprehensive energy and climate bill—a bill that finally makes clean energy the profitable kind of energy for America’s businesses.

Now, there are costs associated with this transition. And some believe we can’t afford those costs right now. I say we can’t afford not to change how we produce and use energy—because the long-term costs to our economy, our national security, and our environment are far greater.

Great so far.  The president then added:

This is why I’m confirming the commitment I made as a candidate to securing America’s future by putting a price on carbon. Doing so would end our dependence on foreign oil, reduce the environmental risks of oil drilling, protect our children from the risk of climate change, and reduce the burden of debt we will pass on to them. Nothing else we can do as a nation would address so many critical problems. For too long we have allowed this policy to be written off because it is politically risky. That must end today. I am calling on the Senate to follow me, the House, and the American people in demanding action. Expedient half-measures will no longer do.

Except he didn’t actually say that, of course. Instead of ending his speech with the call to action it was crying out for, he punted, promising to look at “other ideas and approaches from either party” like new building efficiency and renewable energy standards.

Listening to ideas is a good thing, of course, but disregarding far and away the best one — pricing carbon — is not. The most striking difference between this speech and Obama’s “energy speech” before the 2008 election is the failure to mention a price mechanism for carbon. None of the measures Obama mentioned will do much to address any of the problems he raised, and to the extent they do anything, it will be more costly than achieving the same results with a carbon price. As Sen. Joe Lieberman (I-CT) said before the speech, trying to achieve climate and energy security results without a carbon price “would be the equivalent of President Kennedy launching our national effort to put a man on the moon without building a rocket.” (Side note: Whatever those on the left think about Lieberman, he deserves credit for the grunt work and political stand he has taken this year on climate).

I’m unsympathetic to the meme that the president’s reaction to the oil spill itself has been somehow weak — there is only so much he or anyone can do about the unfolding disaster. I do think, however, that he has shown a lack of political courage in passing up the opportunity to call for meaningful action on climate and energy. It’s likely that Rahm Emanuel, ever mindful of votes, simply does not think that there is enough support in the Senate for a real climate bill. He’s probably right, but the president’s failure to go out on a political limb for a carbon price ensures that support won’t materialize, since there’s a climate/energy leadership deficit in the Senate as well (looking at you, Sen. Harry Reid (D-NV) and Sen. Lindsey Graham (R-SC)). The bully pulpit is a powerful tool to move and shape debate. Emanuel should listen to his own advice here and not waste a crisis that presents such a resonant illustration of the value of reducing carbon emissions. This kind of opportunity may not come again.

However cynical it may appear, Emanuel is right that politics only really changes in response to crises. Climate is a slow problem that will generate obvious crises only when it is too late. The only crises we are going to get while there is still an opportunity to act are those that are indirectly related to climate change (like the oil spill) or illustrate its dangers (like Katrina). If even disasters of this scale are not enough to get us to move — and if even leaders of President Obama’s caliber are unwilling to use them as an opportunity to lead — then maybe we have already lost.

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Expect stern words tomorrow when President Obama speaks to the nation about BP’s failure to stop the Gulf oil spill. He should also use the occasion to deliver a strong message to the U.S. Senate.

The world’s greatest deliberative body has been flailing around energy and climate legislation since the House passed the Waxman-Markey bill last year. You’d think that, with oil still gushing into the Gulf, senators would be moved to do something serious about America’s oil addiction. Instead, the Senate seems headed toward the path of least political resistance.

It’s easy to place sole blame on BP for the spill, but ultimately insatiable American demand for oil played a role in fouling the Gulf. The key to reducing U.S. dependence on oil, and fossil fuels in general, is to put a price on carbon. That would capture both the environmental and the security costs of our thirst for oil, and provide investors with the certainty they need to put money into developing clean fuel alternatives.

An economy-wide cap-and-trade bill at this point is clearly a bridge too far for the Senate. But President Obama made it clear last week that some kind of carbon pricing is still the sine qua none of a serious energy/climate bill.

Republicans, unembarrassed by their “drill-baby-drill” demands before the BP disaster, are standing foursquare for the petro-centric status quo. “We don’t think this is a great time to be socking a national energy tax to the American people,” Minority Leader Mitch McConnell said last week.

And even South Carolina Sen. Lindsey Graham (R-SC), poster boy for GOP reasonableness on capping carbon, now says: maybe next year. He’s talking up an “energy only” bill by Sen. Dick Lugar (R-IN) that includes subsidies for clean fuels but no carbon price to truly galvanize private investment in clean technology and energy.

Thus has the BP spill has not only done grave damage to the Gulf’s ecology and economy, it’s unraveled President Obama’s careful attempts to forge a grand bargain in which some Republicans support a carbon price in return for more support for nuclear power as well as offshore drilling (off the table, at least for now).

It would be a bitter irony if the political fallout from the BP spill wound up perpetuating America’s dependence on oil. To avert that tragedy, the president should make it clear tomorrow that he will accept no bill from the Senate that fails to put a price on carbon.

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The big development in non-election news from Washington this week has been the collapse of bipartisan negotiations for cap-and-trade legislation, caused by Sen. Lindsey Graham’s defection. Said defection has been a long time in the making; earlier Graham broke off longstanding negotiations with Sens. Kerry and Lieberman on climate change, allegedly because he was angry with Harry Reid for hinting that immigration reform might come first in the Senate. Now that Reid’s backed off that idea, Graham’s been forced to more or less flip-flop entirely on climate change, and is now backing a far less ambitious bill introduced by Richard Lugar that would have no cap on carbon emissions.

The CW has suggested that Graham’s happy feet on climate change is the product of pressure from his Republican colleagues in Congress who don’t want any “cap-and-tax” bill and basically don’t want any cooperation with the Obama administration and congressional Democrats. But I think the problem may be a little closer to home for Graham.

Earlier this year, a couple of Republican county committees down in South Carolina raised eyebrows with censure resolutions aimed at Graham for his support for cap-and-trade, comprehensive immigration reform, and TARP. One of those committees was from Lexington County, which happens to be the residence of Nikki Haley, who then became the only gubernatorial candidate to embrace Graham’s censure for ideological heresy.

Now maybe it’s a coincidence that Graham threw in the towel on cap-and-trade the day after Haley became a national political rock star in the wake of her strong (49%) performance in the SC Republican gubernatorial primary, but maybe it’s not. Graham won’t be up for re-election until 2014, but as Bob Dylan once said (though not in the context of climate change): “You don’t need a weatherman to know which way the wind blows.”

I bring this up in part as a reminder to progressives who are naturally sympathetic to Haley as a woman and as a minority member who has been accused without much evidence of being a cheat and a liar, and called a “raghead” to boot. That’s all well and good, but don’t forget she is also a serious hard-core conservative who eagerly identifies herself with the Jim DeMint, take-no-prisoners wing of her party, and who may have just played a role in blowing up what was once a promising effort to deal with one of the most important challenges facing the country and the world. To be sure, she should be judged on her ideas and record and not subjected to gender-based double standards or sexual innuendo. But make no mistake, her “ideas” are really bad from any progressive point of view. She’s only a breath of fresh air in SC politics if you think, like she does, that the good ol’ boys who’ve been running things are dangerously liberal.

This item is cross-posted at The Democratic Strategist.

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