Washington (Platts)--7Jul2009

Four members of US President Barack Obama's Cabinet told the Senate
Environment and Public Works Committee on Tuesday that the Senate should
quickly pass a bill that would cap CO2 emissions from a variety of economic
sectors while making investments in renewable energy and efficiency.

Energy Secretary Steven Chu, Agriculture Secretary Tom Vilsack,
Environmental Protection Agency Administrator Lisa Jackson and Interior
Secretary Ken Salazar testified before the committee, which will be
responsible for drafting most of the bill. The hearing came two
weeks the House narrowly passed a bill, H.R. 2454, that would cut US
greenhouse gas emissions 83% below 2005 levels by 2050.

Chu said the science of climate change is settled and human activity is
destabilizing the climate in the way that is likely to threaten future
generations.

"Denial of the climate change problem will not change our destiny, a
comprehensive energy and climate bill that caps and then reduces carbon
emissions will," said Chu in his opening remarks.

Chu called for a 40% improvement in the energy efficiency of buildings,
saying the action would curb energy use and emissions and cut consumer costs.

"By developing a systems-integrated approach, I believe we can eventually
build buildings that use 80% less energy with investments that pay for
themselves in less than 15 years through reduced energy bills," he said.

A cap on CO2 emissions also would prompt investment in advanced battery
technologies and more fuel-efficient automobiles, he said.

Salazar focused in his testimony on the renewable energy capacity of
public lands. "Since coming into office, we have prioritized the development
of renewable energy on our public lands and our offshore waters," he said. He
pointed to new interest in wind farms off the Atlantic coast, solar facilities
in the Southwest and geothermal energy projects in the west.

Salazar said that without a limit on greenhouse gas emissions these
renewable industries would still be at a disadvantage compared with more
established industries like oil and gas. The cap will "trigger even more
massive investment in new clean energy projects throughout the nation," he
said.

Jackson compared the response to global warming to the space race of the
1950s and '60s.

"America is behind," she said. Jackson pointed to governments in Asia and
Europe are ahead of the US, she argued, in investing in clean energy.
In addition to addressing the climate change issue, she said that a cap on
carbon would help wean the US economy off imported oil and develop alternative
industries like "clean" coal and "safer" nuclear.

The final negotiations in the House before it passed its bill in June
centered on the needs of farmers, whose emissions are not regulated under the
bill's cap but who stand to gain from offsets and would be affected by any
increase in the cost of energy. As one condition of supporting the bill, House
Agriculture Chairman Collin Peterson insisted that USDA administer the
agricultural offset program that would be created by the bill.

"Under climate change legislation, the farm sector will experience both
costs and benefits," said Vilsack. He noted that fertilizer costs and corn
prices would increase as a result of the bill's potential impact on energy
prices.

"But, I believe that there are significant opportunities for rural
landowners in a cap and trade program that recognizes the contributions that
farms, ranches and forests can make in addressing climate change," he said.
--Jean Chemnick, jean_chemnick@platts.com