Saturday, November 04, 2006

Heavyweight candidates push carbon cap-and-trade, nuclear power in U.S. mid-term elections: what does it mean for Canada?
The frantic clamour of the U.S. mid-terms is about to subside momentarily as hundreds of candidates wrap up their campaigns, cross their fingers, and wait for Tuesday’s results. For those who track government policy on energy and the environment, the wait will be particularly excruciating. The so-called “energy lobby” in the U.S. has enjoyed six years of sweet times under Bush and the Republican Congress. All indications are that even if the Republicans in Congress somehow manage to ward off the Democratic hordes (which is not looking likely), the pulverized coal component of the U.S. power industry is looking at much tougher regulation at the federal level.


Several high-profile candidates—including NY senator Hillary Clinton, Delaware senator Tom Carper, New Mexico governor Bill Richardson, and California governor Arnold Schwarzenegger—have signaled strong support for carbon caps.


And the fact that carbon cap-and-trade has achieved prominence in Republican circles (Schwarzenegger, outgoing NY governor George Pataki, and Arizona senator John McCain are among the big-name Republicans who have supported carbon-capping legislation) is undeniable evidence of the “greening of America” to which I referred in my August 13 post.

If the Congress indeed goes Democratic on Tuesday, Bush will have an easier time acceding to congressional demands for more robust federal-level action on climate change. And Bush has already laid the groundwork for a win-win solution to carbon caps: his support for non-emitting nuclear generation in the 2005 EPAct.

How does Bush’s support for nuclear spell a win for pulverized coal? The solution to America’s heavy-emitting electricity system is to reduce system-wide emission intensity. The way to do that is to add more non-emitting (i.e., nuclear) generation to the system. I predicted in my September 14 post that coal-based generators (like NRG Energy and American Electric Power) would acquire nuclear assets as a way of reducing their system intensity to meet the caps.

These companies will come to resemble Constellation Energy, which has a good mix of fossil and nuclear generating assets. The financial support under the EPAct makes it easier to do this.

And siting the plants themselves will have more support, if the Congress goes the way the polls say it will.

Clinton, Carper, and Richardson are members of the moderate Democratic Leadership Council, which recently endorsed the construction of new nuclear plants as a way of offsetting emissions from America’s carbon-heavy electricity generating systems.

This by itself is pretty newsworthy. For decades, the issue of nuclear power in the U.S. has followed a fairly predictable partisan script, with Republicans supporting it and Democrats opposing. The fact that major Democratic candidates are now willing to endorse nuclear—in the middle of a crucial mid-term—says how far the issue of climate change has come in mainstream American politics.

Will there be a similar shift in Canada? I think there will. Prime Minister Harper is now working with the NDP’s Jack Layton to resolve the impasse over the Conservative Clean Air Act. Harper has moved to the left to accommodate Layton (don’t think Jack isn’t ecstatic over Harper’s income trust turnaround). Will Layton now move to the new centre, and endorse nuclear as Canada’s best way to reduce emissions?


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