WASHINGTON, D.C. – Chairman Edward J. Markey (D-Mass.) is currently holding a hearing of the Energy and Commerce Subcommittee on Energy and Environment entitled, “Consumer Protection Provisions in Climate Legislation.” The hearing is examing proposals designed to assist consumers under a cap-and-trade system to reduce greenhouse gas emissions. The Chairman's opening statement follows below:

WITNESSES:

• Robert Greenstein, Executive Director, Center on Budget Policies and Priorities
• Sonny Popowsky, Consumer Advocate of Pennsylvania , Pennsylvania Office of the Consumer Advocate  
• Steve Kline, Vice President of Corporate Environmental and Federal Affairs, PG&E Corporation
• John S. Hill, Director for Economic and Environmental Justice, United Methodist Church, General Board of Church and Society
• Steven F. Hayward, F. K. Weyerhaeuser Fellow, American Enterprise Institute
• Mike Carey, President, Ohio Coal Association

WHEN:          10:00 a.m. on Thursday, March 12 (Please note the new time

WHERE:        2322 Rayburn House Office Building

In over 30 years in Congress, one word has always come first in every piece of legislation I have written: consumers. From telecommunications to fuel economy standards, I have found that starting with the goal of saving families money through technological innovation is the best vehicle for effective public policy.

For too long, American consumers have been unprotected against costs from our old energy economy and the threat of global warming.

First, America’s dependence on foreign oil continues to impact our economy. Before the subprime and derivatives crisis created a financial markets meltdown, four dollar gasoline and skyrocketing coal and natural gas prices sent early shockwaves through the economy, destabilizing our financial house of cards.

Second, consumers are losing money on an inefficient, outdated energy grid that wastes about half of the energy it transports.

Third, by delaying action on clean energy and global warming, consumers are losing money every day on the lost innovation of new clean energy products.

Fourth, we have heard in this committee that the cost of climate inaction will have negative financial consequences. We’ve already seen the impact on the insurance industry as storms have increased in strength from a warming earth.

And so, much like the Telecommunications Act and fuel economy legislation, climate legislation is consumer legislation. And there is a proper way and an improper way to craft this legislation.

Improperly done, climate legislation could unjustly enrich corporations at the expense of consumers.

Improperly done, the investments needed to drive the clean energy economy will be put on consumers while polluters get a free pass.

Properly done, we will put a cap on pollution that will allow businesses the flexibility to innovate and create highly profitable clean energy solutions.

Properly done, we will defray costs to consumers as we transition to a clean energy economy

Of course, this is where it all gets tricky. And that’s why we’re here today.

Creating a market-based global warming bill means that the market will set a price on the right to send carbon into the atmosphere. These permits will have financial value, allowing companies that become clean and efficient to prosper while polluters will be forced to pay.  

The key is to protect consumers from drawing the short straw and paying for these permits when a company decides to pass the costs directly to the consumer.

The danger here is that if we give pollution permits for free to polluting companies, they may actually charge consumers for the market value of what they received free of charge, and pocket a huge cash windfall.
 
Imagine this: a scalper finds Celtics tickets outside the Boston Garden—will he sell them to the next customer for free? No, he will charge the going rate.

To address this problem, some have suggested that instead of giving away these permits to emitters for free, the bill should can give that value to local electric utilities and other entities that are regulated by State Public Utility Commissions or otherwise subject to cost of service requirements—so that the money actually benefits consumers.

This position is shared by varied groups like the US Climate Action Partnership, Edison Electric Institute and the National Association of Regulatory Utility Commissioners.

Others have come up with alternatives.  The Center for Budget and Policy Priorities is here with us today. They have proposed a policy that would completely eliminate any negative financial impacts from climate legislation on the poorest fifth of Americans. And we shouldn’t forget that low-income Americans will be disproportionately affected by the impacts of global warming.
 
It has also been suggested that we use some of the revenues from a climate legislation  to fund energy efficiency programs and invest in new cost saving technology, so that we can all benefit from the long-term savings potential afforded by a clean energy economy.

The bottom line is that there are many options before us on how to benefit and protect consumers under a cap and trade system.  The Subcommittee looks forward to exploring these options this morning.

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