POWER POLITICS: House leaders caving in to Duke Energy on climate bill?

House leaders plan to introduce a revised version of a key climate bill this week requiring power companies to get government allowances to emit greenhouse gas pollution -- and the measure may provide big giveaways to North Carolina-based Duke Energy and other influential corporations that helped shape the legislation.

The bill in question is the American Clean Energy and Security Act, which as we reported last week is the target of an opposition campaign with financial ties to fossil fuel interests. The measure is sponsored by Rep. Henry Waxman (D-Calif.), chair of the House Energy and Commerce Committee where the bill is under consideration, and environmental subcommittee chair Rep. Edward Markey (D-Mass.).

The utilities' involvement in shaping the new version of the legislation was the topic of reporting last week by the Washington Times:

But the sweeping climate bill Mr. Waxman and Rep. Edward J. Markey ... introduced at the end of March includes a provision that benefits Duke Energy Corp., a founding member of the U.S. Climate Action Partnership (USCAP), whose climate plan released in January the lawmakers have frequently called a "blueprint" for their climate legislation.

The exemption would save Duke Energy -- along with other firms now building new coal power plants -- from having to spend millions of dollars outfitting its Cliffside, N.C., power plant currently under construction with "clean coal" technology.

USCAP is an alliance of major corporations and environmental groups asking the federal government to limit greenhouse gas emissions. Besides Duke Energy, its founding corporate members include FPL Group of Juno Beach, Fla. and BP America of Houston. It also involves the nongovernmental organizations Environmental Defense, Natural Resources Defense Council, The Nature Conservancy, Pew Center on Global Climate Change and the World Resources Institute.

Waxman's proposal would require companies to get permits for every ton of carbon dioxide they release, with 4.7 billion permits to be issued when the program begins in 2012. Once the permits are issued, companies could then trade them on the open market.

The political battle is over how much companies should initially pay for the pollution permits. President Obama originally proposed auctioning off all of the permits to finance a middle-class tax cut, but he later backed away from that plan under political pressure. Some members of Waxman's committee -- including Rep. Rick Boucher, a Democrat who represents Virginia's coal region -- insisted that coal-dependent electric utilities should get all their permits for free to avoid a spike in electric rates, Bloomberg reports.

In a conference call with financial analysts last week, Duke Energy CEO Jim Rogers acknowledged that much of the debate in the committee has focused on the "transition and allocation" of pollution allowances.

Under the proposed compromise being considered by the committee, about 55 percent of the pollution permits worth as much as $40 billion could be given away for free to utilities, refiners and manufacturers, according to Bloomberg. The latest version of the legislation also exempts Duke Energy and other utilities from a provision of the original bill that placed a moratorium on construction of new coal-fired plants for at least the next decade until effective carbon-capture technology is developed.

Duke is currently constructing a new 800-megawatt coal-fired unit at its Cliffside plant in western North Carolina that does not employ technology to control carbon emissions. It's estimated that the Cliffside plant will emit 6 million tons of carbon dioxide to the atmosphere each year.

USCAP has come under fire before for "greenwashing" -- that is, enabling its members to appear environmentally virtuous while engaging in actions that are environmentally harmful. According to Sourcewatch:

For example, USCAP members General Electric and Caterpillar have seats on the board of a group called the Center for Energy and Economic Development, which opposes greenhouse-gas regulations. USCAP member Duke Energy has joined notorious coal-lobbying group Americans for Balanced Energy Choices.

Americans for Balanced Energy Choices merged with the Center for Energy and Economic Development last year to create a new coal-industry front group called the American Coalition for Clean Coal Electricity, to which Duke Energy belongs. A recent investigation by the Center for Public Integrity examined ACCCE's so-called "clean coal" lobbying campaign, which among other things successfully pressed Waxman and Markey to scrap a total moratorium on new coal-fired power plants in their bill and provides billions in public support for carbon capture technology.

That's money Duke Energy itself refuses to spend. When the CBS news show "60 Minutes" interviewed Duke CEO Rogers recently, correspondent Scott Pelley asked how much the company -- the nation's third-worst carbon polluter -- has invested in carbon capture and storage technology to date. Rogers answered, "We have not invested any dollars in the technology per se. We have spent a lot of time and money reviewing and analyzing the various technologies."

Pelley pressed Rogers, pointing out that on the one hand he says the U.S. can't afford to do without coal power yet isn't investing money in solutions to carbon pollution. Answered Rogers, "While we haven't spent the money on sequestration technology, we spent the time and the energy to co-invest with the government when this technology involves."

In other words, Duke Energy has invested in politicians to encourage them to have taxpayers finance highly uncertain carbon capture technology. How big of a political investment has Duke made? The company's federal political action committee spent over $1.3 million during the 2008 election cycle alone, according to the Center for Responsive Politics' OpenSecrets database. Together, electric utilities contributed more than $2.8 million to members of the House Energy and Commerce Committee in the last election cycle, with John Dingell (D-Mich.) and Boucher of Virginia the top recipients.

Meanwhile, the Center for American Progress recently reported that ACCCE -- whose members together spent less than two centers in research on so-called "clean coal" for every $1 of profit -- has a communications budget for 2009 of $40 million. The Center for Public Integrity released a report earlier this year that named ACCCE the top spender on climate change lobbying in 2008 at $10 million.

Duke Energy's position on global warming is more nuanced than companies like Exxon Mobil, which has spent millions to deny the reality of global warming. For example, Duke recently announced that it won't renew its membership in the National Association of Manufacturers over that organization's refusal to address global warming, ThinkProgress reports. Rogers said in an interview with Bloomberg that the company chose not to renew its membership because it wants to "invest in associations that are pulling in the same direction as we are" -- a direction that apparently involves acknowledging the reality of global warming but avoiding spending its own money to fix its part of the problem.

But back home in North Carolina, environmentalists aren't buying Duke Energy's efforts to sell itself as an environmentally friendly utility. Last week the clean energy advocacy group NC WARN filed a legal motion asking the N.C. Utilities Commission to halt construction of the heavily polluting Cliffside plant, which has already been delayed for a year. It also called for corporate stockholders -- not ratepayers -- to finance any additional costs for the project.

The motion gives a number of reasons why Duke should halt construction, including lower-than-projected customer demand, the use of exaggerated numbers in the company's long-range projections, and a recent study by a Duke University economics professor emeritus that found the need for the new coal plant as well as the company's planned new nuclear plants could be eliminated by modest increases in energy efficiency and co-generation.

Last month NC WARN and other grassroots environmental groups -- as opposed to the "Big Green" organizations like those that belong to USCAP -- held a peaceful protest against the Cliffside plant outside Duke Energy's Charlotte headquarters, with more than 40 people arrested for intentionally trespassing on the company's property while others chanted "Arrest Jim Rogers." Protesters with NC WARN and other grassroots groups were also a presence at the company's shareholder meeting last week, pressing the company over the necessity of the new Cliffside unit.

"It is now crystal clear that Duke Energy does not need that plant, and it's better to cancel now than in two years," says June Blotnick of the Charlotte-based Carolinas Clean Air Coalition, one of seven environmental groups that endorsed NC WARN's legal motion. "The Utilities Commission must stop allowing Duke to waste customers' money while risking an environmental health tragedy."

(Photo of Duke Energy CEO Jim Rogers from company website)