Consul General Paul Lynch

LITTLE ROCK — U.S. Sen. Mark Pryor has it all wrong with his reservations about cap-and-trade, at least the European version, a British government representative says.

British Consul General Paul Lynch disputes Pryor’s contention that Europe’s cap-and-trade system has not worked as a means to reduce industrial carbon emissions.

In a recent interview with the Arkansas News Bureau, Pryor, D-Ark., said he has “never been much of a cap-and-trade fan,” and that a similar system used in Europe seemed flawed since countries are having to ship manufacturing jobs elsewhere, such as Brazil or China, who would have no such restrictions.

Lynch contacted the bureau last week in what his office said was an attempt to set the record straight.

“That statement has no basis in fact. I have no idea where that’s come from,” Lynch said in an interview. “The UK was the second largest recipient of foreign investment in 2007. We’ve broken the link between economic growth and growth in harmful emissions.”

Lynch said while Great Britain’s economy grew by 47 percent between 1997 and 2006, it reduced carbon emissions by 7 percent.

Pryor said while he did not dispute the consul general’s numbers, he still has a number of concerns about cap-and-trade legislation pending before Congress and its unintended economic consequences.

The Clean Energy and Security Act, also known as “cap-and-trade,” passed in the House two weeks ago and is part of an initiative to greatly curb global carbon emissions by the year 2050.

Under the bill, businesses would be restricted as to how much carbon dioxide they could emit into the atmosphere (cap) but would be allowed to purchase and swap credits to expel more if their company must do so (trade).

The bill narrowly passed in the House in a 219-212 vote, and faces an uncertain future in the Senate, in part because some moderate Democrats like Pryor are leery of the measure in its current form.

“This is one of those examples where you have to get science and economics and the politics all lined up. If we’re going to do this, a big concern we have is getting it done right,” Pryor said.

The senator said one of his primary concerns is insuring states like Arkansas, where Pryor says roughly 50 percent of electricity generation is derived from coal, are treated fairly in the process.

“The way the House bill is structured, in a sense it penalizes all refineries, even the smaller ones. It needs to make sure that it differentiates between the refineries so that companies like Lyon Oil and Murphy Oil (in El Dorado) are treated fairly,” Pryor said.

Advocates for Arkansas and other rural states say the possibility of a sharp rise in fuel expenses would hurt their agricultural-based economies.

Last week, Lion Oil Vice President Steve Cousins said the El Dorado refinery would not be able to weather the soaring costs if the House version of the clean energy bill were to be signed into law. The refinery has nearly 1,300 employees.

U.S. Sen. Blanche Lincoln, D-Ark., said she shared some of Pryor’s concerns, warning that with the struggles facing the state and nation with regard to the economy and health care, the clean energy legislation might be distracting.

“We need to think about the time frame and the economic climate. We don’t want to be counter-productive. We don’t need to change our priorities,” Lincoln said last week in a conference call with Arkansas reporters.

The nonpartisan Congressional Budget Office released a statement dated June 19 estimated the current House bill would cost roughly $22 billion.

While President Obama attended a G-8 summit in L’Aquila, Italy, last week, White House Press Secretary Robert Gibbs fielded questions about possible “disunity” between countries such as Brazil and China on the subject of climate change.

“The House of Representatives has begun the process of getting a specific (climate change) policy to (Obama’s) desk. Now it’s going to be hard to go back and explain why China and India and Brazil aren’t also willing to take those steps,” Gibbs told reporters.

“When you’re talking about carbon, it’s a global challenge. You’re not going to be able to accomplish your goal if China and Brazil aren’t doing it too,” Pryor said.

Pryor said he recalled reading about European companies exporting jobs because of cap-and-trade, but he did not remember where or when. Lynch said Britain has seen no indication of outsourcing.

“I don’t know of one job that’s been lost to Eastern Europe, let alone all the way in Brazil,” Lynch said. “Clean tech industries will be worth $3 trillion worldwide and $106 billion in the UK in 2010.”

Lynch said industries would have to be both energy-intensive and open to international trade for the risk of outsourcing to be significant. He estimates just 3 percent of the Gross Domestic Product and 2 percent of jobs in the U.S. land in both of those categories.

“To the guy running his tractor or generator, the costs are marginal. (Such jobs are) a very small part, and very affordable to protect,” Lynch said. “All of our evidence in the UK is based on experience, mind you. This isn’t speculation.”

Despite his reservations, Pryor acknowledged some potential benefits of cap-and-trade.

“If we really get committed to addressing carbon emissions, I can see a whole lot of technologies coming into the marketplace, like some of these green-collar jobs. Maybe they could offset job loses,” Pryor said.

“I’m glad people are trying to solve this problem, working on it, thinking on it, spending time on it to see if we can come up with a policy that we can be proud of,” the senator said. “The only way is to try, and it’s positive that we’re trying.”