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Region Or Nation?

A clean-energy economy might reshape America almost as profoundly as the transcontinental railroad did.

The building of the transcontinental railroad shaped modern America more than anything else that happened in the 19th century apart from the Civil War and the abolition of slavery. But the need for such a transportation link -- what one engineer called a "bond of iron ... to hold our glorious country in one eternal union" -- was apparent long before the first tracks were laid. For years, sectional differences prevented Washington from acting on the national interest to begin construction.

Building a low-carbon, clean-energy economy might reshape America now almost as profoundly as the transcontinental railroad changed it then. All Americans would share the environmental and economic benefits of retooling the nation's energy supply to attack climate change, increase efficiency, and develop renewable sources such as wind and solar. But regional differences again could delay action that clearly would serve the national interest.


In the 19th century, progress on the transcontinental railroad initially vanished into the chasm between North and South. The free states wanted the railroad to run through the North; the slave states preferred the South. (As secretary of War in 1853, Jefferson Davis -- later president of the Confederacy -- recommended a New Orleans-to-San Diego route.) The impasse was broken only after Southerners abandoned Congress during the Civil War, leaving the Northern-based Republican Party in control. In 1862, Abraham Lincoln (a tireless railroad advocate) and the Republican House and Senate majorities passed visionary legislation subsidizing the Union Pacific to build west from Omaha, Neb., and the Central Pacific to build east from Sacramento, Calif.

Today, the regional conflict endangering national progress on energy is the clash between the states that rely heavily on coal for electricity (mostly in the Southeast and industrial Midwest) and those that don't (largely on the East and West coasts). Coal generates half of U.S. electricity and 80 percent of electricity-related carbon emissions. But because coal is relatively inexpensive, and the climate costs of those emissions haven't been factored into its price, the states that depend on coal generally pay much less for power than those that don't.

Coal's cost would rise under proposals from President Obama and congressional Democrats for a "cap-and-trade" system to combat climate change. Those proposals would, for the first time, limit carbon emissions and require polluters to obtain credits for the carbon they do discharge. That threatens coal-generated electricity with the biggest price increases.


Predictably, legislators from the coal states are demanding relief before signing on. They appear increasingly likely to get it. Obama first proposed auctioning all of the carbon credits, which would cause electricity rates in coal-dependent states to spike. His answer was to recycle some of the auction's proceeds (mostly through tax cuts) to consumers facing the biggest price increases. The utility industry and an environmental-business coalition called the U.S. Climate Action Partnership instead want to directly allocate the carbon credits to local utilities at no charge during a transition period. "It's just not equitable to have an abrupt shift," insists Environmental Defense Fund President Fred Krupp.

Although some other environmentalists are dubious, Reps. Henry Waxman, D-Calif., and Edward Markey, D-Mass., are moving toward that approach in the climate legislation they will begin advancing through the House Energy and Commerce Committee later this month. Aides say that they now intend to provide utilities free credits for 10 years based on their prior emissions and sales, but then to annually reduce the number of credits allocated. That would give coal states time to reduce their dependence, moderating the eventual price increase. Obama hasn't embraced that exact idea, but he has lately signaled that he will accept a transition to auctioning the credits.

This issue could decide the bill's fate. Environmentalists must recognize the need to cushion the blow on coal states. But coal-state politicians must accept the shared national interest in hastening the transition to a clean-energy economy, which, as Obama notes, could revive the Rust Belt's struggling manufacturing base along the way.

The key lesson from the transcontinental railroad is that after the long sectional standoff, all Americans benefited from its completion. As the late historian Stephen Ambrose once concluded, the railroad (along with the telegraph lines built beside it) created a "continent-wide economy" and "continent-wide culture" that "made modern America possible." Future historians might say something similar about the energy revolution now within sight -- if regional squabbles don't derail national action.


This article appears in the April 18, 2009 edition of National Journal Magazine.

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