Domestic political processes shape climate policy. In particular, there is increasing concern regarding the role of political lobbying over climate policy. This paper examines how lobbying spending on the Waxman-Markey bill, the most prominent and promising U.S. climate regulation to date, altered its likelihood of being implemented. We combine data from comprehensive U.S. lobbying records together with an empirical method for forecasting the policy’s effect on the value of publicly-listed firms. Our statistical analysis suggests that lobbying by firms expecting losses from the policy was more effective than lobbying by firms expecting gains. Interpreting this finding through a game-theoretic model, we calculate that lobbying lowered the probability of enacting the Waxman-Markey bill by 13 percentage points, representing an expected social cost of $60 billion (in 2018 dollars). Our findings also reveal how future climate policy proposals can be designed to be more robust to political opposition.