Senators Float Bipartisan Climate Bill
After months of behind-the-scenes negotiations, Sens. Kerry (D-MA), Lieberman (I-CT) and Graham (R-SC) plan to circulate a draft that will present a new approach to regulating greenhouse gas emissions.
Most global warming bills have relied on an economy-wide cap-and-trade (CAT) structure that would limit carbon emissions across the economy and create a new financial market in trading carbon permits. Democrats have concluded that a CAT bill like the House-passed Waxman-Markey legislation has no chance of passing the Senate.
The Senate proposal will offer a three-pronged or sector-by-sector approach. The legislation will set a national target for reducing carbon, an expected cut of 17% below ’05 levels by ’20. Each of the economy’s three major emission sectors – electric utilities, transportation and manufacturing – will be subject to different forms of regulation. The proposal likely is to apply an emissions cap only on electric utilities while the transportation sector would be subject to some form of tax based on carbon content in fuels. A cap on emissions by manufacturers, with possibly a separate cap-and-trade program or some other system of regulation, may be phased in later.
Aides emphasized that the draft to be circulated to Senators represents an opening bid. For example, a central piece that still has to be worked out is the basic mechanism for pricing carbon credits. Another idea is the so-called cap-and-dividend plan which would require emitters to purchase emission permits then return those fees directly to consumers.
The sector-by-sector approach might entice a few Senate moderates from both parties who have said they support addressing climate change but oppose a single economy-wide approach. On the other hand, electric utilities likely are to find the new approach less appealing.
In designing the House climate bill, Energy and Commerce Committee Chairman Waxman (D-CA) worked for months to win the backing of the electric utility industry for a CAT program.
Ultimately, the industry’s support was obtained through giveaways of billions of dollars worth of free emission credits to operators of coal-fired power plants. Those groups likely are to push back hard at the idea of capping only emissions by their sector. Any type of new fuel tax also is likely to be a tough sell.
Sens. Kerry, Graham and Lieberman face a tight schedule to refine a bill and build consensus in time to pass it this year. The pressures of the election-year calendar mean they probably must finish writing the bill and secure a filibuster-proof 60 votes this spring.