Monday will indeed be the day that the Kerry-Graham-Leiberman Senate bill on climate change will be unveiled, according to several reports. The Hill notes that there remains some uncertainty, over how it will be prioritised in the Senate – majority leader Harry Reid won’t be drawn on how climate will fare, given there is talk of an immigration reform bill also being presented soon.
Bloomberg reports that the bill will no longer contain a gasoline tax, as it was too unpopular with other politicians. The wire has summarised the main points they have been told of, which include a 17 per cent reduction in greenhouse gas emissions by 2020 (from 2005 levels). And:
OIL INDUSTRY: The latest proposal being considered would give the oil industry free pollution allowances that would expire by a certain date, after which allowances would have to be purchased. The Congressional Budget Office would be called upon to certify the mechanism wasn’t a tax.
Reuters has some background of how the gasoline tax idea evolved into this. We’ll be very interested to see how the details unfold.There is also:
CAP-AND-TRADE: A cap-and-trade program would initially apply only to electric-power utilities. The market would enable companies to buy and sell rights to pollute and would be expanded later to manufacturers.
Bloomberg adds that the cap-and-trade component won’t be labelled as such, because the term is so on the nose these days. To which we say: good luck with that – if not called out as cap-and-trade it will no doubt be given a more pejorative term by its critics – energy tax, perhaps?
Carbon prices, meanwhile, would be collared at $10 to $30 per tonne.
Back to Bloomberg:
PREEMPTION: State and regional cap-and-trade programs, such as one that operates in the U.S. Northeast, would be suspended in favor of a federal emissions-trading system. Senators including Susan Collins, a Maine Republican, and Mark Udall, a Colorado Democrat, say they oppose such a state preemption.
OFFSETS: The bill is likely to include carbon offsets. These are emissions reductions from unregulated sources, such as farms and rain forests, that polluters can purchase in lieu of pollution permits in a cap-and-trade program.
TRADE: The bill would offer protections for energy- intensive businesses against losing out to imports from countries that don’t have equally stringent pollution restrictions.
There are a bunch of sweeteners for energy producers, too: expanded offshore drilling, in line with Obama’s proposal; possibly more loan guarantees for nuclear plants; and money for coal companies to develop CCS.
The KGL senators are clearly treading a very fine line on many of these issues as they try to round up the 60 votes needed for the bill to pass. As Senator Lisa Murkowski said, “Some would suggest that as you try to bring certain members on to an initiative, for every one you get on, you have two that leap out of the wheelbarrow.”
Has the White House painted itself into a corner on climate change? FT Energy Source