June 8, 2010
With the Gulf of Mexico oil spill reviving prospects for an energy debate in the Senate this summer, leading lawmakers are dusting off a bipartisan climate change proposal that could upstage the comprehensive bill recently unveiled by John Kerry, D-Mass., and Joseph I. Lieberman, I-Conn.
The chairman of the Senate Energy and Natural Resources Committee, New Mexico Democrat Jeff Bingaman, and the panel’s ranking Republican, Lisa Murkowski of Alaska, were among five senators who signed a letter, released Monday, that asked the Energy Information Administration (EIA) to analyze so-called cap-and-dividend legislation.
That bill (S 2877), sponsored by Washington Democrat Maria Cantwell and Maine Republican Susan Collins, would cap emissions of greenhouse gases, but rebate to consumers the money raised by selling emissions allowances to polluters.
The bill is an alternative to the measure that Kerry and Lieberman drafted after months of talks with environmental and business groups.
The Kerry-Lieberman package would also cap emissions, but would structure caps for various sectors of the economy differently. Unlike the Cantwell-Collins plan, it would allow allowances to be traded. It would also allow for a small percentage of revenues to be refunded.
The Kerry-Lieberman legislation would require greenhouse gas emissions to be reduced 17 percent by 2020 and 80 percent by 2050. Their effort to negotiate a package that could draw support from business and environmental groups and attract bipartisan backing stalled this spring when Lindsey Graham, R-S.C., walked away from talks.
Backers of that bill are furiously pressing for its inclusion in the package that Majority Leader Harry Reid, D-Nev., has said he plans to bring to the floor in July. With the gulf oil spill focusing public attention on the risks of an oil-dependent economy, Reid is meeting later this week with committee chairmen in an effort to jump-start an energy bill.
That push is further complicated by the Cantwell-Collins bill, which aims to blunt criticism that an emissions cap would hurt consumers by rebating revenue directly to the public. Additionally, to limit Wall Street speculation, it would block financial institutions from trading the allowances.
In addition to Bingaman, Murkowski and the two sponsors, the June 3 letter asking for an EIA analysis was signed by Ohio Republican George V. Voinovich — a moderate who has expressed reservations about the Kerry-Lieberman package but has said that he wants to address climate change. His interest could provide a significant boost to the Cantwell-Collins efforts.
The cap-and-dividend model also may appeal to senators such as Byron L. Dorgan, D-N.D., who has repeatedly raised concerns about opening a new carbon trading market to investors. Other moderate Democrats, including Jim Webb of Virginia, have expressed support for the dividend approach.
The letter requests that EIA consider the impact of several possible modifications to the bill, including adjusting dividend allocations to minimize regional differences related to fossil fuel use; changes in the bill’s “price collars,” which are limits on both the minimum and maximum cost of carbon emissions allowances; and further assistance to energy-intensive industries vulnerable to international competition. The changes could help attract support.
Energy panel spokesman Bill Wicker cautioned that Bingaman’s signature on the letter was not an endorsement of the underlying bill and that it stemmed from a desire to consider the technical merits of all the climate bills. “Bingaman likes facts,” Wicker said. “He has not made up his mind on any of these proposals.”
A lobbyist for an environmental group backing the Kerry-Lieberman bill said the Cantwell-Collins bill would provide unwanted competition. “I think it’s fair to say Cantwell-Collins doesn’t have the support of some pretty major business constituencies,” the lobbyist added.
Another alternative, unveiled Monday by Richard G. Lugar, R-Ind., would aim to reduce greenhouse gases by encouraging energy efficiency and promoting renewable and nuclear energy production. It does not include mandatory emission cuts.
In an interview Monday on MSNBC, Charles E. Schumer of New York, vice chairman of the Democratic Caucus, said an energy bill (S 1462) approved by the Energy panel last year would be the “base” for Senate action. Kerry would probably offer his bill on the floor as an amendment, Schumer said.
Bingaman’s spokesman said the strategy remains “a work in progress” and the committee staff is writing a separate bill to address spill-related issues. On Wednesday, the panel will hear testimony from Interior Secretary Ken Salazar at one of at least nine scheduled hearings on the spill this week.
