Obama and Dem leaders will push next week to firm up a climate strategy; but will a price on carbon be part of it?

Will there be a price on carbon? That seems to be the most important question, but it's certainly not the only one about upcoming climate legislation in the Senate.

As Obama invites a bi-partisan group of Senators to share ideas at the White House next week, and Majority Leader Harry Reid (D-Nev.) reconvenes the Democratic caucus to discuss proposals presented in a one-hour closed-door meeting last week, cap and trade (or some other price on carbon) seems the most controversial piece of the puzzle.

How to get to 60
Republicans voted in lockstep for the Murkowski resolution to block EPA regulation of greenhouse gases (and were joined by 6 Democrats).

So it seems likely they will hold together to vote “no” on cap and trade, or any legislation that’s tough on fossil fuels. With elections close at hand they may just say “no” to block Obama.

Lindsey Graham (R-S.C.), who worked for months with Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) has deserted his friends in the enemy camp and is now backing fellow Republican Richard Lugar’s (Ind.) bill. So that might have a chance to get to the 60 votes needed. But it’s very weak, focusing on energy efficiency, nuclear power and retiring a few of the oldest, dirtiest coal-powered plants.

Another possibility for Republican support is the Cantwell-Collins “cap and dividend bill.” GOP Sen. Susan Collins (Me.) is one of the sponsors and might bring along a couple of fellow New Englanders. It would return 75% of revenues from allowances to the people. But anything with “cap” seems to be politically toxic.

And we certainly can’t depend on oil-patch Democrats, who we’ve seen are still clamoring for increased offshore drilling. In fact, without immediate state revenue-sharing of offshore drilling, Mary Landieu (D-La.) says she’ll work to stop a bill. And then there are coal-state Dems like Jay Rockefeller (D-W.Va.). He's unlikely to vote for anything that hurts his state’s economy.

The benefits of Kerry-Lieberman
Although it’s not all we might wish, Kerry-Lieberman’s American Power Act, which is built on cap-and-trade (17% below 2005 levels by 2020), seems by far the best Senate bill out there. It would actually DO something and aims for an 83% cut in GHG by 2050. An EPA analysis puts the cost per family at less than a postage stamp a day. A Peterson Institute study says it will unleash 200,000 new jobs a year 2011-2020. And a ClimateWorks Foundation study ups the jobs to half a million a year until 2030.

Rationally, this is the best bill hands down. And it has the support of many big businesses, like GE, Honeywell and Dow Chemical. But who’s rational? Certainly not the Senate a few months before midterm elections.

So conventional wisdom is that Jeff Bingaman’s (D-N.M.) bill that passed the Energy Committee last year and would establish a renewable electricity standard, will be the platform to which other items would be attached. Kerry-Lieberman could be introduced as an amendment (though they are still fighting to take the lead) -- and will probably fail to get 60 votes.

Possible health reform redux
Meanwhile the idea is out there that the strategy might be to pass the best bill possible, then go to reconciliation with the House, which you may have forgotten passed a comprehensive cap-and-trade bill last year. And they could work cap-and-trade into the final result. The votes might be there for passage of such a final bill in the lame-duck session. Especially if majority rules.

That would be cool. But we’ll have to see how it plays out.

Getting anything through the Senate will be hard because this bill will also contain response to the oil spill, like greatly increasing the oil tax for the Spill Response Trust Fund, eliminating the liability cap of $75 million and tightening safety regulations. While most of the country will be all for that, some oil-state Senators will no doubt tout the industry line.

Senators everywhere need to hear from the public, which is way ahead of them on this one.

Call the Congressional Switchboard at 202-224-3121 and tell your Senators you want a comprehensive climate bill with a price on carbon passed this year.

(Sources: E&E Daily, E&ENewsPM, ClimateWire, The Hill)

Reid to use spill to fashion new energy and climate bill

(Photo of Harry Reid from Flickr and talkradionews.)

The Great Gulf Oil Spill of 2010 should make it easier to pass climate legislation to get us off fossil fuels, now that we’ve seen the damage deepwater drilling can do. Right?

Not necessarily. Pundits have been saying the Kerry-Lieberman bill will lose the possibility of any GOP support if it backs away from more offshore drilling, and it will lose Dem support if it encourages it. The lines have hardened.

So how can Dem leadership improve its chances of passing a climate and clean energy bill before the November elections, when Republicans are sure to pick up more seats?

Majority Leader Harry Reid (D-Nev.) has had an “aha moment.” He’s going to turn this into a Spill Bill, with emphasis on holding oil companies accountable and reducing their tax breaks. With public concern about the spill running high, detractors would have more trouble voting against such a bill, he reasons.

Last week Reid sent a memo to eight committee chairmen with a role in climate and energy, asking them to put forth ideas about how to make oil drilling safer, make the companies pay for damage they cause and reduce some of the tax breaks they gained over the past decade.

Reid wants to bring a bill to the floor in July. Whether it will be a combination of oil spill and Kerry-Lieberman or oil spill and energy-only (no cap, no trade, no carbon limit) is still to be determined.

President Obama voiced his support for a comprehensive bill of the Kerry-Lieberman variety last week, but he may have to settle for less.

Reid will meet with the relevant committee chairs next Thursday to talk about how to proceed.

However they shape it, a climate/clean energy bill is going to be hard to pass before November.

My guess is they’ll end up with a Spill Bill that also encourages clean energy (perhaps with a renewable electricity standard) and other incentives to produce and use clean energy – and probably nuclear power. That may be the only way to get 60 votes, and even that will be hard.

Big Oil still has many supporters. Witness calls from Louisiana Gov. Bobby Jindal (R) and former Alaska Gov. Sarah Palin (R) to drill off their coasts, because their economies depend on it.

Stay tuned.

(Sources: Mother Jones, Politico, E&E News PM, Climate Progress)

Kerry-Lieberman bill would create 200,000 jobs a year and cut greenhouse gases 22% by 2020, 42% by 2030

(Photo of Diablo nuclear power plant in California from Flickr and photographer Mike Baird)

The Kerry-Lieberman climate bill would spur a surge of 200,000 new jobs a year from 2011 to 2025 and would cut greenhouse gases 22% by 2020 and 42% by 2030, according to a new study by the non-partisan Peterson Institute of International Economics .

The jobs would be largely for construction of new power plants and increased use of biofuel. They would help with the recovery from recession, but would slow to business-as-usual after 2025, the study says.

This first analysis of the American Power Act was released Thursday. It forecasts what the U.S. energy picture will by 2030 if the bill is passed.

The changes will be significant, though not as much as some might hope.

• Fossil fuels will drop to 70% of the energy supply from 84% today.
• Renewable energy will rise to 14% from 8%, with wind growing the most, followed by biomass and then solar.
• Nuclear power will double to 16% from 8%.
• Nuclear and renewables will power about half the electricity.
• Carbon capture and sequestration will be a factor for both coal and natural gas.
• Oil use will drop 33-40% as transportation turns increasingly to ethanol, biodiesel and electricity. U.S. spending on foreign oil will fall to $93B from $144B per year.
• Homes will see about a 3% increase in electricity rates between 2011-2020, while gasoline will rise about 5%. Home heating oil will rise as well. But price increases will be mitigated by increased efficiency and the return to consumers of revenues from purchased allowances.

Two side benefits will be reduction of other pollutants, such as mercury and nitrogen oxides, plus a sizeable reduction in water use.

Download the study.

(Sources: Greenwire, Peterson Institute of International Economics)

Offshore drilling still in climate bill, but with restrictions

The word is out about the contents of the Kerry-Lieberman climate bill, due for release at a 1:30 p.m. (EDT) news conference Wednesday. The Hill has links to a summary of the new draft on its Web site.

Offshore drilling is still in it but there are protections:
• If a state wants to drill within 75 feet of shore, nearby states that could be impacted by a spill can veto it.
• Safety regulations will be added later, pending the 30-day review by the Interior Department.

What's in the bill
Other key elements of the bill, the American Power Act, include:
• Cutting greenhouse gas emissions 17% (below 2005 levels) by 2020 and more than 80% by 2050.
• Pre-emption of states or regions having their own carbon market, but allowing them to restrict GHG.
• Pre-emption of EPA regulation over GHG from new plants but not over existing plants.
• $54 billion in loan guarantees for nuclear energy
• A price on carbon, with a floor of $12 a ton, to rise 3% a year and a ceiling of $25, to rise 5% a year.
• 37.5% revenue-sharing for states that allow drilling off their shores.
• Two-thirds of utility auction revenue (after paying down the deficit) returned to customers to help pay rising utility costs, referred to by some as cap-and-dividend.
• $7B a year for transportation infrastructure and efficiency.
• Investment in electric vehicles and tax incentives to switch heavy vehicles to natural gas.
• Expansion of the clean energy tax credit by $5B.
• Fuel producers and importers will pay a price for allowances, which they will not be able to trade.
• $2B for coal plants that capture and store carbon.

What happens next
After release, the bill is expected to go to Majority Leader Harry Reid (D-Nev.), who will merge it with some other pieces to craft a bill he thinks can get 60 votes. The Energy Committee bill, which passes committee last year, will be one of those pieces. It included a renewable electricity standard of 15%, efficiency measures and an overhaul of federal financing for clean energy projects. It also included allowances for wider oil and gas leasing in the eastern Gulf of Mexico, which isn’t likely to fly.

Progressives are hoping the bill will move in their direction as it is changed, to woo those on the left opposed to more offshore drilling.

Debate is expected in June or July.

(Sources: The Hill, Climate Progress , Sierra Club, the Washington Post Carbon blog, Greenwire)