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)

Will financial crisis and bailout help or hurt in fight against global warming?

(Headline collage from Flickr and Mother Pie/Hattie Page)

Weekly Angst: The credit crisis and $800-plus billion U.S. government bailout plan will likely have an impact on spending on climate change, but will the positives outweigh the negatives? While conventional wisdom might say there’ll be little money left over to fight global warming, many see green technology as the engine that will drive future growth and revival – at home and around the world.

The U.S. Conference of Mayors last week predicted 4.2 million new green jobs by 2038, adding to the 751,000 already in existence in 2006.

And green technology in Silicon Valley is one of the few industries still growing in California, Gov. Arnold Schwartzenegger noted.

The bailout
The add-on to the $700 billion bailout extended tax credits to help renewable energy, efficiency and sales of plug-in cars. While wind energy is a bit shaky, with only a 1-year extension and damage to some of its main investors – AIG, Lehman Brothers and Wachovia – the industry sees slower growth in 2010 but is still hopeful that utilities and other new investors will take a stake in the fast-growing new energy source.

Solar seems in a somewhat better position with an 8-year extension of production tax credits. The demand for solar panels reportedly still exceeds demand.

The American auto industry says it will remain on track to continue producing smaller, fuel-efficient cars and looks forward to competing for the $25B in low-interest loans from the federal government approved earlier this month.

Good signs
Other signs of hope that climate change will remain a high priority in Washington:
• The economic crisis raises the possibility of Democrats getting the 60-vote majority in the Senate they will need to pass a renewable energy standard (RES) and a cap-and-trade bill.
• House Speaker Nancy Pelosi says climate change remains a priority for her.
• There will be international pressure on the United States to negotiate a viable post-Kyoto treaty.
• And front-runner Barack Obama, should he become president, has touted a $150 billion renewable energy economic plan and produce 5 million jobs.

Problems
Some Republicans, however, may balk at passing a cap-and-trade bill in 2009, because they’ve always been concerned about its impact on the economy and that fear will be heightened. There are those who think such a bill might be held over till 2010, delaying action another year.

Others raise the alternative of a carbon tax, much easier to understand than another complex financial market. But worldwide carbon trading is thriving and expected to grow 80% to $116 billion by next year, thanks in large part to the Kyoto mandate for the European Union.

A major concern for a post-Kyoto agreement is that rich countries may be unwilling to come up with the money and technology for developing countries needed in order to get them to participate in curbing greenhouse gases.

UN Sec. Gen. Ban Ki-moon expressed concern last week that short-term financial emergency will eclipse the longer-term problem of global warming.

But finance ministers from around the world, at a World Bank and IMF meeting over the weekend, pledged to keep climate change on a front burner. Even bankrupt Iceland’s minister said, “We can’t afford to delay responding to climate change.”

And economists and UN leaders are creating a green New Deal. The Green Economic Initiative, spearheaded by the UN Environmental Programme, will be launched next week in London with its focus on renewable energy, other green technology and saving the world’s natural systems. Funded by the European Commission, Norway and Germany, the Initiative will – among other things – work to save forests, whose loss, they say, equals more than $2 trillion a year. The Initiative could produce hundreds of millions of jobs worldwide, according to Pavan Sukhder, chairman of Deutschbank's Global Market Center.

(Sources: Reuters, Greenwire, ClimateWire, PlanetArk, Daily Green, The Independent)