Senate Climate Bill: Last Chance for Cap and Trade

Senators John Kerry and Joe Lieberman unveiled their climate bill, the American Power Act, on Wednesday. Will it get Republican support?

  • Share
  • Read Later
From left: Mohamed Nureldin Abdallah; Larry Downing / Reuters

Senators John Kerry, left, and Joe Lieberman

Cap and trade — which seeks to reduce air pollutants by mandating a decreasing limit on emissions levels and letting the market find the most efficient way to meet it — began as an obscure academic idea, before becoming the mainstream method for tackling climate change. On Wednesday, when Senators John Kerry and Joseph Lieberman unveiled the American Power Act — climate legislation that would reduce greenhouse-gas emissions and boost clean energy — cap and trade reached its apogee. It also may have reached its end.

Kerry and Lieberman's draft bill — the product of eight months of contentious negotiations with environmentalists, the energy industry and nearly everyone in between — would establish a carbon cap that aims to reduce U.S. greenhouse-gas emissions to 17% below 2005 levels by 2020, and ultimately 80% below those levels by midcentury. It would also devote billions of dollars in aid to transportation, including public transit, and expand funding for carbon sequestration and clean-energy research and development. If the bill passes — and if it is reconciled with the tougher cap-and-trade bill passed last year by the House — it will represent the first truly national program to reduce the greenhouse-gas emissions that contribute to climate change. "The American Power Act will finally change our nation's energy policy from a national weakness into a national strength," said Kerry at the bill's unveiling. "It's time to act."

Joining the two Senators at the bill's introduction were representatives of the broad coalition the legislators had worked hard to hold together — chief executives of energy companies, senior military officers, some centrist environmentalists. Duke Energy CEO Jim Rogers, who has a more progressive attitude toward climate legislation than most of his industry peers, spoke in support of the bill, focusing on its potential to build a clean-energy economy rather than its impact on climate change (Rogers' company still operates more than a dozen coal plants.) "This bill will not only create jobs today but tomorrow and in the future," Rogers said, echoing a note the White House has also struck repeatedly on energy. "It gets the transition right to a low-carbon world."

It took some doing to get major carbon emitters and energy executives to stand shoulder to shoulder with environmentalists. Kerry and Lieberman had to make more than a few concessions: the bill contains $54 billion in loan guarantees for up to 12 nuclear plants; heavy industrial emitters would receive free carbon allowances to help them adjust to life under the cap; carbon limits would not be phased in until 2013; and manufacturers would not be subject to the cap until 2016. There would also be upper and lower limits on the price of carbon in a trading market — between $25 and $12 per ton, with a steady increase year on year — to ensure stability.

Most controversially, however, the bill would allow for expanded offshore oil and gas drilling, with restrictions; states would be able to veto offshore drilling in a neighboring state and opt out of drilling that would occur in waters within 75 miles of its shores. (The Interior Department would carry out studies to determine which states drilling would impact.) As an additional incentive, states that allow drilling would retain 37% of the federal royalties from oil and gas development — right now all the money is kept by Washington, an arrangement most inland states want to keep in place.

The concessions are a way to thread the differences between the Republicans who still want to drill here and drill now, and the green, coastal Democrats who have threatened to oppose any energy bill that supports expanded drilling. Before the BP spill, offshore oil and gas exploration was meant to be the bridge that would convince some Republicans to support climate legislation. (The Democrats don't have the votes to beat a filibuster.) But the spill has made offshore drilling politically radioactive for Democrats and even some Republicans — especially after BP released a video showing thousands of barrels of oil pouring out of the wreckage of the rig. "The oil spill has completely changed the politics of this thing," said an environmental leader.

Indeed, the offshore provisions were just one reason that many deeper-green environmental groups came out against the bill, despite requests that critics wait at least 72 hours before attacking it. Other groups, including Greenpeace and Friends of the Earth, argued that the bill was too weak to meet the demands of climate science and contained too many giveaways for the fossil-fuel industry. "The climate proposal put forth today by Senators Kerry and Lieberman represents a disaster for our climate and planet," said Kieran Suckling, executive director of the Center for Biological Diversity.

Most major environmental groups came out in support of the bill, however, saying the legislation represented the best chance to put the country on a low-carbon path and that Kerry and Lieberman should be credited for attempting to pass legislation in such a toxic political environment. At Wednesday's press conference, Fred Krupp, head of the centrist green group Environmental Defense Fund and one of the fiercest advocates of cap and trade, reminded the audience that U.S. businesses need a signal from government before they will truly begin investing in clean energy. "We need to remove the shackles of uncertainty that has restrained investment," he said. "I've been at this a long time, and this is the first time we've had such a broad level of support."

But the kind of support the bill will need to become law — from Republicans — was nowhere to be seen. Republican Senator Lindsey Graham, who had been a major player in the bill, dropped out abruptly late last month, ostensibly because the Senate Democratic leadership seemed poised to act on controversial immigration reform before energy. It's not clear what Graham will do now — he did not endorse the American Power Act but did say in a statement that he may eventually support it. No other Republican has moved to endorse it, and even the White House in its statement of support managed to reference the bill by the wrong name, calling it the American Clean Energy and Security Act, the title of last year's House cap-and-trade bill.

It is no surprise to the bill's co-author that criticism is coming from every side, from hard-green environmentalists to climate-change-denying conservatives. "A comprehensive climate bill written purely for you and me — true believers — can't pass the Senate no matter how hard or passionately I fight on it," Kerry wrote in a post on the green website Grist on Wednesday.

Kerry has said the bill could be the last, best chance for cap and trade — but right now, it looks like it might just be the last.