Kerry, Graham, Lieberman to unveil climate bill

By Juliet Eilperin
Washington Post Staff Writer
Saturday, April 24, 2010

In their last and best shot at enacting a climate bill this year, Sens. John F. Kerry (D-Mass.), Lindsey O. Graham (R-S.C.) and Joseph I. Lieberman (I-Conn.) plan to unveil a draft Monday that will provide a streamlined system for capping greenhouse gas emissions from the utilities and transport sector but still aims to reduce the nation's carbon dioxide output by 17 percent in 10 years.

The measure offers numerous concessions to businesses, including allowing manufacturing and energy-intensive industries four years before they would be subject to the carbon cap; provisions for offshore oil drilling; $10 billion for the coal industry to capture and store its carbon emissions; and enough loan guarantees and incentives to provide for the construction of 12 nuclear power plants.

"Because of the broad-based industry support that I expect the bill will garner, both at the rollout as well as beyond, I think this is the best path forward," said Fred Krupp, who heads the Environmental Defense Fund.

In a telephone briefing Thursday for business supporters, Kerry said the Edison Electric Institute -- whose members generate the bulk of the nation's electricity -- would endorse the measure, along with three of the nation's five biggest oil and gas companies. He did not name the three oil companies, but a source familiar with the negotiations said Shell, BP and ConocoPhillips would support the bill.

Significant sections of the bill remained blank as of Friday evening, according to several sources, and that lack of specificity could deter some senators and many business interests from endorsing the measure at the outset.

"I'd like to support it, but I have to look at it," said Sen. Olympia J. Snowe (R-Maine), adding that she was concerned about what it would do to home heating oil and gas prices. "In this economy, we have to see how much we can do."

One of the most complex areas has been the question of how to limit carbon emissions from transportation. Initially the senators had hoped to create a linked fee on fuels that would be tied to the price of carbon, but that idea came under attack last week as a gas tax.

"If it walks like a duck and talks like a duck, it's a duck," said Sen. Christopher S. Bond (R-Mo.). "I don't care whether you call it a linked fee. It is a tax on energy."

To avoid that pitfall, the bill's authors are going to require oil and gas producers to buy special, non-tradable emissions allowances, at a price set by the Environmental Protection Agency. It would be pegged to the carbon market and must be retired at a certain date.

"We're not going to raise gas prices," Graham said.

To keep utility costs from rising too high, two-thirds of the revenue generated by auctioning off pollution allowances for utilities would be returned to consumers through local electricity distributors.

And in an effort to win over moderate Republicans, such as Sen. George V. Voinovich (Ohio), the bill will preempt both the states' and the EPA's ability to regulate greenhouse gases under the Clean Air Act, as long as emitters comply with the standards outlined in the measure. The agency will monitor and enforce compliance with the law.

The measure aims to cut U.S. greenhouse gas emissions 17 percent from 2005 levels in a decade and 80 percent by 2050.

Thomas J. Gibson, president of the American Iron and Steel Institute, said inclusion of the emissions cap means that someone in the business sector would suffer because the number of pollution allowances the federal government could give away are limited. "If the utilities and refineries are going to be the winners, who are going to be the losers?" he asked.

Jeremy Symons, senior vice president of the National Wildlife Federation, said the bill constituted the kind of compromises that often take place when crafting major legislation.

"The bill is ultimately about the grand bargain of pulling together national security interests with environmental concerns, and an economic job program to create clean-energy jobs," he said, adding that his group was still evaluating its position on the measure.

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