Graham, Kerry, Lieberman share details of bipartisan climate and clean energy jobs bill with industry groups

UPDATE:  More details at the end.

Sens. Lindsey Graham (R-SC), John Kerry (D-MA), and Joe Lieberman (I-CT) “shared an eight-page outline of their draft legislation that would reduce greenhouse gas emissions over the next four decades, including provisions to limit business costs while ramping up domestic production of oil, gas and nuclear power.”

E&E News PM (subs. req’d) reported the following details of the bill, which leaked out from the Senators “closed-door meeting with major industry groups they are courting”:

According to several sources in the meeting room, the bill calls for greenhouse gas curbs across multiple economic sectors, with a 2020 target of reducing emissions by 17 percent below 2005 levels and an 80 percent limit at mid-century. Power plant emissions would be regulated in 2012, with other major industrial sources being phased in starting in 2016.

In a bow to industry demands, the senators’ proposal would preempt U.S. EPA climate regulations under the Clean Air Act and halt dozens of state climate laws and regulations now on the books. Also, only facilities that release 25,000 tons per year of greenhouse gases must participate in the climate program.

Additional layers of certainty for industry come via a “hard price collar” that limits greenhouse gas allowances to between $10 and $30 per ton tagged to inflation, with an increase at a to-be-determined “fixed rate” over time. The legislation would also set aside a “strategic reserve” of 4 billion greenhouse gas credits that could be released into the market to help control price volatility fluctuations.

Well, I’m not a fan of a hard collar (i.e. a pure safety valve, with an unlimited amount of allowances sold if you hit the ceiling price) — but some sort of collar was inevitable (see How the Senate can fix cost containment in the climate bill with ‘price collar plus’).  If the reserve is created from tons skimmed off of each year’s total allowances from 2012 to 2050, that is a good idea.

Also, if there is going to be a hard collar than the “fixed rate” of rise over time needs to be something like 6% plus inflation.  The $30 starting price fora ceiling, presumably in 2012, isn’t that bad, but again, only if you are rising at a pretty rapid rate.

UPDATE:  The floor price was misreported in the press, I’m told, which is good news because $10 is just too low.  I’d want to start at least $12 if not higher.  As an aside, I would strongly recommend starting the regulations in 2013 (or 2014), to give more time to set rules and keep this clearly away from the economic recovery.  Also, the amount of allocations in the early years are likely to be too high anyway, thanks to the economic recession and the success of the stimulus bill, so you’re really not getting any environmental benefit from starting in 2012.

Preempting the EPA was inevitable if there is to be anywhere near 60 votes for this thing.  [Pause for 10 seconds of angst, now get over it.]

Overall, the bill will … set up new nationwide standards for energy efficiency and renewable energy, as well as ideas on carbon market regulation crafted by Sens. Maria Cantwell (D-Wash.) and Susan Collins (R-Maine).

One can certainly make good use of the Cantwell-Collins idea of allowing only regulated entities to own permits.

The senators’ meeting included about a dozen top trade associations, including representatives from the U.S. Chamber of Commerce, Edison Electric Institute and American Petroleum Institute. Several of those officials left the meeting giving the three senators credit for their effort.

“Directionally speaking, the way they’re trying to conform and shape this bill I’d suggest is largely in sync with what most people in American industry think is the direction you’re going to have to go if you’re going to have a successful program,” said Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce. “Now there’s a lot of ifs, ands and buts, but if you’re asking for a broad statement, that’s a broad statement.”

John Shaw, senior vice president of government affairs at the Portland Cement Association, called the meeting’s tone “very positive.”

“I think many of the industry sectors are willing to work with the senators to achieve positive public policy results,” Shaw said, “but the devil is in the details, and folks are very anxious to see those details.”

If the Chamber were to support this bill — or even if not actively oppose it — that would be a miracle, and I don’t really believe in miracles.

Right now, the conventional wisdom is the bill has a very, very, very hard climb to 60 votes.  More on that soon.

CQ has more details (apologies for the repetition):

As expected, the measure would set a mandatory cap on carbon emissions across the economy but apply different sets of regulations to different polluting sectors….

“¢ An economy-wide cap on carbon emissions that would begin in 2012, with a target of reducing carbon pollution 17 percent by 2020 and 80 percent by 2050.

“¢ Separate caps on carbon emissions by the electric utilities and manufacturing sectors, which would have to buy permits to pollute from the federal government.

“¢ A straight fee or tax, paid by consumers at the pump, on transportation fuels. The levy would be linked to the carbon content of the fuel and the price of carbon in the other markets.

“¢ A combination for the regulated sectors of a “cap and trade” model, under which polluters could trade pollution permits on an open market, and a “cap and dividend” model, which would return revenue from the sale of permits directly to consumers.

“¢ Direct rebates to consumers of half the revenue from the sale of pollution permits.

“¢ Delay until 2016 in starting the phase-in of carbon caps on manufacturers.

“¢ Application of a “carbon tariff” to imports of goods from countries that do not regulate their carbon emissions.

“¢ … The government would keep a strategic reserve of 4 billion credits, and would flood the market if the carbon price exceeded $30 per ton. The price would be indexed to inflation rates and rise over time.

“¢ A threshold of 25,000 tons of carbon per year before a polluter would be subject to regulation.

“¢ A single federal system to cap emissions, pre-empting separate state limits.

“¢ Sections or titles devoted to … farming, coal, clean energy innovation, and increasing production of nuclear energy and oil and natural gas drilling.

22 Responses to Graham, Kerry, Lieberman share details of bipartisan climate and clean energy jobs bill with industry groups

  1. Jeff Huggins says:

    If any plan wants my support, it needs to be well-designed, simple, sure to be effective, and not create huge exceptions for industries that should be changing.

    If they (whoever “they” are) come up with a plan that takes someone more than eight minutes to explain to me, and that I can find ten holes in, there’s a problem. The public will never get it, won’t be inspired by it, won’t support it, and it’ll never work. I’m not (necessarily) saying that about this plan — although I must admit, it sounded complex and full of techno-jargon and holes — but I am saying that about whatever plan is eventually put forth. If it can’t be explained simply, and if it has “holes” and lots of exceptions for the big industries, forget it. Shall I repeat that? Have we not learned yet?



  2. Matt Dernoga says:

    Preemption of state laws is a big trade away

  3. Leif says:

    I hope that there is some kind of provision to revisit this bill if “grim realities” dictate stronger action in the near term.

  4. Tom C says:

    Given the difficult climb to 60 votes and the highly partisan health care battle seemingly coming to a close, what is the updated prognosis for when the senate will fully take on clean energy legislation?

  5. Jim Edelson says:

    This bill could be a step backwards, and raises as many questions as answers.

    [JR: The only step backwards is no bill, no shrinking cap and rising price on carbon.]

    It is quite likely that the US would meet the same 2020 goal (ie 17% below 2005)without all of the concessions and counterproductive precedents contained in this bill’s outline.

    [JR: Try “very unlikely” instead of “quite likely”. Plus, you can’t negotiate an international agreement on the basis of your crossed fingers.]

    Many of the alternatives on the table are likely to proceed ONLY in the ABSENCE of K-G-L:

    1)Retain EPA regulatory powers on CO2

    [JR: No guarantee that such power will be retained during the course of the Obama administration, and even less guarantee that it might be retained in a non-aggressive administration.]

    2)Do not abolish states’ ability to regulate CO2 (7% emissions reductions nationally in this one stipulation alone)

    [JR: Don’t know where that 7% figure comes from but my guess is that it is an overoptimistic projection and against projected growth, not 2005 levels.]

    3)Continue ARRA funding, with extensions of many of the job-producing energy-saving financing and incentives

    [JR: Extensions? With what source of revenue?]

    4) Pass Home STAR jobs bill

    [JR: We’re pushing hard for this.]

    5) Pass Building STAR jobs bill

    6) Witness greater climate calamities over the next 2 years and advance effective climate legislation in 2011

    [JR: And people say I’m optimistic. If the bill goes down this year, it certainly won’t come up in any serious form before 2013, and that would require a whole bunch of calamities that people actually associate with global warming, which, in case you didn’t notice, the media rarely do.]

    7) Allow the Administration time to use pending regulations under NESHAP to negotiate for the early closure of over 50 coal-fired power plants

    [JR: Oh I expect some of the most inefficient and least used coal plants to be shut down with or without a bill, but nothing that gets you near 17% and nothing that allows you to negotiate an international treaty.]

    8 Allow the hundreds of billions (trillions) in private capital flowing into the clean energy space to accelerate the global competition for clean energy, bullet trains, etc.

    [JR: Flowing mostly outside of this country, I’m afraid, if there’s no bill. Great for advancing clean energy in the medium term, but not so great for reducing U.S. emissions or restoring US leadership in clean energy jobs.]

    QUESTIONS: Is this preferable to passing K-G-L as presented?

    1) Will this bill lead to a closure of existing coal plants more quickly that the alternative?

    [JR: Yes. As currently envisioned, absolutely no question about it. Not even close.]

    2) Will this bill slow the drive in the US for consumption and development of tar sands and other solids-to-liquids fuels?

    [JR: Yup!]

    3) Will this bill lead to a quicker consumption reduction in gasoline? jet fuel? in diesel?

    [JR: Yes, again.]

    4) Will this lead to quicker deployment of renewables and efficiency?

    [JR: Most certainly.]

    5) K-G-L contains a gas tax increase as THE way to tackle transportation emissions. Exactly which 60 votes are we going to get here?

    [JR: Same as before, a very big left.]

    I have a problem with seeing this proposal moving us forward. But I will consider it on its merits.

    [JR: I’ve said many times, one can easily construct a far better bill that can’t even get a majority of Democrats. So what? I rather think this bill will be a disappointment, and conventional wisdom says its DOA. But I prefer those who are trying to achieve something possible to those who are opposed to everything plausible. More posts to come on this subject.]

  6. Jay Turner says:

    For California legislators, the preemption of state laws is a poison pill. I wouldn’t want my senators to gut efforts like AB-32, which is meant to set the pace for reform in the rest of the country.

  7. Steve Bloom says:

    Re #5: Yes, and note also that this November there will probably be a statewide vote on what will amount to a repeal of AB32. The sponsors are some of the same oil companies that Kerry is currently playing footsie with. Imagine that.

    The proposed legislation contains too many bad provisions to make it worth supporting. The far better course of action is to pass nothing this year and insist that Democrats repeal the 60-vote rule to pave the way for a better bill next year, noting that doing so would have much wider benefits. Of course if Democrats had any guts they’d repeal the 60-vote rule now.

  8. James Newberry says:

    Not to mention possible hundreds of billions of dollars for federal LOANS for “clean, green, safe” atomic fission. These three ideologues are friendly to global corporatists and are operating as politicos from last century. Unfortunately, science says everything has changed.

    The middle-east wants to go nuclear (also a weapon system)in step with the US, which will be just great. Total insanity, given that Wall St. would not touch nuclear, a dying obsolete scheme for the past several decades do to economic infeasibility. A “free market fraud,” since my Senator will force us to invest as taxpayers. Thanks Traitor Joe, you are one of three stooges.

    Where is my nuclear bailout bucket? Must be downstairs in the floodwaters. Anyone want to buy a nuclear economic bomb?

  9. sasparilla says:

    Well, this doesn’t exactly sound too good, but as the only possible game in town – I hope it can get passed.

  10. Ken Johnson says:

    “… a ‘hard price collar’ that limits greenhouse gas allowances to between $10 and $30 …” Why don’t they just split the difference and set the price to $20?

    There should be a much easier way to do this. You want to stop new coal? Set the carbon price to $100 — not on all coal, just on new capacity. You want to stimulate renewable energy? Give renewables a price subsidy equivalent to $100/ton — not for all renewables, just new capacity (like Europe and China are doing). Subsidy financing can come from carbon fees on existing fossil-fuel power. Fees would start out not at $10, but near zero (when there are no “new” sources) and would rise in relation to renewables’ market share.

    You want to create a price incentive for hybrid vehicle technologies and fleet electrification? Fuel costs alone already create an incentive of over $200/ton (and rising). Just use creative financing mechanisms to leverage the existing price incentive.

    Incentives for efficiency and cogeneration? Why is a carbon price needed when “the entire 2020 target in the Waxman-Markey climate bill could be met with energy efficiency at a net savings to U.S. consumers and businesses of $700 billion“?

  11. Wes Rolleyh says:

    #5 _ 2) Will this bill slow the drive in the US for consumption and development of tar sands and other solids-to-liquids fuels?

    [JR: Yup!]

    From Earth Energy Resources:

    We are very excited to report that on September 19, 2009, Earth Energy Resources received approval for its Notice of Intention to Commence Large Mining Operations from the Utah Division of Oil, Gas and Mining. This is the first oil sands production permit to be granted in the United States and represents a very significant milestone for the Company and the US domestic oil sands and oil shale industry.
    Better get this passed if it is our only hope.

    I really can not understand why, in the face of peak oil and climate change, people want to use up the rest of our oil / natural gas supplies as fast they can. I guess that the are counting nuclear to keep us going after. It really makes me glad to long past collection social security.

  12. Ken Johnson says:

    If this bill becomes law, will it have any more than a “10% to 20% chance of averting catastrophe“?

  13. Wit's End says:

    Leif, “grim realities”

    CO2 increases death rate in cities:

  14. Preston Wright says:

    I feel like I have woken up in the twilight zone. Every day the nightmare signals are increasingly clear and yet nothing is done. This legislation will essentially be WAY to little, WAY to late. What happened to America and its ability to deal with overwhelming problems? What happened to the spirit of independence and pioneering spirit? It sickens me to no end to watch this country be reduced to middling ineptitude in the face of a great challenge.

  15. Lou Grinzo says:


    “What happened to America and its ability to deal with overwhelming problems? What happened to the spirit of independence and pioneering spirit? It sickens me to no end to watch this country be reduced to middling ineptitude in the face of a great challenge.”

    It was strangled by a combination of greed, myopia, cynicism, and the willingness of some people to define themselves via their contrarian stances, i.e. what they’re against and not what they’re for.

    But it’s not dead yet. It’s up to us to find a way to revive the American spirit, even if our elected leaders can’t figure it out.

  16. Mike says:

    On the state pre-emption question, it really depends how they do it. Everyone involved in setting up cap-and-trade programs such as RGGI or WCI has known for a while that their programs would likely end if a federal program was created. And they’ generally accept this idea. But if the bill tries to block other state efforts, such as efficiency standards, building codes, then I would expect to see a fight.

  17. Preston Wright says:


    Agreed ‘conspicuous consumption’ has now completed its life cycle and become ‘conspicuous waste’

    “But it’s not dead yet. It’s up to us to find a way to revive the American spirit, even if our elected leaders can’t figure it out.”

    Reviving the American Spirit…sigh. Some days it is difficult to see the light.

  18. Leif says:

    Find a way? My current pony is questioning why capitalism and corporations are at cross purposes with humanities long term survivability. It is obvious to the point of absurdity that if I could make tons of money by dumping my waste products in my neighbors yard that I would be restrained. If I compensate said neighbor then perhaps but even then society would have something to say. Yet Corporations do that very thing, not only each American, but to each being the world over with apparent immunity. I say take the @#%&*’s to court and force them to factor humanities long term survivability into corporate actions first and foremost and shareholders profits secondary. Surely corporations can be profitable suppling humanity with goods and services that are recyclable, have a life span longer than a few minutes, even seconds for some, and do not require humanity to trash the earth’s life support systems for them to entertain bimbos on a yacht someplace.

  19. Jonah says:

    Preston: Demagoguery reigns in America.

    I don’t agree with Joe 100% of the time on the politics side of things (I tend to run a bit more idealistic than he), but the point he makes about the timeless power of rhetoric rings true in my ears.

  20. SecularAnimist says:

    I think that Joe is probably very good at assessing what is politically possible, certainly more so than I am, so I am happy to accept his judgments on that score.

    Having said that, it appears that nothing that is politically possible comes anywhere near to doing what mainstream climate science is telling us we need to do if we are to have any hope of averting the worst consequences of AGW (and there is good reason to believe that mainstream climate science is still understimating how bad things are).

    Nor is it certain that even measures that may be politically possible — like the legislation discussed in this article — will actually pass. The current “health care reform” process shows that corporations will fight tooth and nail with all of their immense wealth and power (in which respect the fossil fuel corporations dwarf the medical insurance corporations) to water down proposed legislation and otherwise turn it to their advantage to the detriment of the public interest — and then they will use their wealth and power to try to defeat even that.

    So, I find this update to be a reason for pessimism.

  21. fj2 says:

    Perhaps, the most positive aspect of this is that American industries are taking part in the discussion though in an excruciating version of that old Jack Benny comedy skit where a mugger comes up to him and says:

    “Your money or your life!”

    There’s that long pregnant pause and with hand on cheek, Jack Benny turns and smiles to all of us; of course, he has to think about it.

  22. Kelley Meck says:

    This isn’t really a comment for this page. I just have a quick question and wonder if you could direct me toward a good resource to make a response to a classic climate denier citing Tim Patterson of Claremont U.’s discussion of sunspots found here:

    Normally I rely on Grist’s ‘how to talk to a climate skeptic’ and it is out of its depth here.
    I appreciate your time and help. Thx.

    [JR: Skeptical Science.]