Washington (Platts)--30May2008

Supporters and detractors of legislation to reduce US greenhouse gas
emissions by 71% by 2050 predict that there will be enough votes to allow a
debate in the US Senate next week, but there may be more politics than policy
development after that.

Senate Environment and Public Works Committee Republican Staff Director
Andrew Wheeler said Thursday that the votes are there for the chamber to
proceed with a floor debate on the bill from California Democrat Barbara
Boxer, the committee's chairwoman.

Senator Jim Inhofe, the committee's senior Republican and the bill's
ardent foe, wants to thoroughly debate the bill's merits, but there are
concerns that the Democratic leadership may not allow substantive amendments,
Wheeler said. Inhofe is expected to favor the motion to debate, but has
threatened to filbuster the bill.

In the end, it is a question of whether the debate will be a legislative
process "or a political exercise," Wheeler told a roundtable discussion
sponsored by the Environmental Law Institute and E&ETV.

"We're hearing from the majority leader, 'you have maybe a week,'" to
debate the 157-page bill, released by Boxer last week, Wheeler said. "That is
not enough time to debate the issues we did not debate in committee."

A key area of contention expected to arise in the debate are the bill's
provisions to contain the cost of reducing greenhouse gases from the electric
power sector, natural gas processing, large industrials and transportation
fuels, according to the panelists.

Other potential battlegrounds include how international goods are
accepted in the US from countries lacking similar carbon constraints and
whether states with tougher carbon caps should be forced to enroll in the
federal program.

The bill, S. 3036, is based on the carbon cap-and-trade bill from
Connecticut Independent Joe Lieberman and Virginia Republican John Warner.
It uses an emissions allowance market where some permits are awarded and
others auctioned to prod emitters to comply with an incrementally tightening
carbon cap.

But new provisions will attempt to increase oversight of the carbon
market--estimated to be in the trillions of dollars--and create more
flexibility to keep allowance prices down with a supplemental auction.

Boxer estimates the carbon market would reap nearly $7 trillion through
2050 that the bill would allocate to transition industry to a low-carbon
economy, kick-start carbon capture technologies and provide tax relief to
compensate for higher energy bills.

David Doniger, who directs climate policy at the Natural Resources
Defense Council, called the bill "a crucial step forward" to address global
climate change.

But Scott Segal, director of the Electric Reliability Coordinating
Council, a coal-fired utility lobby, called the bill a "disappointment."
"I don't see a particularly serious effort to address supply-side
concerns," Segal said, adding that it does not "loosen the rein" on domestic
natural gas development nor contain a title for nuclear energy, which does not
emit carbon.

Instead, the bill's cap is going to cause "fuel-switching" from coal to
natural gas and drive up costs to consumers, he said.
--Cathy Cash, cathy_cash@platts.com