Details of climate bill trickle out

Details are beginning to leak out about the climate bill, after weeks of closed-door negotiations among key Senate lawmakers and staff.

Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) spent the past week presenting an eight-page outline of the bill to key business groups, including the U.S. Chamber of Commerce and the American Petroleum Institute.

But the bill provides a weaker cap on greenhouse gas emissions than many environmentalists had hoped. And it’s chock-full of sweeteners for coal, oil, offshore drilling and nuclear power — energy sources viewed with some skepticism in the environmental community but seen as key to picking up the votes of a handful of moderate Republicans.

“We’re not restricting our pool of potential votes to only Democrats,” said Kerry.

Those types of trade-offs, lawmakers said, are necessary to build the political support to move the bill through the Senate.

“We don’t have 60 votes to pass a strong global warming bill,” Sen. Bernie Sanders (I-Vt.) said. “The choice I suspect Sen. Kerry is wrestling with is whether it’s better to do something or nothing.”

On Tuesday, the three members briefed a group of lawmakers who’ve spent months working on the various iterations of the bill.

They hope to send a draft of their proposal to the Environmental Protection Agency by the end of this week. The agency needs six to eight weeks to do an economic analysis of the bill, according to administration officials.

Graham told POLITICO that the proposal mirrors the Markey-Waxman legislation that passed the House last June by putting an economywide cap on greenhouse gas emissions starting in 2012 — with the goal of reducing pollution 17 percent by 2020 and 80 percent by 2050.

But unlike the House bill, the Senate proposal puts different kinds of limits on different industries.

Separate caps are put on utilities and manufacturers that will have to buy and trade pollution allowances from the government, according to people briefed on the bill. A “hard collar” is put on the price of the allowances to prevent them from dropping below $10 per ton. If the price exceeds more than $30 per ton, the government will flood the market from a strategic reserve of 4 billion credits. The price is indexed to inflation and increases at a set rate.

Manufacturers will be phased into the cap by 2016 to give fossil-fuel-intensive industries such as paper, aluminum and steel time to adjust to the new system. In a letter he sent to Kerry earlier this month, Sen. Carl Levin (D-Mich.) asked that the cap be delayed at least 10 years for manufacturers.

The legislation also tries to protect those industries from foreign competition by levying a “carbon tariff” on imports of goods from countries, such as China and India, that do not regulate emissions. The proposal was drafted by manufacturing-state Democrats, who refused to support the legislation unless it protected trade-sensitive industries from foreign competition.

The three lawmakers also accepted a proposal backed by big oil companies that will impose a carbon tax on gasoline to be passed along to consumers at the pump. The fee will be linked to the market price of carbon emissions bought and traded by utilities and other industries.

The legislation also pre-empts separate state limits on emissions caps. Lawmakers said the pre-emption, opposed by some environmental groups, is necessary to give business greater certainty.

“Business can’t live with 50 different standards,” said Graham. “I couldn’t support 50 states coming up with their own standards.”

Environmental groups have also expressed concerns about support in the legislation for new coal technologies, nuclear power and offshore drilling. Sen. John Rockefeller (D-W.Va.) wants to include $20 billion for carbon capture and sequestration — technology aimed at controlling greenhouse gas emissions from coal-fired power plants. And Republicans are pushing to include nuclear power under a renewable-energy standard in the bill.

“If the stuff that Kerry, Graham and Lieberman are doing had been a Bush administration initiative, every environmentalist and every progressive in America would denounce it as a sellout to special interests,” said Frank O’Donnell, president of the advocacy group Clean Air Watch.

One particularly contentious proposal offers coastal states that agree to offshore drilling a greater portion of the resulting royalties.

The proposal is strongly backed by moderate Republicans and oil state Democrats, who said it is key to gaining their support.

But liberal Democrats fiercely oppose it. Last summer, Sen. Bill Nelson (D-Fla.) threatened to filibuster any energy bill that expanded drilling in the Gulf of Mexico.

“It is clear to me that we’re not going to get a major bill done unless we have broader support,” said Sen. Ben Cardin (D-Md.), who opposes drilling off his state’s shores. “But there’s more than one way to get something done.”

EDITOR'S NOTE: This corrects an earlier version which incorrectly stated that the U.S. Chamber of Commerce had indicated tentative support for the Kerry-Graham-Lieberman climate legislation.