Taking Climate Bill Straight to Senate Floor Could Open Window for ‘Cap-and-Dividend’

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The possibility that Senate Majority Leader Harry Reid might send climate legislation straight to the Senate floor, bypassing part of the usual committee process, could boost the chances for a cap-and-dividend approach winning out, Sen. Susan Collins suggested today.

During a National Journal forum, Collins (R-Maine), who has introduced a bipartisan carbon cap-and-dividend bill with Sen. Maria Cantwell (D-Wash.), was asked how national climate legislation should proceed.

Collins said that the best approach might be to start with the bill that has the most support — the energy-only bill approved last summer by the Energy and Natural Resources Committee — and then add in other elements during debate on the Senate floor.

“It’s a bipartisan bill that’s supported by both the committee chairman [Sen. Jeff Bingaman (D-N.M)] and the ranking member [Sen. Lisa Murkowski (R-Alaska)]. If that were brought to the floor, it could be a platform to debate a clean energy bill, such as the one Maria Cantwell and I have introduced," Collins said.

"There’s a lot to be said for having free and open debate on the Senate floor with ample opportunity to offer amendments. I think that’s the best approach.”

The Senate is anticipating the release on Monday of a comprehensive climate and energy plan that Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joseph Lieberman (I-Conn.) have been working on for months.

Details of the Kerry-Graham plan are still under wraps, but it is expected to embrace the Republicans’ all-of-the-above approach to energy, with incentives for nuclear power and expanded offshore drilling for oil and gas. At the same time, it would still have some elements of cap-and-trade, but only for electric power at first, while the oil industry would instead face a fuel tax linked to the carbon price in the utility sector.

Lieberman explained last week that Reid could have the Kerry-Graham plan bypass the traditional committee process. The trio plans to unveil a draft but not formally introduce legislation, he said, because

“If we introduce it, it’ll get referred to committees. We want him to be able to work with it and bring it out onto the floor as a leader whenever he’s ready.”

Collins sees that approach as a way to bring her CLEAR Act into the energy picture instead.

The Allure of Cap-and-Dividend

One major problem that Republicans have with cap-and-trade-based plans, such as the House-passed American Clean Energy and Security (ACES) bill, is that they would rake in trillions of dollars in revenue from carbon auctions and send that money to Washington to divvy up, Collins said.

Consumers and businesses have to be protected she said. For example, the Kerry-Graham bill is expected to include a gas tax — “that will not be well received by the American people,” Collins said. She declared the House bill flat-out dead, calling it “a monstrosity of a bill that’s replete with special interests.” The House bill’s core is an economy-wide cap-and-trade system for carbon emissions, but months of cajoling committee members and coal and industrial state Democrats to support the measure led to major concessions for fossil fuels, particularly the coal industry. The bill counts on utilities to keep their prices reasonable.

Collins said her Republican colleagues might be more amenable to a cap-and-dividend — or “cap-and-cash” plan, as she likes to call it — that sends most of the proceeds of auctioning off carbon permits directly to consumers instead.

The CLEAR act that she and Cantwell have proposed would cut the nation’s emissions 20 percent below 2005 levels by 2020 by setting caps on the amount of carbon emissions that fossil fuel producers and importers can sell into the economy. Those producers and importers would buy permits through a closed auction process, and 75 percent of the proceeds would be returned directly to consumers to help them deal with the subsequently higher energy prices. The rest would go into a fund that would primarily invest in low-carbon technologies and adaptation measures.

Next Steps

The Energy and Natural Resources Committee structured its energy bill with the expectation that it would be merged with climate-oriented legislation that would create a price on carbon, said Mark Udall (D-Colo.), a member of the ENR committee who joined Collins at the forum today. He said a price on carbon is necessary to create the certainty
that will unleash private investment and spur the U.S. clean energy sector
to be the world leader.

“If we don’t have a price on carbon, we don’t release this jobs engine," he said.

As written now, the energy bill passed by the ENR committee would tighten energy efficiency standards for appliances and buildings, expand offshore drilling, encourage carbon capture and storage, fund clean energy development and set a national renewable energy standard requiring that 15 percent of utilities’ electricity come from renewable sources or energy efficiency improvements by 2021. Several states already have RES requirements well above that level, including a 30 percent standard recently approved in Colorado.

First up in the Senate is Wall Street financial reform, Udall said, but then the Senate should turn its attention to energy and climate change.

“We can make this happen, but we’ve got to start. We have to trust that our markets will work," he said. "This isn’t so complicated that we have to wrap ourselves into knots trying to figure out how to do it.”

The White House also maintains that comprehensive energy reform is necessary, said Carol Browner, director of the White House Office on Energy and Climate Change Policy.

“This is doable. Because people increasingly believe that we are losing out in the clean energy revolution,” Browner said. “The cost of inaction is loss of opportunity here in the United States.”


See also:

Economists: Graham-Kerry’s Sector-Specific Approach to Carbon Limits is Less Efficient

Cap-and-Trade, California Style: Who Gets the Money?

Climate Advocates on the Defensive as Congress Returns

(Photo: Sens. Collins (left) and Cantwell)