John Kerry at Huffington Post:
I don’t think there are many people left who really question that we need a major transformation in the way we produce power, the disaster in the Gulf being the latest wakeup call for anyone who was still sleeping. It was the most recent reminder that 40 years after Richard Nixon started talking about “energy independence,” we’re still stuck or moving backwards — our economy constantly rattled by the volatile price of oil, our planet’s climate increasingly unstable thanks to the pollution we’re pumping into the atmosphere.
And, oh yes, we’re sending billions of dollars a day overseas, with the global oil market enriching some of the most autocratic and anti-American regimes around the world. Here’s one fact to stiffen the spine: as my friend Jon Powers and his band of veterans remind me, every day we keep going with what we’re doing makes Iran $100 million richer and takes over a billion dollars out of our economy. Every single day.
That’s why I’m doubling down on the proposal I’m rolling out today with Senator Lieberman, a work product that reflects six months of contribution from Lindsey Graham, and hundreds of meetings with our colleagues: major energy and comprehensive climate change legislation that meets this big challenge. It’s a practical pathway to finally end our addiction to oil, put Americans back in control of our own power production, and release the innovation and ingenuity of Americans to build the clean energy economy we need to build prosperity in the 21st century.
It’ll help us create nearly 2 million new jobs, develop new products, and support the research and development to help us maintain leadership in the global economy. And it’ll even reduce the deficit by about $21 billion in nine years.
And we’ve got to pass it this year.
I’m asking you to look at it on the merits, but also knowing that we have to find 60 votes in a tough atmosphere in Washington, on an issue where even a lot of good Democrats have been reluctant to act over the years.
The big details:
In the bill, we finally start to bring down carbon pollution by sending a clear price signal on that pollution. This market is tightly controlled, with only folks who need the permits able to buy the permits in the initial auction. No Wild West of speculation, no big banks coming in to buy up permits. Then the corporations who buy those permits can trade among themselves, so if a company makes great strides in bringing down their carbon pollution, they get the benefit of being able to sell off their permits, and if they don’t, they need to buy more. It’s simple, fair, and rewards those American companies who work hard to bring down their emissions of carbon pollution. And much of the proceeds of that carbon auction get sent straight to the American people, helping out consumers with their energy bills. Bottom line: it does what President Obama told the world we’d do — it reduces greenhouse gas emissions to 17 percent below 2005 levels by 2020, and 80 percent below 2005 levels at 2050.
We also set up a tough, WTO-consistent border adjustment mechanism so that there won’t be any “carbon leakage” of companies manufacturing things overseas in countries that don’t manage their emissions. Imports from those countries will have to pay a fee at the border. This will protect American industry and make sure jobs stay here at home. And we threaded that needle in a way that President Obama can support — you’ll remember he was concerned about the way it’s been handled in previous bills.
Next, we know we’re in the middle of a major catastrophe in the Gulf, and we need to learn all the right lessons. The big lesson? Get us to the day when oil spills are infinitely less likely because we’re not scrambling to pump every last barrel of oil out of every inch of the earth. You do that by transforming energy in America.
But there’s more we do in the short term. This bill starts tightening up federal law around offshore drilling, adding two major reforms. First, any state can veto drilling less than 75 miles off their coast. Second, each new rig needs to be studied for the effects of any potential spill, and any state that could be affected has the right to call a halt to the project. This creates important local control over the beaches and waterways of our country.
More John Kerry at Grist:
Busy day here — started early with some curtain-raising morning television to kick off the discussion a bit about the American Power Act that Joe Lieberman [I-Conn.] and a unique coalition are talking about later today.
But sometimes those morning-show interviews are a bit of a reminder of how much detailed discussion we lose when we’re crammed into a two- or three- or five-minute back-and-forth, which is especially tough on an issue like a comprehensive approach to climate and energy.
Which brings me to why I wanted to come by Grist — because of the in-depth discussions you’ve already had here again and again on this issue.
But — and here’s the but — I don’t want to swing by and just sort of preach to the choir. We’re true believers — we already get the imperative of the threat our addiction to carbon-emitting energy poses. You know the science, you know the reality, and so do I.
So, what I do want to talk about is this: We need to take a deep dive together on the Senate strategy, and on the real details of the bill that make it important for the things you and I care about. So, I hope I bring something new to that discussion that we can use as a jumping-off point.
First, the Senate dynamic — the politics of this place. I want to be candid about this, and I do so with a record on this issue that I think earned me the spurs to say this. We’ve been at this a long time. Al Gore and I held the Senate’s first climate-change hearings in the Commerce Committee way back in 1988. Since then, precious little progress has been made and ground has been lost internationally, all while the science has grown more compelling. I can barely even count any more the number of international summits I’ve attended, or press conferences we’ve held after losing climate-change votes in the Senate where our message was, “Next year, we can get this done — don’t give up on the United States or the Senate.” Two Congresses ago, we had 38 votes for a bill. Last Congress, we had 54 votes for cloture out of 60 needed — and we said then — me, Joe, Barbara Boxer [D-Calif.] — that this Congress we could get to 60 and pass a bill.
So what have we done? A lot of meeting and listening — between me, Joe Lieberman, and Lindsey Graham [R-S.C.], hundreds of meetings one-on-one with our colleagues to find out what they needed to support a bill. And I absolutely believe we’re closer than ever to getting across the finish line — but make no mistake, it remains difficult, even with President Obama in the White House, and even with the House of Representatives having passed their bill by the slimmest of margins last summer. But we’re going full-steam ahead because, in my judgment, this may be the last and certainly the best chance for the Senate to act, especially with the fact that I think the next Senate — given a 2012 presidential campaign added to the dynamic and a lot of new senators — is going to be less likely than this one to find a path to the 60 votes needed for passage. So we’ve got to get it done this year.
Hear me out on this one — you know where I’ve been and continue to be on all the major environmental fights since even before I became a senator. As a lieutenant governor, I focused on acid rain and we laid the groundwork for the successful fight on the Clean Air Act in 1990, with the support of the first President Bush and bipartisan support from Congress. In stark contrast to that effort to find a bipartisan way forward, I led the successful filibuster — against the urging of many in our Democratic caucus — to defeat the second President Bush’s plan to drill in and destroy the Arctic National Wildlife Refuge. I point to these twin examples because I think they’re evidence that I know when to dig in and fight, and I also know when and how to find the path to getting something done across the aisle.
Joe Romm at Climate Progress, yesterday:
Before offering my thoughts on individual sections, here’s Dan Weiss, CAPAF’s Director of Climate Strategy:
“The Kerry-Lieberman American Power Act jump starts efforts to adopt comprehensive clean energy and climate polices that would cut oil use, increase security, reduce pollution and create jobs. The BP oil disaster is like a signal flare warning us that we must reduce our oil use via investments in more efficient, cleaner energy technologies. President Obama and Senate leaders must work together to craft a comprehensive program that achieves these goals.”
So let’s go through this, starting with the summary.
“From day one, two-thirds of revenues not dedicated to reducing our deficit are rebated back to consumers.” The rest goes to low-carbon energy development and deployment along with things to aid industries in transition to a low carbon economy.
In the later years, every penny not spent to reduce the deficit will go directly back to consumers.
You might call it cap-and-dividend, were the name not taken.
Yes, much of this money goes back to consumers through the local regulated utilities, but that was not only inevitable from a political perspective — to keep utilities and Senators from the mid-west and south from immediately bolting — it’s actually a good idea from the perspective of regional equity (see here and here). There’s just no other way to construct a bill that could have any chance whatsoever in either house of Congress.
The auctioning is done along the lines I suggested here: How the Senate can fix cost containment in the climate bill with ‘price collar plus’. The floor price starts at $12 in 2013 and rises 3% plus inflation each year. The ceiling starts at $25 increasing 5% plus inflation annually.
The bad news is that, after the regular allowances are auctioned off — and then after the strategic reserve is auctioned off (explained here) — the hard ceiling is maintained by providing unlimited new allowances. The “good news” is that I can’t see us getting near the ceiling price until well into the 2020s since the emissions targets are so weak compared to where we are today — EIA Stunner: Energy-related CO2 emissions are now down nearly 10% from 2005 levels — and since there are so many low-cost clean energy strategies available, many of which are directly incentivized by this bill (see “Game changer part 2: Unconventional gas makes the 2020 target of a 17% reduction so damn easy and cheap to meet).”
I will do a post soon on why these floor and ceiling prices are sufficient to drive significant clean energy into the marketplace, including fuel switching from coal to natural gas.
Yes, there are still 2 billion offsets, but they won’t vitiate the 2020 target because, again, it’s too easy to meet with efficiency, conservation, renewables, and natural gas fuel switching. Large quantities of offsets aren’t gonna be cheaper those solutions. As I wrote here, I doubt offsets will comprise even 3% out of the 17% target achieved by emitters in 2020. And yes, I would take a bet on that. The oversight provision seems pretty solid to me.
Moreover, I expect most of the offsets sold will be domestic ones — if we get an international deal (which is really only possible if we can pass a climate bill), then I expect international offsets will be fairly pricey by 2020. And CBO said half of the domestic offsets are actual emission reductions in uncovered sectors.
Daniel Foster at The Corner:
The perversely-named “American Power Act” retains the cap on carbon emissions “credits” and a tax of at least $12-per-ton on carbon produced by large emitters, while imposes broad new regulations on industrial, transportation, and energy infrastructure. It aims to reduce carbon emissions by 17 percent over 10 years and 83 percent over 40 years. The tax “floor” of $12 would indexed at inflation plus 3 percent, while the tax “ceiling” would be set at $25 and be indexed to inflation plus 5 percent. The proposed federal cap-and-tax system would eliminate existing state-run efforts, and pay off those states for lost revenue.
At the same time, the bill includes a grab-bag of costly subsidies to affected industries, including billions in cash subsidies and tax credits to the transportation industry, loan guarantees for nuclear plant builders, and a number of exemptions from emissions caps and other protections for favored industries like steel and Big Ag. The bill also appears to contain a plethora of government-funded “pilot programs” for the green tech sector in which so many high-profile supporters of cap-and-trade hold large financial stakes.
In light of the Gulf spill, Kerry-Lieberman makes a complete 180 on offshore drilling. While earlier drafts of the bill were aimed at expanding offshore drilling, the released version makes it more difficult — if not impossible — for the federal government to pursue such efforts, allowing states to opt out of drilling up to 75 miles off their coasts. States will also be able to veto any drilling efforts that would have a major adverse impact in the event of a drilling accident.
Reactions from usual-suspect stakeholders have been slow to come in, as their lobbying and policy arms are no doubt balancing the bevy of direct and indirect taxes against the dollar-value of the subsidies and giveaways.
David Dayen at Firedoglake:
Basically, the bill bribes just about every player in the energy sector in the hopes that they will set a price for carbon and allow a cap. It’s nearly impossible to see how this cap would be enforced, however, given all the allowances and exemptions and giveaways. Over time, this may push us toward a new regime of cleaner energy. In the near term, it kind of looks like a mess. And because the other two major planks, energy efficiency and renewable energy standards, are so poor in this bill, it makes it much harder to say that it will usher in a dramatic reduction in carbon emissions. If those pieces were significantly strengthened, those willing to lay down for this bill would at least have an argument.
Ronald Bailey at Reason:
Not having had time yet to analyze 987 pages of proposed legislation, it is still the case that what government is likely to do about global warming will be worse than global warming.
As for the APA’s prospects, as we’ve discussed before, getting a climate/energy bill through the Senate was going to be tough under normal circumstances. Now, the challenge is arguably even greater — Kerry and Lieberman have to find a way to break a Republican filibuster; they have to keep business interests on board; they have to keep Midwestern Dems from jumping ship; they have to thread a needle on increased oil drilling; and they have to consider what happens in the House in the event the Senate actually passes their bill. Oh, and they have to do it all rather quickly, while Republicans try to run out the clock, and with other agenda items battling for attention.
But I give Kerry and Lieberman credit for tackling this, despite the odds, because it’s absolutely necessary. Republicans will almost certainly make significant gains in the midterms, and much of the GOP considers climate science some kind of nefarious plot cooked up by communists. If the bill dies this year, after having already passed the House, we may not see another vote on the issue at all until 2013, at the earliest.
And we really can’t wait that long.