Sens. Joseph Lieberman (I-CT) and John Warner (R-VA) last Thursday introduced a bill they said would achieve substantial, long-term cuts in U.S. greenhouse gas (GHG) emissions, but opponents said it could further strain tight gas supplies and disrupt energy markets.

The two senators, chairman and ranking member of the Senate subcommittee on Private Sector and Consumer Solutions to Global Warming and Wildlife Protection, said the America's Climate Security Act would reduce total U.S. GHG emissions as much as 19% below the 2005 level by 2020 and as much as 63% below the 2005 level by 2050. Lieberman and Warner presented their new bill as the core of a new federal program that they said Congress should pass to avert "catastrophic global climate change" while enhancing America's energy security.

"With all the irrefutable evidence we now have corroborating that climate change is real, dangerous, and proceeding faster than many scientists predicted, this is the year for Congress to move this critical legislation," Lieberman said. "If we fail to start substantially reducing greenhouse gas emissions in the next couple of years, we risk bequeathing a diminished world to our grandchildren."

"Today we introduced a balanced bill," Warner said. "Senator Lieberman and I found a good, sound starting point that sends a significant signal that the U.S. is serious about taking a leadership role in reducing its greenhouse gas emissions."

The bill, co-sponsored by Sens. Norm Coleman (R-MN), Tom Harkin (D-IA), Elizabeth Dole (R-NC), Benjamin Cardin (D-MD), Susan Collins (R-ME) and Amy Klobuchar (D-MN), would control compliance costs by allowing companies to trade, save and borrow emission allowances, and by allowing them to generate credits when they induce businesses, farms and others to reduce their GHG emissions or capture and store GHG. The bill would provide free allocations of 20% of the emissions cap to manufacturing facilities in 2012, phasing out the free allocation by 2036, and provides free allocations of 9% of the annual emissions cap to states. It would phase in up to 73% of the annual emissions cap for auction by 2036, distributing 20% of the proceeds to low- and moderate-income energy consumers. Set-aside emissions credits and money raised by the auction of emission allowances would also be invested in deploying emission-reducing technologies and practices.

A whirlwind of praise and criticism came from a variety of sources in the hours following introduction of the bill. Larry Schweiger, CEO of the National Wildlife Federation, called it "a bipartisan breakthrough on global warming," Steve Cochran of Environmental Defense said it "promises to make great strides toward climate security and economic growth" and Frances Beinecke, president of the Natural Resources Defense Council said the bill "recognizes the need to direct proceeds from the pollution allowance market to important policy objectives, including promoting clean energy solutions, protecting the poor and other consumers, ensuring a just transition for workers in affected industries and preventing impacts abroad that lead to conflicts and threats to security."

Pacific Gas and Electric Co.'s (PG&E) Steve Kline, the utility's holding company vice president for corporate environmental and federal affairs, said the Lieberman-Warner proposal "provides a solid starting point for constructively advancing a comprehensive, national response to and policy on climate change." Kline said PG&E Corp. and its utility like the fact that the bill includes provisions that "prioritize energy efficiency and technology development and deployment, as well as innovative ideas to protect electricity consumers, manage overall program costs, and provide states with the resources to help address the unique needs of their communities and citizens." This is essential as the nation transitions to a low-carbon economy and adapts to a changing environment, he said.

Others were more critical. National Petrochemical and Refiners Association executive vice president Charles Drevna labeled the bill "all cost, no benefit," saying it would transfer American jobs "to other countries that do not have nearly as stringent environmental laws and regulations as the United States." American Chemistry Council CEO Jack Gerard said the proposed emissions cuts would damage U.S. manufacturing, competitiveness and employment if passed "in the absence of a comprehensive energy policy that substantially expands America's fuel diversity and supply, including natural gas.

"The bill's proposed emissions reduction schedule would turn energy markets upside down, causing massive reductions in coal usage and enormous increases in natural gas and renewable fuels usage. Yet there is no provision in the bill for additional domestic natural gas supply. Consequently, lower-emission energy choices such as natural gas would be stretched even further, energy prices would soar and manufacturers and residential consumers who rely on affordable natural gas and electricity would pay dearly."

The introduction of the bill comes two weeks after the release of a report, commissioned by the National Gas Council, which recommended that Congress look to natural gas if the technologies to reduce GHG emissions are not fully developed and commercialized in the decades ahead (see NGI, Oct. 8). The report was based on a model which "placed constraints on the number of nuclear facilities and power plants utilizing renewable fuels that realistically can be built to achieve the emission reductions mandated under [a] bill introduced by Lieberman and Sen. John McCain (R-AZ)." That measure, S. 280, would place absolute caps on GHG emissions.

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