A Senate subcommittee last Thursday approved with little change cap and trade legislation that seeks to achieve substantial, long-term cuts in U.S. greenhouse gas (GHG) emissions, a measure that critics contend will be costly and disruptive to energy markets.
The measure (S. 2191), sponsored by Sens. Joseph Lieberman (I-CT) and John Warner (R-VA), was approved by 4-3 and voted out to the full Senate Environment and Public Works Committee for further mark-up. The bill provides for companies to get allowances starting in 2012 to release a certain amount of carbon dioxide and other greenhouse gases. The number of emission allowances would gradually decrease by as much as 63% by 2050. Companies could buy, sell or trade the allowances in a market.
Nearly all of the amendments, most of which were offered either by Sens. Bernard Sanders (D-VT) or John Barrasso (R-WY), were defeated or withdrawn to be taken up at the committee level.
Lieberman, chairman of the subcommittee on private sector and consumer solutions to global warming and wildlife protection, opposed a number of the proposed amendments, which would have made a tough bill even tougher. He said that some would have killed the chances for the bill's approval in the full Senate.
Rejected were proposals that would have required the bill to specify funding for solar and wind power; set criteria on how the automotive industry would spend $232 billion to develop advanced technology vehicles; allow the Environmental Protection Agency (EPA) to make future adjustments if its finds that the bill's targeted reductions of GHG emissions are not being met; move up the phaseout of free carbon credits or allowances for the industrial and power sectors to 2026 from 2036; bar the construction of new coal-fired plants if they fail to capture 85% of carbon emissions; impose limits on offset allowances to ensure that emissions targets are met; establish a five-year sunset for the bill so Congress can assess whether the emissions-reduction goals are being achieved; and reduce current greenhouse pollution levels by 15% by 2020 and by 80% by 2050.
The subcommittee approved a few amendments, including one that would require the advanced technology vehicles that are manufactured by the auto industry to be consistent with a corporate average fuel efficiency standard of at least 35 miles per gallon, and would define low-ranked coal as coal with a heat content not to exceed 10,000 Btu.
The legislation is a "step in the right direction, but [it] simply does not go far enough," said Sanders following the defeat of approximately eight amendments that he offered, which sought to bolster provisions in the bill.
Sen. James Inhofe (R-OK) expressed concern about the economic impact of the Lieberman-Warner climate change bill to the states. "It's going to cost them a lot more to heat their homes," he said. "It may take a higher cost, but what's the cost of human life?" responded Sen. Frank Lautenberg (D-NJ).
The American Gas Association (AGA) opposed a last-minute addition to the bill, which would for the first time expand restrictions on GHG emissions to include natural gas, a move that "could significantly increased natural gas costs." This amendment "amounts to an additional tax on an energy source that must be available for consumer and commercial use if we are to have any hope of reducing greenhouse gas emissions over the next few decades," said AGA President David Parker.
Electric power company executives have criticized the measure as threatening to curtail development of new power generation at a time when demand for electric power is increasing. Also, they warn that power costs could skyrocket because the measure has no price safety valve mechanism.
The Lieberman-Warner bill proposes to reduce 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. It 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 it 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.
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