With health care legislation out of the way, the U.S. Senate will finally be able to return its attention to climate and energy issues. Last fall, the Clean Energy Jobs and Power Act (CEJAP), the Senate’s version of the comprehensive climate and energy bill that the House of Representatives passed last June, got mired in a bitter partisan stand-off. Since then, policymakers and onlookers have been working to define a compromise that can achieve the magical 60 votes needed to pass climate legislation in the Senate.

Last week, Senators John Kerry (D-MA), Lindsey Graham (R-SC), and Joe Lieberman (I-CT), the architects of a new effort to create a bipartisan climate and energy bill, began circulating an eight-page draft outline in closed meetings with industry and environmental NGO representatives. The draft reportedly includes eight major headings: Refining, America’s Farmers, Consumer Refunds, Clean Energy Innovation, Coal, Natural Gas, Nuclear, and Energy Independence. So far, additional details about these headings have not been elaborated, although the general shape of the compromise is emerging and includes the following:

  • Cap-and-trade system for utilities starting in 2012 and industry starting in 2016
  • Carbon tax on the transportation sector
  • Emissions targets of 17 percent below 2005 levels by 2020 for capped sectors
  • Universal rebate checks from 50 percent of allocation auctions
  • Hard price collar confining allowances between $10 and $30 per ton of carbon dioxide
  • Strategic reserve of 4 billion allowances to be used to control allowance price volatility
  • Support for offshore drilling
  • Renewable energy or clean energy standard, which could include new nuclear, coal with carbon capture and storage (CCS), and natural gas that displaces coal clunkers

Senate liberals and environmental groups have agreed to make concessions on controversial issues like offshore drilling in order to obtain Republican support for a comprehensive climate and energy bill. But some have begun wondering how much compromise is too much. Last week, Senator Bernie Sanders (I-VT) noted, “We don’t have 60 votes to pass a strong global warming bill…. The choice I suspect Senator Kerry is wrestling with is whether it’s better to do something or nothing.”

The bill’s rumored sympathy for hydraulic fracturing, a controversial energy extraction technique that the federal government currently does not regulate, could be one compromise too many. This week, E&E News reported that BP and two other major oil and gas companies have submitted a “discussion draft” proposing “Sense of the Senate” language on the practice, which involves injecting millions of gallons of water, sand, and chemicals into shale formations to extract natural gas.

The draft language would support the legislative status quo, wherein hydraulic fracturing is exempt from regulation under the Safe Drinking Water Act and several other laws. Currently, regulation is left to individual states. The proposed language would affirm that, “States with existing oil and gas regulatory programs have the authority to and are best situated to continue regulating hydraulic fracturing processes and procedures.” It would also recommend that no further disclosure of the chemicals used in hydraulic fracturing is necessary, a requirement that gas companies have argued would endanger their trade secrets. Although “Sense of the Senate” language is non-binding, its inclusion would further alienate environmental groups and demonstrate how fickle the “sense” of the Senate truly is.

Rather than bowing to special interests, a comprehensive climate and energy bill should instead be an honest effort to reduce greenhouse gas emissions, invest in the low-carbon economy, and improve America’s energy security. Natural gas producers should recognize the Kerry-Graham-Lieberman bill as an opportunity to benefit from the environmental advantages that gas offers over coal and oil. Shoe-horning superfluous language into such a bill would exacerbate environmentalists’ complaints about industry’s lack of transparency and oversight. This would not only be petty, but it would endanger potentially fruitful collaboration between the natural gas industry and the environmental community.    

Meanwhile, alternatives to the Kerry-Graham-Lieberman bill continue to illustrate the range of possible Senate outcomes. In December, Senators Maria Cantwell (D-WA) and Susan Collins (R-ME) proposed a cap-and-dividend bill, the CLEAR Act, which would auction all allowances under a carbon cap and recycle the auction revenues back to households. Senators Byron Dorgan (D-ND) and Jeff Bingaman (D-NM) have been promoting their energy-only bill, the American Clean Energy Leadership Act, which abandons cap-and-trade altogether in favor of provisions that support renewable energy and offshore drilling. Meanwhile, in the absence of legislation curbing greenhouse gases, many Republican Senators are concerned that the U.S. Environmental Protection Agency will take on emissions reductions itself. Senator Lisa Murkowski (R-AK) has been leading efforts to prevent such an eventuality.

The Senate has a lot of soul-searching to do between now and mid-term elections in November. The window of opportunity on real climate and energy legislation is small, and the zone of potential agreement seems to be even smaller. The Senate has a chance to pass historic legislation, enabling the United States to signal to the world that the country is serious about climate change and the environment. It must be careful not to lose the public trust on the way.

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cap and trade, Climate Change, emissions reductions, natural gas