Senate Climate Bill Details Emerge

The climate bill emerging in the Senate imposes a weaker cap on emissions than some environmentalists had hoped and includes a number of coal, oil and nuclear-friendly provisions designed to court the support of moderate Democrats and Republicans.

Last month, an outline of the bill was circulated among business groups like the U.S. Chamber of Commerce and the American Petroleum Institute, prior to a draft proposal being sent to the EPA so that economic analysis can get underway.

The bill, from Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.), aims to reduce CO2 emissions by 17 percent by 2020 and 80 percent by 2050.

It would impose an economy wide cap on greenhouse emissions beginning in 2012. However, different industries would be regulated differently under the Senate bill.

The bill creates a cap-and-trade system in which pollution allowances can be purchased from the government and traded. A “hard collar” would prevent the prices of those allowances from dropping below $10 per ton; by the same token, if prices rise beyond $30 per ton, the government will release credits into the market from a strategic reserve.

Manufacturers of products like steel, paper and aluminum will be phased into compliance by 2016. Additionally, they’ll be partially protected from foreign competition by a “carbon tariff” that would be levied on goods from countries that do not regulate emissions.

The bill also includes an oil-company-supported carbon tax on gasoline. Linked to the market price of carbon emissions, that tax would be paid by consumers at the pump. Another controversial oil-friendly proposal would encourage coastal states to allow offshore drilling by awarding them a larger portion of resulting royalties.

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