Amid Oil-Spill Outcry, Senate Preparing to
Take Up Energy Bill
With a growing sense of urgency thanks in part to public revulsion over the BP Gulf of Mexico oil spill, the U.S. Senate is nearing consideration of a sweeping energy bill that would also curtail greenhouse gas emissions.

President Barack Obama has urged Congress to send him an energy bill this year, and the chances the Senate will take it up increased now that Congress has disposed of the health care overhaul and is nearing completion of financial industry reform legislation. By the narrowest of margins, the House has already passed its version of an energy bill. Any action by the Senate will require the two chambers to reconcile what could be major differences in their bills, including how the federal government will regulate carbon dioxide and other greenhouse gas emissions, such as through a “cap and trade” mechanism or a tax on those emissions.

The primary Senate bill is expected to focus on energy, but the New York Times reported this week that a climate bill will likely be added to the energy bill as an amendment. A number of energy and climate bills have been circulating in the House and Senate for more than a year, but recent developments give compromise legislation greater chances of passage. It’s yet to be determined how the energy bills will treat controversial off-shore drilling in light of the worsening Gulf of Mexico oil catastrophe. One thing is becoming clear, however, and that is that any final energy bill will almost certainly contain expanded federal loan guarantees for the nuclear power industry. Critics of the nuclear subsidies argue taxpayers shouldn’t be on the hook for risky nuclear reactor construction projects plagued by runaway costs and that the industry should be required to stand on its own after a half-century of taxpayer-funded loan guarantees.

One recent glitch in the Senate arose in April when Sen. Lindsey Graham, R-S.C., withdrew his support for the American Power Act he helped craft with Sen. John Kerry, D-Mass., and Joe Lieberman, I-Conn. Graham was irritated about Senate Democrats’ plans to move forward with an immigration bill this year. Another version of the energy bill by Sen. Jeff Bingaman, was approved last year by Bingaman’s Senate Energy and Natural Resources Committee and will presumably be the primary energy bill should Kerry and Lieberman fail to collect the filibuster-proof 60 votes required for passage now that Graham has for now withdrawn his support for what was once a bipartisan effort. Bill opponents also criticize plans to place a price on carbon emissions as putting a drag on the economy.

Senate Majority Leader Harry Reid of Nevada, locked in his own tight re-election bid, has yet to commit to moving legislation that addresses climate change and greenhouse emissions this year. Reid has said that passing an energy bill may be even more difficult than passing health care reforms. This week, Reid suggested he might move an energy bill to the Senate floor, but that greenhouse reductions may not be part of the mix – despite insistence by House Speaker Nancy Pelosi, D-Calif., that Congress deals with the climate issue as part of any energy package. So it’s possible, if not likely, that Reid and Pelosi may lock horns later this year as Congress tries to send Obama an energy bill.

Bingaman’s bill includes such measures as a national renewable energy standard to require utilities to provide a certain percentage of their power from renewable resources like wind. It also retools federal financing for clean energy projects and would expand off-shore oil and gas leasing. The Kerry-Lieberman bill would cap electric utility greenhouse gas emissions and would also incentivize new nuclear reactors. The nuclear enticements were added to the Senate energy bills largely to satisfy certain Republicans who voiced opposition to any bill that didn’t include taxpayer-funded giveaways to the nuclear industry. Another version of a climate bill has been crafted by Sen. Susan Collins, R-Maine, and Sen. Maria Cantwell, D-Wash. And just this week, Sen. Richard Lugar, R-Ind., trotted out his “Practical Energy and Climate Plan,” which he billed as an alternative to the Kerry-Lieberman bill and which proposes more modest (non-mandatory) greenhouse reduction goals and which avoids the cap and trade issue while increasing nuclear loan guarantees. Lugar’s bill would also allow utilities and states to include such things as nuclear power and “clean coal” technologies to meet escalating clean energy requirements.

The House passed its American Clean Energy and Security Act (ACES) by Reps. Henry Waxman of California and Edward Markey of Massachusetts with only six votes to spare. Like the Kerry-Lieberman bill, the Waxman-Markey bill calls for a 17 percent reduction of greenhouse gas emissions from 2005 levels by 2020. The reductions would rise to 83 percent by 2050. The House bill would use a controversial cap and trade mechanism to gradually reduce greenhouse gas emissions.
Ccap-and trade is an emissions-reduction mechanism in which the government would set a limit on total emissions of, say, carbon dioxide, and auction or give away allowances for certain amounts of CO2 emissions. A cap would be set for the maximum amount of emissions allowed and that cap would be gradually reduced over time. Pollution emitters would have to have adequate allowances for all of their emissions, and those who reduce their emissions could sell their extra allowances on a trading market. Those who don’t reduce their emissions enough would need to buy more allowances. Over time, the total emissions levels will continue to be reduced.

Cap and trade is viewed by many as a nonstarter in the Senate. A similar pollution-reduction mechanism is already in effect for sulfur dioxide emissions, particularly from coal-fired power plants, and is widely credited with reducing the acid rain threat. The Waxman-Markey bill would also require utilities provide 25 percent of their energy from renewable resources by 2025.
While Senate Democrats are proposing a less ambitious bill than in the House and one larded with industry-friendly enticements, they have a weapon at their disposal. Should a greenhouse gas emissions bill fail, the U.S. Environmental Protection Agency now has the power to order its own greenhouse reductions thanks to a 2007 U.S. Supreme Court ruling that carbon dioxide is a pollutant that can be regulated.