Annie Snider
The long-awaited energy bill Sens. Kerry and Lieberman announced Wednesday includes new controls for expanded offshore drilling.
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ASHINGTON — As hundreds of thousands of gallons of oil continued leaking into the Gulf of Mexico Wednesday, Sens. John Kerry, D-Mass., and Joseph Lieberman, I-Conn., unveiled their much-awaited energy bill, which seeks a workable compromise on offshore drilling by giving states veto power over new drilling off their coastlines.
Overall, the bill aims to cut greenhouse gas emissions 17 percent below 2005 levels by 2020 and 83 percent by 2050, and to reduce American dependence on foreign oil.
“The American Power Act is a decision to seize this moment to transform our nation’s energy policy from a national weakness into a national strength,” Kerry said at a news conference. “It is a message to the world that America is ready to take back our role as the world’s clean energy leader.”
The offshore drilling provisions give coastal states with newly opened drilling areas a portion of the revenues and, if environmental and economic impact studies find that a spill would put a state at significant risk, the state would have the power to outlaw drilling within 75 miles of its shore.
The bill’s authors describe it as taking a “reduce and refund” approach to energy reform because it aims to reduce the country’s carbon pollution, dependency on foreign oil and gap in clean energy jobs with China while refunding revenues to taxpayers once industry has transitioned to the requirements.
Like the energy bill passed by the House last summer, the Senate bill manages emissions reductions through a system of tradable allowances. Unlike the House bill, which sets a single cap for all industries, this bill applies only to the electric utility, manufacturing and transportation sectors and phases each of those sectors into the program differently. The Senate version also aims to produce cost certainty for businesses by setting upper and lower limits for the price of emissions allowances.
The energy bill faces an uncertain future in the Senate without its third original co-sponsor, Sen. Lindsey Graham of South Carolina. Graham, the lone Republican supporter of the bill, withdrew his leadership late last month, citing concerns that Democrats wouldn’t give the bill priority and that the BP oil spill in the Gulf of Mexico would make off-shore drilling too controversial to be fairly handled right now.
“This proposal does not cater to the politics of the moment,” Lieberman said. “But it will protect the future of our country and our families, and ultimately that is the best politics, because that is what constituents sent us here to do.”
In addition to expanding off-shore drilling, the bill aims to boost domestic energy production by streamlining the process for new nuclear power plants and providing incentives to develop technology that would capture and permanently store carbon dioxide for widespread commercial use.
To meet the pollution reduction goals, the bill also allows companies to purchase offsets from projects that aren’t restricted by the cap. For example, farmers who plant trees on their property could sell offsets for the amount of carbon that those trees take out of the atmosphere. The bill aims to have three-quarters of offsets produced domestically, which alone would be at least a $1.8 billion market.
Many business leaders support the bill because it would substitute clear long-term requirements for the Environmental Protection Agency’s regulation of greenhouse gas emissions under the Clean Air Act, which go into effect next year. It also would also invalidate state and regional programs such as California’s cap-and-trade program.
Jim Rogers, CEO of Duke Energy, which has significant holdings in coal power, helped craft the bill and stood with the bill’s sponsors on Wednesday.
“This bill helps get the transition right for the low-carbon world… in a manner that protects family budgets and protects American factories that depend on affordable power,” Rogers said.
The U.S. Chamber of Commerce led opposition to last year’s House energy bill because it said the cost would put American businesses at a competitive disadvantage, but said it needed more time to review the new Kerry-Lieberman bill before taking a position.
The economic analysis of the bill expected from EPA in about month will include detailed cost projections.