Cap-And-Trade Bill Introduced

A climate-change bill that includes greenhouse gas cap-and-trade provisions and sections that aid industries affected by a charge on emissions was introduced by Sens. John F. Kerry (D-Mass.) and Joseph I. Lieberman (I-Conn.) at a crowded briefing on Capitol Hill last week. The bill, in draft form since last year, would require reduction of carbon dioxide emissions by 17% in 2020 and more than 80% in 2050, according to the authors.

The nearly 1,000-page bill was described as a work-in-progress by supporters and critics alike, signaling that many amendments and a lengthy debate are likely. No Republicans voiced support for the bill, and even Sen. Lindsey O. Graham (R-S.C.), who had been working with Lieberman and Kerry on the legislation, withdrew his support for the bill in recent weeks.

For the chemical and other industries that are energy-intensive or may be competitively disadvantaged internationally, the bill puts off compliance until 2016 and then provides free allowances to emit CO₂ on a phased schedule to help offset costs. It also provides $20 billion in aid to encourage industrial efficiency.

The bill encourages deployment of new nuclear power plants and carbon capture and sequestration projects for coal power plants, as well as offshore oil and gas drilling. But in light of the recent BP spill in the Gulf of Mexico, it was modified to allow states to block offshore drilling operations within 75 miles of their shores and gives this authority to neighboring states as well.

Many in clean-energy-related industries welcomed the bill as a good starting place to develop a law to cap carbon emissions and help drive their industries. But a host of traditional industry groups, such as the American Chemistry Council, the National Petrochemical & Refiners Association, and the National Association of Manufacturers, criticized it as destructive to their economic interests.

Environmental groups were also divided between those that see it as a starting place and those that see it as too weak with too many free allowances in the early decades.

The House narrowly passed a cap-and-trade climate bill last June (C&EN, July 6, 2009, page 8).