CLIMATE:

Boxer, Kerry brace for delicate talks as bill emerges today

The decision by Sens. John Kerry (D-Mass.) and Barbara Boxer (D-Calif.) to seek steeper greenhouse gas emissions cuts than their House counterparts drew mixed reviews from senators yesterday, underscoring the challenges the pair will face after unveiling their climate bill today.

The lawmakers briefed several senators yesterday evening as staff put the final touches on the cap-and-trade bill for this morning's official unveiling. The measure was circulated in draft form yesterday.

But today's planned roll-out is just the beginning of the Senate climate effort.

The bill will have placeholder titles on controversial issues like carbon markets oversight and international trade, a senior aide to Boxer said, because other committees have jurisdiction.

And lawmakers are lining up to add new measures. For instance, Sen. Tom Carper (D-Del.) told reporters that the bill, when introduced, will not include his plan to further reduce power plant emissions of sulfur dioxide, nitrogen oxide and mercury. He said adding it would be among his top priorities.

The draft includes new incentives for natural gas producers that were not in H.R. 2454, the sweeping House-passed energy and climate bill, as well as a modest nuclear energy title that Senate nuclear power backers -- such as Sen. Lindsey Graham (R-S.C.) -- hope to greatly expand.

Overall, the bill will seek to cut U.S. carbon dioxide emissions by 20 percent from 2005 levels by 2020 and 83 percent by 2050. The House-passed bill has a 17 percent cut by 2020 but has the same midcentury target as the Senate plan.

Sen. Kent Conrad (D-N.D.), a conservative Democrat and swing vote on the climate bill, said the 2020 target is "problematic."

"I represent a state where 90 percent of our electricity comes from coal," Conrad said, noting he is uncertain the technology will be available to achieve the cut.

But Sen. Bernie Sanders (I-Vt.), a member of the Environment and Public Works Committee that Boxer helms and among the Senate's most left-leaning members, said the more aggressive 2020 target is a good sign.

"At the end of the day, what happens early on is what's most important, not what your goals are 50 years from now," Sanders said. "That's a significant step forward."

A senior aide to Boxer said the plan will include multiple measures that make it easier to achieve the 20 percent level and also pointed out that U.S emissions are already lower than previously forecast.

The Energy Information Administration said in a report earlier this month that projected U.S. emissions will fall by 6 percent this year due to the weak economy and declines in consumption of most fossil fuels.

Hearings in the EPW Committee are planned for mid-October with a markup possible by the end of the month. But from there the trajectory of the bill is uncertain. Senate Democratic leaders hope to bring the measure to the floor this year, but the schedule is very tight and they face a major challenge corralling the 60 votes needed to break filibusters.

Senate Majority Leader Harry Reid (D-Nev.) said floor action this year remains on the agenda. Asked yesterday whether the Senate is on track to pass a climate bill before December's international climate talks in Copenhagen, Denmark, he replied, "Yup."

But Republicans -- who largely oppose cap-and-trade plans -- will launch immediate attacks on the measure today. A number of Republicans, including Republican Conference Chairman Lamar Alexander (R-Tenn.) are planning a press conference this afternoon to lay out criticisms.

Natural gas, nuclear plans in play

Plans to include new natural gas incentives drew attention as lawmakers last night began digesting the long-awaited bill.

A new "clean energy" provision rewards companies that switch from power sources with higher emissions than the 2007 power sector average -- such as coal-fired or oil-fired power plants -- to cleaner fuels including gas.

The plan received high marks from Sen. Mary Landrieu (D-La.) who said it is a "positive step."

"Anything we do to promote natural gas would be a very, very smart thing to do," Landrieu said. "The leaders are hearing from many different parts of the country how much natural gas is out there."

Landrieu was among nine senators who sent a letter last week to Boxer lobbying for greater incentives for natural gas. Natural gas producers have been aggressively lobbying senators to win greater incentives for the fuel and have garnered support from some swing votes, including Sens. Michael Bennet (D-Colo.) and Arlen Specter (D-Pa.).

Natural gas power plants could potentially qualify for the incentives as a fuel that emits 50 percent less carbon dioxide than coal and 30 percent less than oil, as a backup power source for wind, solar and other renewable energy and as a fuel that could utilize CCS technology.

But the provisions on their own appeared quite unlikely to bring Landrieu on board. "I'm still not convinced that the cap-and-trade framework is the best way to create a carbon constrained future," she said. ""I am not committed to cap and trade under any circumstances."

Sens. John McCain (R-Ariz.) and Graham both said they are seeking major incentives for building new nuclear power plants.

The draft circulating yesterday contains a nuclear energy research title to boost ways of expanding the life of current plants. It also calls for new research to improve spent fuel management and increased grants for nuclear industry work force development.

"This bill does not get us where we need to go on nukes, but it's a start," Graham said, adding he plans for more talks with Kerry on the issue.

McCain said he is seeking provisions on fuel storage, recycling and greater loan guarantees for nuclear facilities. He said that the draft bill's 2020 emissions target would be impossible without a substantial nuclear power title. "Frankly, I don't see how significant reductions are obtainable unless you have nuclear power, so I don't pay much attention to the goals," he said.

Trade, derivatives, allocations battles await

The senior Boxer aide said the bill would include "principles" on how to oversee the carbon markets but noted that the jurisdiction over that section rests with other panels, including the Agriculture Committee.

Some Democrats, like Sen. Dianne Feinstein (D-Calif.), are pushing legislation they say would empower the Commodity Futures Trading Commission to implement robust rules to prevent manipulation and undue speculation.

But others -- notably Sens. Maria Cantwell (D-Wash.) and Byron Dorgan (D-N.D.) -- who say regulators have been far too lax in policing energy derivatives trading say these markets should not be allowed at all for carbon.

"I'm not a big fan of trading in general in carbon markets," Cantwell said. But the senator said she nonetheless welcomed the release of the legislation. "We're happy the bill is moving. That's the key thing, because we all want to put a price on carbon."

Another major issue is how to prevent energy-intensive industries like steel and cement manufacturing from being undercut by plants in countries that do not have strict emissions rules.

The House-passed bill would effectively authorize "carbon tariffs" on energy-intensive imports from countries that do not participate in emissions cutting international agreements. The tariff issue rests with the Finance Committee, which provided "placeholder" language for the bill coming out today, the Boxer aide said.

The final shape of such provisions is vital to labor unions and senators from manufacturing states such as Sen. Sherrod Brown (D-Ohio). But several business groups, including the U.S. Chamber of Commerce, oppose the border measures, alleging they would spark a "green trade war."

Finance Chairman Max Baucus (D-Mont.) has said he plans to mark up provisions of the bill under his jurisdiction. But Baucus is currently at the center of the battle to craft a major health care overhaul. "If the Finance Committee doesn't do it, then we do it outside of the committee structure when Harry [Reid] puts the bill together," Brown said.

Lawmakers must also decide how to craft the specifics of distributing emissions allocations among industrial sectors covered by the economywide cap-and-trade bill.

Draft bill seeks lower aircraft emissions

The draft Senate bill's many provisions include a requirement that U.S. EPA, by the end of 2012, set greenhouse gas emissions standards for new aircraft and new aircraft engines. The agency would work with the Federal Aviation Administration on the standards.

The standards must "achieve the greatest degree of emission reduction achievable based on the application of technology which the administrator determines will be available at the time such standards take effect, taking into consideration cost, energy, and safety factors associated with the application of such technology," the draft Senate bill states.

Standards would take effect "after such period as the administrator finds necessary to permit the development and application of the requisite technology."

The mobile source greenhouse gas standards required under the House-passed bill do not include airplanes and airplane engines. The version approved by that chamber's Energy and Commerce Committee did include the aircraft requirements, but they were later stripped.

Reporters Katherine Ling and Robin Bravender contributed.

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