CLIMATE:

Offshore drilling could add, subtract support for cap and trade

Can Congress drill its way to legislation to cut greenhouse gas emissions?

Perhaps, says Sen. Lindsey Graham (R-S.C.), who believes there is public support for both reducing reliance on energy imports and curbing carbon dioxide emissions. "If you married these two ideas up, I think you could get 60 votes, but that means give and take," Graham said yesterday.

"My hope is that if you marry these two ideas up you would get the votes for a reasonable climate change proposal, that's blocked now, and you would be able to become energy independent, that's blocked now," Graham added. "Both ideas run into a wall. I am trying to knock that wall down."

A push to make a cap-and-trade bill more enticing to Republicans by adding new offshore drilling could create new barriers to passage even if it toppled others, lobbyists and observers say.

"That's a very careful balancing act that [Senate Majority Leader] Harry Reid is going to have to play if he goes down that road," said Dan Holler, who analyzes the Senate for the conservative Heritage Foundation.

Adding wider offshore drilling could push several Democrats away from supporting the cap-and-trade bill. "They may think drilling sweetens the pot for some, but it sours the pot for others," said Athan Manuel of the Sierra Club, which opposes widening outer continental shelf leasing.

A major energy bill (S. 1462) the Senate Energy and Natural Resources Committee approved in June would scale back the no-leasing area in the eastern Gulf of Mexico by allowing development as close as 45 miles from Florida's gulf shores and closer in a region called the Destin Dome. The drilling provision was authored by Sen. Byron Dorgan (D-N.D.).

That gulf provision prompted Sen. Bill Nelson (D-Fla.) to vow a filibuster if it remains part of Senate energy and climate plans. Sen. Robert Menendez (D-N.J.) is another Democrat who opposes offshore drilling and criticized its inclusion in the Senate bill.

Menendez wants leasing permanently banned between North Carolina and Maine.

Adding even more new drilling to Senate proposals could prompt several Democrats to drop support from an energy and climate package, said one petroleum industry lobbyist. "I don't know what the net gain is here," this lobbyist said.

Several lawmakers declined to comment directly on how a hypothetical drilling provision would affect their vote or the bill's chances. "I am not into speculation," said Sen. Bernie Sanders (I-Vt.), adding, "I am not a great fan of offshore drilling. The future of America is energy efficiency and sustainable energy."

But wider offshore drilling has wide support among Republicans, including some GOP swing votes on climate such as Sens. Lisa Murkowski (R-Alaska) and John McCain (R-Ariz.).

It is also backed by a number of moderate-to-conservative Democrats who are fence-sitters on the cap-and-trade effort, like Sen. Kent Conrad (D-N.D.), or leaning against it, notably Sen. Mary Landrieu (D-La.).

Sen. Debbie Stabenow (D-Mich.) said she is not part of discussions on OCS but expects the issue will be "in play" in the climate debate. She acknowledged that attempts to add wider drilling would face resistance.

"It's not easy. I think there will be a real big fight about that," Stabenow said.

The 'gang' model

Graham believes Kerry should look to drilling provisions endorsed by the bipartisan "Gang of 10" -- which later grew to 20 -- last year. Graham was a member of the gang, which floated a plan that would blend new drilling with major new investments in renewable energy and advanced vehicles.

Their plan called for shrinking the no-leasing buffer in the eastern Gulf of Mexico to 50 miles. It would also allow drilling greater than 50 miles off the coasts of Virginia, North and South Carolina and Georgia if those states allowed it.

"I'm not talking about anything that hasn't been vetted," Graham said Tuesday. "This is an idea that has been vetted and got a lot of Democratic support."

Other current senators who were in the 2008 "gang" are Sens. Conrad and Saxby Chambliss (R-Ga.) -- who jointly led the effort -- as well as Landrieu, John Thune (R-S.D.), Ben Nelson (D-Neb.), Blanche Lincoln (D-Ark.), Johnny Isakson (R-Ga.), Bob Corker (R-Tenn.), Mark Pryor (D-Ark.), Tim Johnson (D-S.D.), Tom Carper (D-Del.), Susan Collins (R-Maine), Evan Bayh (D-Ind.) and Amy Klobuchar (D-Minn.).

Landrieu said adding an OCS provision that included state revenue sharing would be "very encouraging" to her. Louisiana already shares in revenue from gulf leasing under a 2006 law, but she wants the concept to be implemented more widely.

But Landrieu stopped far short of saying it would bring her support for a cap-and-trade bill. "There's still some other considerations on cap and trade. There are economic considerations. We want to be increasing jobs, not losing jobs, and we want to be building on, making stronger this recovery, not weaker," she said.

Holler, the Heritage analyst, believes that to gain support from GOP lawmakers who are currently opponents of the climate bill, a drilling provision would have to have two features: large amounts of new access, and limitations on permitting and legal challenges that many Republicans say have hampered development.

"I am not sure how Senator Reid can hold his caucus together," under such a scenario, Holler said.

Opening new areas is also certain to draw resistance from environmental activists. "I don't believe it's rational to open up more areas for the production of fossil fuels as a way of making real progress on reducing global warming pollution," said Mike Gravitz of Environment America.

But Joe Romm, a senior fellow at the Center for American Progress, suggested that liberals would be wise to accept nuclear and drilling provisions to get an emissions-capping bill with large-scale boosts for efficiency and other "clean" technology.

In a post on his "Climate Progress" blog, Romm said the willingness of Graham, a swing Republican, to negotiate is a good sign for the bill's prospects.

"The other good news is that most of the annoying things that progressives may have to swallow to get that bill smell worse than they taste," Romm added.

Oil prices may soar in coming years, Romm noted, citing a recent Deutsche Bank prediction that prices will reach $175 per barrel by 2016, and that this makes it inevitable that new areas will be opened to drilling. Democrats might as well get a climate deal in return, he said.

Another incentive to bargain is EPA plans to regulate greenhouse gases absent a new climate law, Graham said.

"So to the people who don't want to do anything, if you think falling short of 60 votes is winning, I would suggest to you that the regulators are going to start regulating carbon," Graham said. This would be the "worst of all worlds" because it would create new mandates, yet without the support that Congress could provide business to comply, he added.

But Graham had a warning that supporters of mandatory emissions limits should fear EPA acting under its existing authority.

"There will be a backlash," Graham said. "I would tell my friends from the left, if you think we don't need to deal with these Republicans, let's just go ahead and let EPA do it, there will be a backlash from ratepayers and businesses and they will come up here in droves and the Congress may overreach."

A role for Lieberman?

Graham is working with McCain and Sen. Joe Lieberman (I-Conn.) to push for addition of major nuclear power support in the bill (see related story). Less clear is whether Lieberman will push for drilling too.

Lieberman's most prominent engagement on a drilling issue was his years-long work with the campaign opposing drilling in Alaska's Arctic National Wildlife Refuge, which Kerry also strongly opposes. Lieberman also opposed offshore drilling measures in the past, voting against wider eastern Gulf of Mexico leasing in 2001.

More recently, Lieberman did not cast a vote on the 2006 OCS bill -- which became law -- that expanded Gulf of Mexico drilling by millions of acres while providing Florida a no-drilling buffer that generally extends 125-235 miles from its gulf shores.

But Lieberman said he supported offshore drilling in the summer of 2008, a time of record gasoline prices and when he was backing McCain's presidential bid. McCain made pushing for wider drilling a major campaign theme.

Lieberman steered clear yesterday of saying whether his work with Graham will include pushing for wider OCS leasing, instead commenting on Graham's work in general terms.

"Lindsey is engaged now. It's a very significant, positive development for the possibility of climate change. He wants, correctly, and he's not the only one, to put climate change together with energy independence in one bill," Lieberman said. "And they go naturally together. it'd not only help us do our part to reduce the threat of global warming to our country, but it'd also make us energy independent."

Graham said he believed Lieberman could be an ally in the OCS effort.

"I think Senator Lieberman is a guy that if it were part of the mix and it would get us to where he thought we needed to go on nuclear and emissions controls, greenhouse gas controls, that he would be the type of senator who would understand the benefit of it," Graham said.

Senior reporter Darren Samuelsohn contributed.

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