CLIMATE:

Kerry, Lieberman push their own utility-only option as Reid's decision nears

The architects behind this year's sweeping Senate energy and climate proposal are working overtime to round up support for a slimmed-down version of their bill that would curb emissions from only the electric utility sector.

Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) had previously conceded that they would be willing to scale back their goal of an economywide price on carbon, and the pair are now ramping up efforts to take the lead in making such a utility-only bill a reality.

A draft proposal from the duo surfaced yesterday shortly after Majority Leader Harry Reid (D-Nev.) announced his plans to address emissions from power plants as part of a larger energy bill later this month. Meanwhile, Kerry worked late into the evening to try to drum up support from stakeholders off the Hill.

The maneuvering comes as a number of senators are feverishly working to ensure that their priorities make the cut when Reid unveils the final package.

Reid provided a rough outline yesterday of what he plans to include in the four-part package: oil spill response, energy efficiency, clean energy production and efforts to slash greenhouse gases from power plants. That leaves Reid a lot of wiggle room to pick and choose which measures he will include in the final package, which he wants to send to the floor the week of July 26.

Several key Democrats -- including Kerry, Energy and Natural Resources Chairman Jeff Bingaman of New Mexico and Finance Chairman Max Baucus of Montana -- told reporters yesterday that they remain in the dark about exactly what Reid's pollution-reducing plans are.

"I don't think a final decision has been made," Bingaman said. "It's going to be up to Reid."

Reid's broad strokes to describe the climate title of his package give hope to a number of senators who are working on their own efforts to tackle greenhouse gas emissions, which is seen as the most controversial part of the bill.

In addition to the latest proposal from Kerry and Lieberman, Bingaman has circulated a separate utility-only bill among senators that would begin capping utilities' emissions in 2012 and allow manufacturers to opt into the program if they choose. A Bingaman spokesman said that the draft published by multiple media outlets, including E&E, yesterday was a "mid-generation" version and that there have been several changes in the interim.

Sen. Olympia Snowe (R-Maine) has also expressed interest in crafting utility-only legislation and has spoken with Kerry and Lieberman about their effort.

Sen. Sherrod Brown (D-Ohio), meanwhile, stressed earlier this week that manufacturers must have the choice to opt in to a carbon pricing system and that he is working on legislation that would allow them to do that under a utility-only bill.

Kerry-Lieberman details

Kerry and Lieberman's latest effort thrusts the pair back into the center of the climate debate. The duo authored a more sweeping climate and energy bill that would create a broader carbon cap to curb emissions from utilities, energy-intensive manufacturers and the transportation sector, but that effort failed to attract the necessary support from moderates to stand a realistic chance of reaching the 60-vote threshold.

According to a 667-page draft of their latest scaled-down effort obtained by The Hill yesterday, Kerry and Lieberman would seek to cut utilities' emissions by 17 percent from 2005 levels by 2020 and 83 percent by 2050. Those targets mirror the reductions required for capped sources under the "American Power Act" that Kerry and Lieberman unveiled in May.

Neither Kerry or Lieberman's office was willing to confirm the validity of the circulated draft.

The draft was the second utility-only bill to surface yesterday, following a 50-page draft from Bingaman that would also cut utilities' emissions 17 percent by 2020 from 2005 levels and 42 percent by 2030. Utilities that emit more than 25,000 metric tons of carbon dioxide-equivalent per year would be under the cap starting in 2012, and large manufacturers could opt in to the program (Greenwire, July 13).

Lieberman said yesterday afternoon that he still thinks that the broader climate bill he and Kerry co-authored remains the best option, but he is willing to compromise on the utility-only effort amid a heated political climate and a dwindling timeline for floor action before the November elections.

"If we can get that, that would be a significant step forward," Lieberman told reporters. "It doesn't break our dependence on foreign oil as much. It doesn't cut pollution as much. It doesn't create as many jobs. But it does some of all of that, and that's what we need."

The new Kerry-Lieberman proposal does not include details about how emission allowances would be allocated under the program, which promises to be the subject of fierce debate if the bill moves forward.

Like the broader American Power Act, the discussion draft would offer offset credits for domestic and international emission reductions, provide additional assistance to people disproportionately affected by energy price increases and support the commercial deployment of carbon capture and sequestration technologies.

The utility-only proposal would prevent U.S. EPA from regulating greenhouse gases as criteria pollutants, hazardous air pollutants and international air pollution.

It would also block EPA from setting New Source Performance Standards for utilities covered under the cap based on their greenhouse gas emissions. The performance standards are industry-specific rules that require facilities that significantly contribute to dangerous pollution levels to cut their emissions. Capped sources would also be exempt from New Source Review permitting requirements based on their greenhouse gas emissions if they were initially permitted or modified after Jan. 1, 2009.

States would be prohibited from implementing or enforcing cap-and-trade programs to curb greenhouse gas emissions under the draft.

In a meeting with Kerry yesterday, environmental groups including the Sierra Club, the Natural Resources Defense Council and Environment America said that they would oppose legislation if it included major concessions to relax EPA standards for pollutants like soot, smog and mercury, according to an environmentalist who was briefed on the discussions.

Some environmentalists are worried about possible incentives that may be necessary to sweeten the deal for the power industry, including provisions to weaken regulations for emissions beyond carbon dioxide.

Upon leaving a roughly 90-minute meeting with representatives of the National Rural Electric Cooperative Association yesterday evening, Kerry avoided providing specifics of what he and Lieberman are working on but said that he was optimistic that pricing carbon in some form was possible.

"I'm very hopeful that we can get something done," Kerry said.

Kerry admitted that he had yet to win over the rural co-ops, whose support would be a boon to his and Lieberman's efforts to persuade Reid to chose their proposal from the variety of pollution-reducing measures on the table.

"They certainly described the things they need and some of the issues that are there," Kerry said of the co-op representatives that he met with. "I think some of them are very legitimate issues that we need to deal with as we think about how we try to do this."

Likewise, NRECA Chairman Glenn English described the meeting as a "getting acquainted session" for the rural co-ops and the Massachusetts senator, who has no such electric co-ops in his home state.

"I think it's fair to say that our membership has to be comfortable, particularly if anything is done along the lines of supporting it, we have to be comfortable," English said. "We have to be comfortable that we understand it, we have to be comfortable that it's going to work for our members."

English stressed that Kerry and his staff did not provide specific legislation and that the two sides "never did get down to those type of specifics."

In addition to English, representatives from rural co-ops in Missouri, Virginia, Michigan, Ohio and Wisconsin were present.

Energy proposals

Beyond carbon caps, an array of senators are hoping for the inclusion of their own energy priorities into the bill.

Sen. Amy Klobuchar (D-Minn.) is pushing a bill she introduced yesterday with Sen. Tim Johnson (D-S.D.) that would expand standards for renewable electricity and biofuels. Klobuchar told reporters yesterday that farm-state lawmakers may be more likely to support an energy bill that would beef up support for the renewables that form a major economic driver in their states (E&ENews PM, July 13).

It could be part of the energy bill or an amendment to it, Klobuchar said. "I haven't discussed the bill with [Reid] yet, but as you know he's from Nevada, there's a lot of sun there, and he's been supportive of doing more with renewable in the past."

Several left-leaning senators are urging Reid to include more aggressive measures in the bill than the Kerry-Lieberman original sweeping cap-and-trade proposal would have, according to a Senate Democratic aide.

The senators -- including Sens. Sheldon Whitehouse (D-R.I.), Ben Cardin (D-Md.), Bernie Sanders (I-Vt.) and Jeff Merkley (D-Ore.) -- will push for a "significant" investment in energy efficiency and renewable energy deployment.

On a renewable electricity standard, the senators want to see a standard above 20 percent, and ideally in the 25 percent range. The energy-only bill that passed the Energy and Natural Resources Committee last summer would require utilities to provide 15 percent of their power from renewable sources by 2021, with slightly more than a fourth of the requirement that could be met through energy-efficiency measures. The climate and energy bill that passed the House last summer sets a combined 20 percent renewable electricity and efficiency standard by 2020.

Reporters Noelle Straub and Mike Soraghan contributed.