Guest Blog of the Week: Prospects for Climate & Energy Legislation in Late 2010—Part I

   By Meredith Irvin and Erin Book, Managing Directors, SNR Denton

Since the June 2009 passage of the Waxman-Markey bill (H.R. 2454, the American Clean Energy and Security Act of 2009), a multitude of proposals have been offered that represent a variety of approaches from all sides of the climate and energy issue.  Some lawmakers remain steadfast on passing, or at least debating, a comprehensive climate and energy bill this year - something along the lines of the Waxman-Markey bill, or the more recently released Kerry-Lieberman bill (the American Power Act of 2010, discussed below).  Others see value in tackling only the energy side of the issue in the near term, pushing to move a bill this year to address the country's domestic energy use and supply, and to reduce our dependence on foreign oil.  The latter position partly stems from the recognition of the political difficulties that would plague a comprehensive bill capping greenhouse gas ("GHG") emissions and decreasing energy use.

Political sensitivities have not, however, precluded members of Congress from drafting and offering their ideas on climate change and energy use in legislative proposals.

Today's blog discusses:  Kerry-Lieberman, Bingaman v. Lugar and Cantwell-Collins

Kerry-Lieberman

The prevailing proposal in the Senate this summer is the American Power Act (referred to as the Kerry-Lieberman bill in reference to its Senate sponsors); it encompasses both a climate and an energy component.  In this way, it is similar to the Waxman-Markey bill; however the substance of the draft legislation differs significantly, reflecting a great deal of input from Members on both sides of the aisle.  This legislation contains seven titles: clean energy development, pollution reduction, consumer protection, job protection and creation, international climate change activities, community protection from global warming impacts, and budgetary effects, as well as an attempt by the authors to satisfy an "all of the above" approach through nuclear incentives and expansion of offshore drilling.  The bill originally included a Republican sponsor, Senator Lindsay Graham (SC), but Graham left the effort in October after a dispute with Senate Majority Leader Reid over Senate legislative priorities.

After the release of the bill, the authors met with and gathered feedback from colleagues and with the Administration, and agreed to scale back the scope of the legislation in an effort to win more support.  In an attempt to reach middle ground, Senators Kerry (D-MA) and Lieberman (I-CT) introduced a scaled-down version of their cap-and-trade bill that would initially only apply to utilities.  Subsequently, the White House and the Democratic leadership decided to move forward with this approach.  The utility industry did not reach a consensus regarding support or opposition for such a proposal; however, in utility representatives' talks with Reid, the utilities have reportedly been trying to obtain significant concessions, such as a large pool of allowances under a plan and relief from existing Clean Air Act regulations. 

Bingaman v. Lugar

Some Members maintain that reaching 60 votes in the Senate on any bill that contains any type of capping system is unlikely.  This has lead to proposals of several forms of legislation that address energy issues without provisions to curb GHG emissions or to price carbon.  Both Senate Energy and Natural Resource Committee Chairman Bingaman (D-NM) and Senator Lugar (R-IN) have drafted such legislation.

A major difference between the two bills, and one of the most controversial issues when discussing "energy only" bills, is the renewable energy standard versus the clean energy standard (or what Lugar's bill calls a "diverse energy standard").  Senator Bingaman's American Clean Energy Leadership Act ("ACELA," S. 1462) contains a renewable energy standard ("RES") that requires electric utilities to obtain 15% of their power from renewable sources by 2020.  Under ACELA's RES, "renewable" includes energy sources such as wind, solar and geothermal; it does not include nuclear power.  Senator Lugar's proposal, the Practical Energy and Climate Plan (S. 3464), however, requires that by 2020, 20% of a utility's power must come from "clean" energy sources, which are sources that do not generate carbon emissions, including nuclear power and "clean coal."

Senator Bingaman's bill, approved by the Energy and Natural Resources Committee last year, also expands offshore drilling, whereas Senator Lugar's proposal does not.

Cantwell-Collins

Other alternatives to a comprehensive cap-and-trade scheme have been offered, such as the cap-and-dividend proposal authored by Senators Cantwell (D-WA) and Collins (R-ME).  The Carbon Limits and Energy for American Renewal Act ("CLEAR," S. 2877) would involve a 100% auction with the proceeds going to American consumers.  It would offer direct rebates to households to offset higher energy costs, and would provide a smaller role for government regulation than a cap-and-trade scheme.

For additional information on Energy Law, see David J. Muchow and William A. Mogel, Energy Law and Transactions, and the Energy Law page.