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Senate climate bill may drop cap and trade

A compromise climate bill being developed in the Senate may drop controversial cap and trade legislation passed by the House.

By / Staff Writer / March 2, 2010

Sen. John Kerry (D) of Massachusetts speaks during a news conference on a comprehensive climate change and energy independence legislation, as Sens. Lindsey Graham (R) of South Carolina and Joseph I. Lieberman (I) of Connecticut look on.

Scott J. Ferrell/Congressional Quarterly/Newscom

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The last best hope to get a climate-energy bill through Congress this year may be to drop long-held "cap-and-trade" plans for an economy-wide price on carbon emissions and instead target just the utility, transportation, and industry sectors of the economy.

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That scenario, now emerging in the Senate, set energy industry officials and environmental groups scrambling to evaluate how to deal with new legislation that's being developed behind closed doors and whose details are still unknown.

Broad outlines of the legislation – including a pullback from cap and trade – were reported over the weekend by The Washington Post. Details were in short supply as trial balloons floated and popped at the Capitol.

But even lacking details, several analysts say that such a move would be a broadly significant and dramatic shift away from the nationwide cap-and-trade climate-energy bill passed by the House of Representatives last June but tarred by opponents as a "cap-and-tax" bill.

Architects of the new bipartisan bill are Sens. John Kerry (D) of Massachusetts, Joe Lieberman (I) of Conn., and Lindsey Graham (R) of South Carolina. The latter was quoted over the weekend as saying in a private meeting that "cap and trade is dead."

"Cap and trade may not be quite dead, but it's been dying for some time," says Kevin Book, a principal with ClearView Energy Partners, a Washington consulting firm. "For five years, Congress has been talking about carbon markets. Now they're saying to heck with that – we've got a problem to solve."

Acknowledging a lot of "wheel spinning" and a "lack of any real consensus," Frank Maisano, spokesman for Bracewell and Giuliani, a law firm specializing in energy issues, suggested on Monday in an e-mail that current rough outlines of the emerging bill appear to include:

1. A new cap just on utility emissions in the short run.
2. A cap for industrial sectors in the longer term.
3. A carbon fee on transportation fuels.
4. Expanded federal support for nuclear power
5. Expanded federal support for the oil and gas industry.

Reactions among environmentalists and industry representatives to the proposed new legislation ran the gamut from wary acknowledgment to cautious embrace to tentative hope.

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