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Climate-energy bill debuts in Senate, but prospects are dim

A climate-energy bill – one intended to appeal to enough factions to proceed through the Senate – was unveiled Wednesday after months of negotiations. But it recently lost its Republican sponsor, complicating its future.

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"Two-thirds of revenues not dedicated to reducing our deficit are rebated back to consumers through energy bill discounts and direct rebates," Lieberman and Kerry said in a summary of the bill. "We also provide assistance to those Americans who may be disproportionately affected by potential increases in energy prices through tax cuts and an energy refund program."

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A chicken in every pot

Other features of the bill would:

•Establish primacy of federal law for achieving cuts in greenhouse-gas emissions. States wouldn't be allowed to have their own cap-and-trade emissions programs.

•Spend $6 billion on transportation infrastructure to increase efficiency and decrease oil consumption, as well as on tax incentives to convert heavy-duty trucks from diesel fuel to natural gas. It includes funds for advanced vehicles and battery research.

•Boost offshore oil exploration. With the Gulf spill in mind, the bill offers "new protections for coastal states," letting them veto drilling up to 75 miles off their shores. States that allow drilling would get 37.5 percent of revenues from sale of the oil to help protect coastal ecosystems.

•Curb industrial emissions. Industrial emitters wouldn't enter the program until 2016. Prior to that, funds collected from emissions permits would be used to offset electricity and natural-gas rate increases for industrial rate-payers and to improve energy efficiency in manufacturing. In 2016, energy-intensive industries and industries exposed to trade threats would get emissions allowances to offset their compliance expense.

•Protect American firms from any trade disadvantage stemming from the bill. The bill would "phase in a World Trade Organization-consistent border adjustment mechanism." If no global pact on climate change is reached, the bill requires a surcharge on imports from countries that have not acted to limit carbon emissions.

•"Ensure coal's future" with $2 billion a year for research and development of technology to store carbon emissions underground.

Natural gas and nuclear power industries also would receive incentives to boost production.

With all the billions of dollars worth of permits being traded among polluters and markets, the bill aims to block market manipulations by requiring the largest sources of pollution – those with more than 25,000 tons of carbon pollution annually – to meet reduction targets. The program focuses on about 7,500 factories and power plants. Other measures would keep a close watch on "market makers" in auction and other markets.

Reviews are mixed

Business groups' reactions are across the spectrum. The US Chamber of Commerce, which has long opposed climate legislation, thanked the authors but reserved judgment, calling the bill a "work in progress." The Nuclear Energy Institute, the nuclear power trade association, praised the nuclear-related aspects of the bill as "a solid platform for the expansion of nuclear energy to meet our electricity needs."

Environmentalists' responses are mixed. Friends of the Earth called the bill "dangerous," saying it gives too many concessions to the nuclear and coal industries to gain support for a limit on carbon emissions. The Natural Resources Defense Council applauded it – with reservations about the expanded offshore oil drilling and the lack of minimum performance standards for the largest carbon polluters.