Despite Majority Leader Reid’s confidence, Senator Brown doesn’t think a comprehensive climate bill is likely to pass this year:

On climate change, Brown said he doesn’t see Congress passing a bill this year.

“Health care was hard enough,” he said. “Climate change will be harder for a lot of reasons.”

Instead, he said, they’ll work to enact parts of legislation, including regulations that require utilities to increase production from renewable sources, and incentives for other clean energy businesses.

“Climate change legislation is ultimately a jobs bill if it’s done right,” he said.

Brad Johnson at The Wonk Room reports:

Today, fourteen Democratic senators, led by Sen. Tom Harkin (D-IA), affirmed their allegiance to the profits of polluting industry at the expense of the health and jobs of their constituents. In a letter to Senate leaders, a bloc of senators with powerful coal interests in their states called for “fair emissions allowances in climate change legislation.” Their definition of “fair,” unfortunately, turns out to be full taxpayer subsidies for global warming polluters. They call for the free allocation of pollution permits to electric utilities to be distributed “fully based on emissions.”

In the letter, the Senators write:

We believe it is essential that we strive to formulate legislation that equitably distributes transition assistance across individuals, as well as states and regions and economic sectors. We urge you to ensure that emission allowances allocated to the electricity sector – and thus, electricity consumers — be fully based on emissions as the appropriate and equitable way to provide transition assistance in a greenhouse gas-regulated economy.We thank you for your efforts to build consensus on the critical issue of energy and climate legislation.

The change we recommend would contribute to a more balanced and equitable bill for the Senate’s consideration, and a better strategy for America.

The Senators who have signed onto this inaccurate and deeply disingenuous statement are:

The signatories on the letter defending coal-heavy polluters are Senators Tom Harkin (D-IA), Al Franken (D-MN), Roland Burris (D-IL), Byron Dorgan (D-ND), Herb Kohl (D-WI), Russell Feingold (D-WI), Kent Conrad (D-ND), Michael Bennet (D-CO), Amy Klobuchar (D-MN), Mark Udall (D-CO), Robert Byrd (D-WV), Carl Levin (D-MI), Debbie Stabenow (D-MI) and Sherrod Brown (D-OH).

The provision these Senators are advocating would not ‘contribute to a more balanced and equitable bill’. It would line the pockets of coal companies and offer zero protections whatsoever for consumers.

But don’t take it from me. Consider this chart from the Congressional Budget Office (via David Roberts).

The option on the right, in which 80% of American households experience a decrease in income while the top 20% experience an increase, is what these Senators are fighting for.  The option on the left — a 100% auction of allowances with dividends distributed equally to the American people — has not been seriously considered by Congress. This is due entirely to the corrupting influence of corporate polluters on our political process.

David Roberts explains the distinction between these approaches succinctly:

Auction-and-rebate is vastly more progressive, favoring low-income taxpayers, while freely allocating permits overwhelmingly favors the rich.

But suppose you don’t trust the non-partisan Congressional Budget Office. Surely someone else has weighed in on this.

In March of this year, 600 economists wrote a letter to Congress expressing their strong preference for a 100% auction of carbon credits. Specifically, they cited three reasons free allocation of allowances would “undermine the program’s long-term success”:

Free allocations will do little or nothing to protect families and businesses from higher energy costs.

Free allocations will represent a significant and undeserved windfall to
utilities and other greenhouse gas producers.

Free allocations will deny the government the necessary resources to
reduce the economic cost of combating climate change, and will thus
generate needlessly high costs of achieving any reduction target.

Congressional Budget Office: Check
Hundreds of Respected Economists: Check

Perhaps you need further evidence that these Senators are fighting for the coal industry at the expense of their constituents.

President Obama, during the campaign, advocated strongly for a 100% auction of allowances. During the primary, this was the key aspect of his plan that was superior to what candidates Clinton and Edwards proposed. During the general election, the Obama campaign attacked Senator McCain’s proposal to give allowances away as a huge government giveaway:

Obama’s camp attacks McCain’s program as a huge government giveaway. Says Jason Grumet, Obama’s principal advisor on energy and the environment: “McCain, in contrast to his self-description as a fiscal conservative, would give hundreds of billions of dollars of emissions permits away to the energy industry in the hope that they would pass the savings on to consumers.”

Even more tellingly, OMB Director Peter Orszag told the House Energy and Commerce Committee in March what giving credits away for free would amount to:

If you didn’t auction the permits it would represent the largest corporate welfare program that has ever been enacted in the history of the United States. All of the evidence suggests that what would occur is that corporate profits would increase by approximately the value of the permits.

So, the Congressional Budget Office, the Office of Management and Budget, hundreds of leading economists, and the Obama administration have all argued forcefully against giving away credits. The consensus is that this would be a massive giveaway to corporations and the wealthiest 20% of Americans at the expense of lower-income Americans and the middle class.

This leaves the 14 Senators who signed this letter in a precarious position. Are they actually disputing the arguments I’ve outlined above? I have offered each of them the opportunity to reconcile their claims with this evidence, along with an invitation to publish their response at EnviroKnow.com.

Via Wonk Room.

November 12, 2009

Dear Senators Reid, Boxer, Baucus and Kerry,

As the Senate formulates and debates energy and climate change legislation, it is clear that revamping our energy systems with alternative energy resources and technologies will be fundamental to our strategy for achieving energy security and reducing greenhouse gas emissions. A transition of this magnitude will take years to accomplish and will incorporate major changes to the way we produce and use energy. Both the House-passed “American Clean Energy and Security Act” (H.R. 2454) and the recently introduced “Clean Energy Jobs and American Power Act” (S. 1733) recognize the importance of helping individuals and firms by alleviating potential financial impacts as this transition takes place. This assistance, in the form of the allocation of greenhouse gas emission allowances, is an important tool for protecting consumers and businesses as we move to adopt new energy systems and decrease greenhouse gas emissions. To be fair and effective, any legislation must equitably allocate these allowances to individuals and across states and regions and economic sectors.

The House bill falls short of that equitable distribution goal with its formula for allocating allowances to local distribution companies based 50 percent on emissions and 50 percent on sales. Unfortunately, the Senate bill currently under consideration includes the same 50/50 allocation provision. Under the proposed 50/50 formula, utilities that are more coal dependent will need to purchase even more allowances than they would have if all allowances were allocated based on emissions, and those higher costs will be passed on to their customers. Meanwhile, many utilities with relatively lesser emissions will receive sufficient allowances to completely cover their initial requirements. Thus, their customers will experience no price increases resulting from the legislation.

We believe it is essential that we strive to formulate legislation that equitably distributes transition assistance across individuals, as well as states and regions and economic sectors. We urge you to ensure that emission allowances allocated to the electricity sector – and thus, electricity consumers — be fully based on emissions as the appropriate and equitable way to provide transition assistance in a greenhouse gas-regulated economy.

We thank you for your efforts to build consensus on the critical issue of energy and climate legislation. The change we recommend would contribute to a more balanced and equitable bill for the Senate’s consideration, and a better strategy for America.

Sincerely,

Senator Tom Harkin Senator Al Franken Senator Roland Burris Senator Byron Dorgan Senator Herb Kohl Senator Russell Feingold Senator Kent Conrad Senator Michael Bennet Senator Amy Klobuchar Senator Mark Udall Senator Robert Byrd Senator Carl Levin Senator Debbie Stabenow Senator Sherrod Brown

Via Western Citizen, American Farmland Trust lays out what this legislation aims to do:

1) Ensure agriculture is not subject to an emissions cap;

2) Ensure USDA promulgates the rules and administers any agricultural offset program;

3) Create clear authority so projects partially-funded with government money are eligible for credits, and ensures stackable environmental credits from projects are recognized;

4) Create clearer mechanisms to recognize producers and systems already in place in voluntary carbon markets;

5) Clarify various technical requirements for carbon sequestration projects;

6) Create a comprehensive and well-funded government carbon conservation program for producers who are ineligible or unable to participate in a carbon offset market; and

7) Provide supplemental funding for various programs to jumpstart renewable energy projects.

Original cosponsors included Senators Baucus, Klobuchar, Brown, Harkin, and Begich.

Here is the text of the bill:

Here is a section-by-section summary:

Here is a one-pager:

Yesterday, Senators Kerry and Boxer introduced the Clean Energy Jobs and American Power Act (CEJAPA). You can view a section-by-section summary and the full text of the legislation here.

Many bloggers have already weighed in with their initial reactions. What follows is a round-up of these first impressions, as well as a few thoughts of my own.

Bradford Plumer has a solid summary, running down the list of they key differences between Kerry-Boxer and Waxman-Markey. Key among the differences are the preservation of the EPA’s authority to regulate greenhouse gases, a “crackdown on carbon speculators” and “stricter scrutiny for biofuels.” Among (what I consider to be) the weak points in the bill, Plumer identifies increased incentives for natural gas production and use, and a voluntary mechanism for methane capture, which on first glance seems awfully short-sighted.

Brad Johnson writes that: “Incorporating the efforts of a number of senators, the Kerry-Boxer legislation has strengthened a number of provisions.” Among these, Johnson highlights the stronger emissions limits, funding for green transportation, and the preservation of EPA’s authority to regulate greenhouse gas emissions, which the House bill foolishly gutted. Johnson also mentions a few Senators who have already attacked the bill, including Democrat Kent Conrad and Republican Kay Bailey Hutchison.

Kate Sheppard makes an interesting observation: “Noticeably missing from both the bill and their rhetoric was any reference to cap and trade. Instead, they’re calling it a ‘Global Warming Pollution Reduction and Investment’ program — and they’re promoting the energy and national security benefits rather than the emissions reductions goals.” Sheppard also observes that, as of yesterday’s unveiling, there was no Republican support for the bill whatsoever.

Elana Schor laments the lack of focus on transport, writing that “transportation reform groups are already strategizing about how to increase the bill’s focus on their area — which currently accounts for one-third of U.S. emissions but stands to receive far less than the 10 percent of total climate revenue that is mandated in the so-called “CLEAN TEA” legislation.” Schor also predicts that the bill will not make it to the Senate floor in advance of December’s climate negotiations in Copenhagen, but that “Senate passage next spring remains a distinct possibility.”

Steve Benen also expresses skepticism that some of the more promising measures will make it to the Senate floor. Benen writes: “So, does the bill have a realistic shot? It won’t be easy. The first step for Boxer-Kerry will probably be the easiest: it’s going to pass the Environment and Public Works Committee, perhaps by the end of the month. From there, however, it will be subjected to scrutiny in at least four other Senate committees, each of which will change the bill, probably for the worse. Some of the entirely worthwhile measures introduced yesterday are not at all likely to withstand the process.” This, of course, brings to mind the old adage that the United States Senate is where good ideas go to die. This statement is as true now as it ever was, as far as I can tell.

Brian Beutler discusses the arduous path the bill must take through various unfriendly Senate committees. In particular, Beutler mentions potential roadblocks in both the Finance and Agriculture Committees. Beutler also takes note of the bright side: “James Inhofe will spend weeks and weeks saying more and more ridiculous things about it. So that should be fun.”

Matt Yglesias raises the same concern that I will below: “Kerry-Boxer is a somewhat stronger and better measure than the American Climate and Energy Security bill that passed the House. But of course ACES passed the House whereas Kerry-Boxer will doubtless be changed many, many times.”

Joseph Romm focuses on the genuine improvement over the House bill in terms of offsets. Romm republishes a guest-post from an expert on offsets, who writes: “Probably the most important difference between the bills is that the Kerry-Boxer bill does not specify which agency would be in charge of administering and ensuring the integrity of any offset program. In the House bill, a last minute compromise switched all of the administration of biological sequestration offsets to the USDA from the EPA, a change widely criticized by environmentalists because of the belief that the USDA would not be as effective in regulation.”

A. Siegel focuses primarily on the price collar, detailing the pros and cons of the approach Senators Kerry and Boxer have used. In the end, he concludes: “From my perspective, for the next 10+ years, it seems almost certain that the floor will have more impact on actual carbon prices than the ceiling … thus, having that floor will help drive more emissions cuts than a program without a cost collar.”

David Roberts takes note of the fact that the bill is called Kerry-Boxer, rather than Boxer-Kerry as was previously expected. Roberts writes: “Word has it this decision came down from Senate Majority Leader Harry Reid (D-Nev.) himself.” He also speculates that this decision was due to Senator Boxer’s “bungling” of the Lieberman-Warner bill, which was the Senate’s last attempt to address global warming.

Personally, I’m cautiously optimistic. While — as others have pointed out — the bill as it currently stands is stronger than the American Clean Energy and Security Act is several crucial ways, it has a treacherous gauntlet to run before reaching the President’s desk. The two greatest roadblocks I anticipate are in the Agriculture and Finance Committees.

In the House negotiations, Agriculture Chairman Collin Peterson was able to extract several major concessions which significantly weakened the bill. Pollution-powered Senator Blanche Lincoln, who recently took over the Chairmanship of the Senate Agriculture will undoubtedly take the opportunity to do the bidding of her agribusiness benefactors. It would be a true shame for the Senate to grant devastating concessions to Senator Lincoln at the expense of the environmental integrity of the legislation.

The Finance Committee Chairman, Senator Max Baucus, is also likely to be a major thorn in liberals’ side. Baucus has been fighting behind closed-doors to have a major role in the key aspects of the bill, including the financing for cap-and-trade mechanism. Senator Baucus’ insistence on wasting months trying to secure Republican support — despite all evidence that such support would never materialize — has been a major detriment to Democrats’ ability to move healthcare legislation in a timely manner. Indeed, many progressives have now accepted that Baucus’ attempts to gain Republican support are little more than pretense for weakening the bill and delaying the process as long as possible.

A smaller but still significant concern is a group of Midwestern Democratic Senators — led by Sherrod Brown — who are intent on extracting concessions for manufacturers in their states. Senator Brown, speaking of Senators Kerry and Boxer to The Hill yesterday, gave the ultimatum: “They don’t get the votes from Midwestern industrial-state senators unless manufacturing is a major component of this.” While the Midwestern Senators do have some valid concerns, the manufacturers they are advocating on behalf of now join a long list of industries seeking favorable concessions (read: free emissions credits): Nuclear, Coal, Natural Gas, Agribusiness, Oil Refining, Electric Utilities, etc. The true test this bill faces is whether or not it can work its way through the Senate without ceding so much ground to these industries that the environmental integrity of the bill is compromised. Either way, as Steve Benen notes, “it’s a fight worth watching closely.”