Senate clears path for run at climate legislation

The Senate last night passed Barack Obama's financial reform bill, finally clearing the way for a vote on controversial climate change legislation.

The president had signalled that he would throw his full weight behind trying to secure the 60 Senate votes needed to pass a comprehensive energy and climate change bill as soon as the proposed overhaul of financial regulation was completed.

Speculation is now mounting that the Senate could debate a draft climate bill put forward by Democrat senator John Kerry and independent senator Joe Lieberman within the next few weeks after Senate majority leader Harry Reid hinted that he was preparing to move forward with the latest revised version of the bill.

Senators Kerry and Lieberman have been circulating a 667-page draft version of the bill that scales back previous plans for an economy-wide emissions trading scheme in favour of a narrower carbon-pricing mechanism that initially focuses solely on energy utilities.

The proposals have secured support from a number of influential business groups and energy firms and Kerry and Lieberman are confident that the scaled-back proposals, which also include substantial support for renewable- and nuclear-energy projects, can win over the Republican votes needed to pass through the Senate.

However, many Republican senators remain fiercely opposed to a bill that they believe will raise energy prices for businesses and consumers.

Their hand was strengthened this week when the National Rural Electric Co-operative Association and the American Chemistry Council briefed the press voicing concerns about the impact of the proposed utility-first approach on energy bills. There were also reports that the influential Edison Electric Institute, which represents around 70 per cent of the US electricity generation industry, remains uncertain on whether to support the bill.

Moreover, a number of Democrat senators have signalled they could vote against the bill and are pushing for the party leadership to adopt alternative legislation that scraps emissions trading plans altogether.

Speaking on a conference call with reporters this week, West Virginia Democrat senator Jay Rockefeller said the cap-and-trade proposals currently being considered cannot get 60 votes, adding that it was common knowledge on Capitol Hill that the Kerry-Lieberman bill will not pass this year.

Senator Rockefeller was speaking at the launch of a new bi-partisan energy bill that he has crafted alongside Republican senator George Voinovich, which would aim to raise $20bn over 10 years to support the installation of carbon capture and storage (CCS) technologies.

The two senators from coal-rich states are proposing that cap-and-trade proposals be scrapped and instead energy firms should be paid $67 to $96 for each tonne of carbon that they capture using CCS technology with the money raised through a levy on all fossil-fuel power plants.

Meanwhile, the Kerry-Lieberman bill can also expect to face opposition from some green groups after a new analysis from the Pew Center on Global Climate Change suggested that the latest watered-down version of the bill falls short of the emission cuts originally promised by president Barack Obama at last year's Copenhagen summit.

Obama has said the US will cut its greenhouse-gas emissions by 17 per cent against 2005 levels by 2020 – a commitment that attracted criticism from other world leaders for not going far enough given that it equates to just a four per cent cut on the 1990 baseline commonly used in international climate negotiations.

However, according to the Pew Center the utility-first proposals put forward by Kerry and Lieberman will result in emissions cuts of between 12 and 14 per cent by 2020, assuming that both the cap-and-trade scheme and other proposals contained in the draft bill such as new fuel- and energy-efficiency standards make it into the final version.