Bipartisan group of senators tables compromise climate bill

With the world's eyes on Copenhagen, the Obama administration's attempts to pass a domestic climate change bill received a major boost late last week after two bipartisan proposals were tabled by influential senators.

The proposed Boxer-Kerry cap-and-trade bill that is working its way through the Senate has faced staunch opposition from both Republicans and some Democrats, raising fears that in its current form it will not be able to secure the 60 votes required to pass the legislation.

As a result, Democrat senator John Kerry has been working for several months with Republican Lindsey Graham and independent senator Joe Lieberman, to develop a compromise version of the bill that could secure bipartisan support.

The group formally outlined its proposal on Thursday, with Kerry arguing that the senators were confident they had developed a package of incentives and safeguards that will attract the votes needed to pass the bill early next year.

A White House spokesman welcomed the proposal, stating that president Obama saw the compromise legislation as "a positive development towards reaching a strong, unified and bipartisan agreement in the US Senate".

The new proposals, which were set out in an open letter to the president, set out a range of general principles for the legislation designed to appeal to moderate Democrats and Republicans who have expressed reservations about the original draft bill.

Most notably, it downgrades the emission reduction target set out in the Boxer-Kerry bill, proposing cuts in emissions of 17 per cent by 2020 on 2005 levels as opposed to the original 20 per cent target. The new target would bring the bill into line with the emission reduction goal that president Obama is expected to announce at the Copenhagen summit later this week.

The compromise bill also proposes increased financial support for the nuclear energy, domestic oil and gas, and clean coal industries, and sets out many safeguards designed to support those sectors that would be hit hardest by the introduction of a nationwide emissions cap-and-trade scheme. For example, it raises the prospect of a price ceiling for carbon credits, financial assistance for those sectors that face the threat of "carbon leakage", incentives to help farmers cut emissions, and trade measures to protect US firms from "imports from other countries that do not adhere to emissions-cutting measures".

The trio of senators argued that the recent Environmental Protection Agency (EPA) ruling giving it the power to legislate against carbon emissions meant that failure by Congress to reach a compromise would mean "ceding the policy reins to the EPA and ignoring our responsibility to our constituents".

Significantly, the US Chamber of Commerce, which has been campaigning vigorously against the Boxer-Kerry bill, signalled that it could support the latest proposals. Speaking to Reuters, the Chamber's Stephen Eule said that " perhaps the [Kerry-Lieberman-Graham] approach might be something that could form the basis for a piece of legislation we could support, but there's still a lot to sort out".

The framework document was followed a day later by a second package of bipartisan proposals from Democrat senator Maria Cantwell and Republican senator Susan Collins.

The two senators proposed wide-ranging reforms to the cap-and-trade model set out by the Boxer-Kerry bill, outlining plans that would would effectively ban speculators from entering the carbon market and only impose caps on producers and importers of fossil fuels.

Dubbed a cap-and-dividend model, advocates of the approach argue that capping use of fossil fuels such as coal and oil is far easier to manage than capping emissions from a large number of industrial sites.

The Cantwell-Collins bill also proposes that revenue raised from the auctioning of emission permits is returned to consumers to help them cope with higher energy costs with a quarter of the money held back for investment in clean technologies.

Cantwell said in a statement that the bill "provides businesses and investors with a simple, predictable mechanism that will open the way to clean energy expansion while achieving America's goals of reducing carbon emissions".