WASHINGTON (Reuters) – The Senate is close to wrapping up talks ahead of introducing a compromise climate change bill, said a top Democratic lawmaker who discussed ideas with industry groups on Wednesday.

“We’re planning to button up our efforts somewhere I hope next week,” Senator John Kerry told reporters after meeting with a coalition that represents automakers, forestry and paper companies, Big Oil, steel, mining, electricity and others.

Kerry is working with Republican Senator Lindsey Graham and independent Senator Joseph Lieberman on a bill to require U.S. industry to cut emissions of carbon dioxide and other greenhouse gases associated with global warming.

Indicating there was still work to be done, Kerry said, “We’re trying to build support as we develop (bill) language.”

Bruce Josten, an executive vice president at the U.S. Chamber of Commerce, left Wednesday’s meeting with the three senators and told reporters: “They’re being very constructive; they’re trying to figure out how to make this work for the American economy.”

The measure will not take the exact approach of legislation approved by the House of Representatives in June, and by the Senate Environment and Public Works Committee in November. This would set an economy-wide “cap and trade” direction to reducing carbon pollution.

Kerry said that while “a lot of language is there” to craft legislation, “we don’t have a full outline” yet of a bill.

PRICE COLLAR AND FUEL FEES

The climate bill has been stalled in the Senate and supporters have missed several informal deadlines for producing and passing a bill.

Under cap and trade, companies would face limits on the amount of carbon pollution Washington would let them emit. Those limits would become stricter over the next 40 years, when supporters want an 80 percent reduction from 2005 levels. Also, required pollution permits could be sold on a regulated market.

The three senators also talked about pollution reductions of 17 percent by 2020 below 2005 levels, a goal President Barack Obama has embraced.

The Chamber of Commerce, which says it represents more than 3 million U.S. businesses of all sizes, is staunchly opposed to U.S. Environmental Protection Agency regulation of carbon dioxide.

The three senators said on Wednesday the bill would pre-empt the EPA from regulating the gases, said a source with knowledge of the meeting.

The EPA is ready to issue final regulations as early as March 31 for automobile carbon emissions. That would clear the way for expanding regulations to smokestack emissions, although the agency prefers Congress tackles that problem.

Instead of an economy-wide cap and trade, the three senators are aiming to impose the market system initially on power companies, which contribute about 40 percent of carbon emissions.

The senators are “talking about allowances for that sector that are built around pollution-reduction targets and prohibiting price spikes,” Josten said.

Power plants would face emissions limits starting in 2012 while big manufacturers and energy-intensive industry would not face limits until 2016, the source said.

The senators presented an eight-page outline to the industry groups but took it back at the end of the meeting, he added.

The bill would also include a hard price collar that would keep carbon prices between $10 and $30 a ton. Any polluter emitting below 25,000 tons a year would not be regulated, the source said.

As for a possible oil industry tax, the senators discussed a fee on fuels linked to the market price of carbon. The fee would be visible to consumers at petroleum pumps and on airline tickets, the source said.

A tax at the oil refinery level that would not be as visible to consumers has also been discussed by the senators.

Once a bill is put together, the Congressional Budget Office will analyze the potential costs to the federal government and the economy. EPA also is expected to conduct a six- to eight-week analysis of the bill before it could be debated on the Senate floor, possibly in June.

Article by Richard Cowan and Timothy Gardner, editing by Mohammad Zargham; appearing courtesy Reuters

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When Congress returns from its summer vacation it will consider legislation that could energize investment in renewable energy projects with an almost “cash for clunkers”-like fervor.

Like the cash for clunkers legislation (and American Idol, and The Office), a feed-in tariff bill would be a ripoff of a European idea modified for American consumption. Bills that would require utilities to pay a premium for renewable power have been tried and failed here before, but the time (and composition of the Congress) may be right for the fight to take flight.

Introduced by Democratic Senators Jay Inslee (WA) and Bill Dellahunt (MA), the bill would guarantee a market for the renewable power projects and would do much to calms fears in today’s skittish investment arena. Feed-in tariffs have been overwhelmingly successful in Germany and Spain, basically creating the solar industries in both those countries.

Because a feed-in tariff promises American jobs and reduces foreign energy dependency, Congress will likely give the idea more of a fair hearing when the leaves begin to turn in DC.

Introduced by Democrat Ron Wyden of Oregon in May to no fanfare, the Storage Technology of Renewable and Green Energy Act of 2009 (S.1091) would create substantial tax credits for investment in storage projects that would accompany renewable energy projects.

Per the official summary, the bill would amend the IRS code to:

(1) allow a 20% energy tax credit for investment in energy storage property directly connected to the electrical grid (i.e., state systems of generators, transmission lines, and distribution facilities) and designed to receive, store, and convert energy to electricity and deliver such electricity for sale;

(2) make such property eligible for new clean renewable energy bond financing;

(3) allow a 30% energy tax credit for investment in energy storage property used at the site of energy storage; and

(4) allow a 30% nonbusiness energy property tax credit for the installation of energy storage equipment in a principal residence.

As previously reported, the renewable energy industry doesn’t like to admit that storage should be part of their equation, but in many applications the investment can be more than worth the cost. Tax incentives that would make it more cost effective to bundle storage with wind and solar projects would eliminate some of the resistance and just might get more “old guard” energy folks to be open to intermittent power sources. Utilities who are resistant to change would lose their knee-jerk reaction to say that renewable energy isn’t dispatchable.

This bill could help to accelerate the slow reduction in the cost of energy storage per kWh by encouraging more r&d investment.

This article originally appeared on Matter Network.

[photo credit: Flickr]

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“No Drama” Obama somehow managed to step in it again last week, plunging himself into the Skip Gates arrest and racial politics when he was meant to be drumming up support for health care reform.

If the measure of how badly the White House narrative veered off course is to observe that many of the Sunday shows spent more time on ObamaGates (I might have to trademark that one) than they did on health care, it is worth noting that Waxman-Markey is barely in the rear view mirror anymore. It does not appear to be on the Senate’s radar either.

Any hope of climate change legislation is rapidly fading and Waxman-Markey is poised to become another smudge on the road, steam rolled by the political process in much the same way the BTU Tax, Kyoto ratification, and previous energy-environment bills were.

What went wrong? I’m interested in your thoughts on whether cap-and-trade ever had a chance? Or, is strategy to blame for squandering the best chance at climate change legislation that we have had in a generation? If so, who dropped the ball? The White House? The House Dems? Senate leadership?

I’ll post my “three strikes” below, but what do you think killed cap-and-trade?

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HR 2454 or the Waxman-Markey bill, named after its two major supporters Henry A. Waxman and Edward J. Markey of the Energy and Commerce Committee, was passed in the US House of Representatives on June 27. Its major mandate is a cap and trade system though it does have other green practices scattered throughout. There has been a lot of talk recently, because of this bill, of the viability of a cap and trade system in the US. To evaluate the government’s ability to implement this new system we have to first understand it.

The basics of a cap and trade are fairly simple. It is a way to limit emissions through a credit system. Every business acquires a certain amount of credits; depending on the type of system these credits are either auctioned off or given away by the government. These credits represent the amount of carbon that businesses can emit. If the business cannot adhere to the limit of emissions their credits allow, they must buy credits from companies who are below their cap. Thus the companies who are responsible and limit their emissions are rewarded and those who are not as environmentally friendly are punished.

With this particular cap and trade system only 28% of the credits would be auctioned off over the next ten years. The other 72% will be given away for free, especially to heavy users of coal and other fossil fuels to help them cope with the change. The auctioning of the 28% will generate an estimated 276 billion dollars, which will be distributed to a range of places. Low and middle income families will receive money to help them deal with the increases prices passed down as a result. Big carbon emitters will also receive money on top of getting a good chunk of the free credits.

Where the trouble begins
The specifics of the cap and trade system embedded in HR 2454 are a little troubling. Understand that many businesses with currently high carbon emissions are going to have a hard time adjusting to meet the new standards, but giving them free credits is not the way to go. Auctioning off all the credits would generate government revenue – money that could be distributed to more of the people hardest hit from the resulting increase in prices of energy and goods. Maybe this increase in rebates would quell some of the opposition to the bill.

Besides implementing a cap and trade policy, the bill mandates a 17 percent cut in greenhouse gas emissions by 2020 and an 87% reduction by 2050. Considering the mandates being implemented in California and 21 other states (for instance, buildings will use net zero energy or have net zero carbon emissions by 2030), these reductions do not seem extreme.

The public response to this bill has not been good. Googling the bill generated several articles: almost all were in opposition. Sadly, people tote it as another method Obama has found to increase taxes. They claim it is an unnecessary step to solve a group of alarmists’ wild and false theory, Global Warming. Without arguing the validity of Global Warming, one friend put it to me this way:

“If the believers are wrong and Global Warming is not true then we have implemented changes that will improve our environment and the Earth, if the naysayers are wrong and Global Warming does exist and we do nothing, our cities are underwater.”

The United States is the economic leader of the free world and the most powerful nation on the globe, but we have never been a leader on sustainability. We haven’t signed on to the Kyoto Protocol, we have very few “Green” standards in place, and per capita we emit the most carbon out of any country in the world (19.6 metric tons/person/year compared to 3.7 tons/person/ year from second place China).

Many people claim we are alone in this ever-growing crusade to save the Earth. Interestingly, they claim Europe has given up on sustainability because it is not feasible and unnecessary. Amazing how facts can become so skewed. Not only has the EU accepted the Kyoto Protocol, they have also implemented strict green building standards, emissions limits for cars and many European Countries already have an existing cap and trade system in place. Interestingly, they implemented all of these environment-saving standards with their economies intact…

The US has always lagged behind Europe and other developed nations when it comes to environmental conservation measures. Though this bill is flawed it is a positive step forward in its intent and its power to reduce emissions. Nation-wide opinions need to change on the role of sustainability in our society and hopefully the success of this bill can be the catalyst.

[photo credit: Flickr]

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A key U.S. congressional committee has approved historic legislation that for the first time would put a cap and a price on carbon dioxide emissions. After weeks of debate and an intensive, multi-million dollar lobbying campaign by industry and environmental groups, the House Energy and Commerce Committee passed a bill calling for a 17 percent reduction in greenhouse gas emissions below 2005 levels by 2020 and an 83 percent reduction by 2050.

The bill passed by a 33 to 25 vote, largely along party lines, and the legislation now faces many hurdles — including debate by several other committees — before it will be considered by the full House and Senate later this year. Opposition to the bill from conservative Democrats and nearly all Republicans was so strong that, in order to win committee approval, Chairman Henry Waxman agreed to initially give away 85 percent of permits to emit carbon dioxide; President Obama had called for auctioning all permits. The 1,000-page bill, the “American Clean Energy and Security Act,” sets a declining cap on national carbon emissions that will eventually require all major sources of fossil fuels to purchase permits to emit CO2. The bill also calls for 15 percent of the country’s energy to come from renewable sources by 2020.

This article originally appeared on Yale Environment 360 at http://e360.yale.edu

[photo: flickr/said&done]

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