Losing Momentum, US Senate Climate Change Bill Faces Challenges

Copyright © 2021 Energy Intelligence Group

Sparks are expected to fly this week when the Kerry-Graham-Lieberman climate change and energy bill is published and business and environmental groups weigh in on its merits and flaws. Despite the fanfare that is likely to accompany the announcement, the bill is running almost two months behind schedule and has been losing political momentum for an even longer period. Partisan battles over the legislation first came to a head last fall, when a vote on a cap-and-trade bill was boycotted by Republicans on the Senate's main environmental committee. The boycott forced the Democratic majority to bypass normal Senate procedures to pass it, thereby tainting the effort. The legislation was given new life when three senators of varying political persuasions -- Senators John Kerry, Lindsey Graham and Joe Lieberman agreed to negotiate a new bill. Their efforts are based on a "grand bargain" to impose a price on carbon emissions in return for expansions of offshore oil and gas drilling and nuclear power. The bill is expected to make electric utilities pay for their emissions of greenhouse gases and require them to generate a certain minimum percentage of their electricity from renewable resources. But half a dozen or so important elements promised by the senators could stall the legislation and prevent it from reaching the 60 votes needed to reach President Obama’s desk. Criticism has focused in particular on the idea of a "linked fee" for transportation fuels to fund the construction and repair of highways and lower the budget deficit. Many senators who have not yet decided how they will vote are wary of being accused of supporting an additional tax on gasoline. "If it's a gas tax -- that would not be looked on well by the public,” said Sen. Susan Collins who is considered a swing vote for the legislation. "Consumers have to be protected and business has to have predictability." Sensitive to such criticism, the trio of senators is trying to find a way of raising revenues from fuel sales that cannot be attacked as a new tax on gasoline and diesel fuel. One option would require US refiners to purchase emission allowances that can't be traded or auctioned and would be linked to the price of carbon paid by utilities in the previous quarter. Another touchy issue is the demand by some senators for an import tariff or some other kind of protective measure for industries that produce chemicals, cement, steel and other energy-intensive goods. US heavy industries want to make sure they compete on a level playing field against producers from developing economies that may not sign up to a binding global climate treaty that would restrict their emissions. But there are concerns that such measures could violate World Trade Organization rules and open the US to charges of "protectionism" from other countries. "Trade incentives are going to be very hard to get," said retired Senator J. Bennett Johnston, an energy lobbyist who chaired the Senate’s Energy and Natural Resources Committee in the 1990s. "Every provision is highly controversial and highly complicated. And the one thing that people miss on legislation is the clock. I don’t see that they have the time." Over the next several weeks energy legislation will have to compete for time on the Senate schedule with contentious financial reform legislation and the confirmation process for a new Supreme Court justice. The possible introduction of major immigration legislation this summer could also make it more difficult to pass climate change and energy legislation. Bill Murray, Washington

Ineos has announced additional investment to decarbonize Scotland's sole remaining oil refinery as the country aims to achieve net-zero emissions by 2045.
Wed, Sep 22, 2021