Hill Heat

From CQ:

Energy legislation remained in limbo Friday, stalled by tight vote counts, partisan squabbling and fresh veto threats from the White House. Floor consideration was likely to be delayed until Saturday — at best.

Democrats at midday were considering making changes to the energy tax package (HR 2776) to placate oil-state Democrats upset about treatment of the oil and gas industry.

There “may be some slight changes,” said John B. Larson, D-Conn., vice chairman of the Democratic Caucus, after a meeting in the office of House Speaker Nancy Pelosi, D-Calif. Larson would not elaborate on what the changes might be, but Democrats have been struggling to ensure that they can muster a majority vote in support of the energy package. They cannot count on support from many, if any, Republicans.

House Democratic leaders still insist the chamber will take up the energy tax bill and a broader energy measure (HR 3221) before it leaves for the month-long August recess. The Rules Committee was expected to draft a rule later Friday, with floor votes Saturday. But even that could prove optimistic.

Democratic aides said they expect a prolonged debate on a fiscal 2008 defense spending bill (HR 3222) that is set to go to the House floor ahead of the energy package. Republicans were threatening to use parliamentary delaying tactics on that bill.

“We didn’t get the rule for the energy package done yesterday. That means the earliest it could be taken up would be Saturday,’’ said a senior Democratic aide.

The proposed amendments to HR 3221 have been submitted and are available for review, as are those for HR 2776.

Of significance for HR 3221:

• Both major CAFE standards bills, Markey-Platts, and Hill-Terry, were withdrawn. Barton’s CAFE bill is still on the slate as Amendment #62
• Udall-Platts (HR 969), the Renewable Energy Standard, is on the slate as Amendment #96 and probably has enough votes for passage
• Herseth Sandlin submitted Amendment #81 to change the Renewable Fuels Standard program to require the production of 36 billion gallons of renewable fuels by 2022
• Boustany’s Amendment #9 makes the Secretary of Energy a statutory member of the National Security Council
• Shay’s Amendment #105 doubles the funding for the Weatherization Assistance Program

HR 2776:

• McCrery submitted the Republican substitute for the tax package as Amendment #7

Sens. Lieberman and Warner have unveiled the skeleton of their cap-and-trade legislation, America’s Climate Security Act.

Cap

“The bill will specify an annual aggregate tonnage cap, expressed in terms of Co2 equivalence, for each year from 2012 through 2050. The cap that the bill will specify for 2012 will be the 2005 emissions level.” And: 10% below 2005 by 2020, 30% by 2030, 50% by 2030, 70% by 2050.

Allowances

• Each year 20% of that year’s National Emission Allowance Account for free to covered entities within the industry sector.
• In 2012 20% of the NEAA will be allocated to the electric power sector. A portion of that 20% will be free to new entrants to the electric power sector. The allocation will be at 20% from 2012 – 2017, then transition to 0% by 2035.
• 10% will be allocated to load-serving entities to defray energy-cost impacts on low- and middle-income consumers and to promote demand-side energy efficency, some of it for free to rural electric cooperative facilities.
• 8% will be allocated to covered entities who have taken pre-enactment action to reduce greenhouse gas emissions. That 8% will transition to 0% by 2020.
• Each year 4% will be allocated to state governments, half based on population, half on historical state emissions.
• Each year 4% will be allocated to US coal mines.
• Each year 7.5% will be allocated to farmers, foresters, and other landowners to store carbon in soils, crops, and forests.
• Each year 2.5% will be allocated to the transportation sector.

Allowances for Auction

• 24% in 2012 will go to auction under the aegis of the Climate Change Credit Corporation; rising to 52% by 2035.

Auction Proceeds

• 20% for a public-private partnership for power-sector technologies including CCS
• 20% for public-private partnership for CCS
• 20% for transportation sector technologies and reducing miles traveled
• 10% for environmental mitigation
• 10% for SO2, NOx, mercury emission reduction from coal plants
• 10% to state and local for low-income community mitigation
• 10% for international mitigation

CCS

CCS regulations and a legal framework for the Federal assumption of liability for geological storage will be proposed by a study group within two years of enactment.

Carbon Market Efficiency Board, Banking

• Up to 15% of the allowances a covered entity must submit may be comprised of borrowed allowances, with an interest rate set by the Board.
• Up to 15% of the allowances that a covered entity must submit may be comprised of offset credits.
• Up to 15% of the allowances that a covered entity must submit may be comprised of allowances purchased on a certified foreign greenhouse gas emissions trading market.
• the Board may increase the number of emissions credits if the average daily closing price of an emissions credit exceeds the upper end of the range predicted by the CBO prior to the start of the program.
• The Board may adjust the terms and interest rates of the emissions loans “as needed to avoid significant harm to the economy” and “in the event of more extreme economic circumstances” to raise the cap temporarily provided that subsequent year’s caps are tightened so that cumulative reductions are unchanged.

Offsets

“The bill will set forth detailed, rigorous requirements for offsets, with the purpose of ensuring that they will represent real, additional, verifiable, and permanent emissions reductions.”

Foreign Tariffs

The President will be authorized to require that importers of GHG-intensive products submit emissions allowances of a value equivalent to that of the allowances that the US system effectively requires of domestic manufacturers, if it is determined that nation has not taken commensurate action to reduce GHG emissions.

Last weekend, Sen. Barbara Boxer led a delegation from the Environment and Public Works Committee to Greenland:

• Barbara Mikulski (D-Md.)
• Ben Cardin (D-Md.)
• Bill Nelson (D-Fl.)
• Frank Lautenberg (D-N.J.)
• Amy Klobuchar (D-Minn.)
• Sheldon Whitehouse (D-R.I.)
• Johnny Isakson (R-Ga.)
• Bob Corker (R-Tenn.)
• Bernie Sanders (I-Vt.)

Inhofe sent staffer Mark Morano, a former writer for the rightwing Cybercast News Service. Richard Alley of Penn State University, the lead author on the United States Intergovernmental Panel on Climate Change was the scientific advisor on the trip. They met with Arkalo Abelsen, Greeland’s environmental minister.

• Barbara Boxer: Urge Your Senators to Support the Sanders/Boxer Global Warming Bill!

The New York Times has an editorial on the energy bill to be debated this week (HR 3221): An Incomplete Energy Bill.

The House will begin debating Friday on a generally useful energy bill that would increase energy efficiency, encourage more responsible oil and gas development on public lands and stimulate investment in cleaner fuels. Yet the bill is incomplete. If it truly hopes to address the problems of global warming and energy independence, three vital issues need to be addressed.

The three missing components:

• CAFE Standard (Markey-Platts, HR 1506)
• Renewable Energy Standard (Udall, HR 969)
• Low-Carbon Fuel Standard

This is also the Union of Concerned Scientists platform.

Rep. Dingell, meanwhile, wrote an op-end on the carbon tax: The Power in the Carbon Tax. It’s a critical insight into the thinking of perhaps the most influential person in Congress in shaping global warming policy.

I apparently created a mini-storm last month when I observed publicly for at least the sixth time since February that some form of carbon emissions fee or tax (including a gasoline tax) would be the most effective way to curb carbon emissions and make alternatives economically viable. I said, as I have on many occasions, that we would have to go to some kind of cap-and-trade system for carbon emissions.

The press conference has been announced for 10:30 AM tomorrow.

In this morning’s markup, the Senate Environment and Public Works Committee approved S. 1785, which has the following straightforward text:

Section 209 of the Clean Air Act (42 U.S.C. 7543) is amended by adding at the end the following: (f) Waivers of Preemption-

1. PENDING REQUESTS- Not later than 30 days after the date of enactment of this subsection, but in no case later than September 30, 2007, the Administrator shall issue to the Governor of each applicable State a decision on each request for a waiver of preemption under subsection (b) that—
   1. has been submitted by the State; and
   2. is pending as of the date of enactment of this subsection.
2. SUBSEQUENT REQUESTS- With respect to a request for a waiver of preemption under subsection (b) (including such a request submitted by a State that has adopted and enforced certain standards as described in section 177) that is submitted by a State after the date of enactment of this subsection, not later than 180 days after the date on which the Administrator receives the request, the Administrator shall issue to the Governor of the State a decision on whether to grant the waiver.

It passed by a party-line 10-9 vote.

On July 30, Speaker Pelosi set the agenda for her energy independence initiative, which she had originally hoped to complete by July 4th. The legislative package will be introduced to the floor in two parts:

• the Renewable Energy and Energy Conservation Tax Act of 2007 (HR 2776) from the Ways and Means Committee, reported out at the end of June
• and the New Direction for Energy Independence, National Security, and Consumer Protection Act (HR 3221), which needs to be signed off by the relevant committees

HR 2776 provides tax incentives for renewable electricity production, biofuels, efficient appliances, plug-in hybrids, and renewable energy bonds. It pays for these incentives buy reducing oil and gas royalties and closing the “Hummer” tax loophole.

HR 3221 is a wide-ranging omnibus, under the jurisdiction of the following committees:

• Education and Labor (Title I: green jobs)
• Foreign Affairs (Title II: foreign assistance and trade)
• Small Business (Title III: small business sustainability initiative)
• Science and Technology (Title IV: research funding—HR 364, HR 906, HR 1933, HR 2773, HR 2774, HR 2304, HR 2313)
• Agriculture (Title V: biofuels)
• Oversight and Government Reform (Title VI: carbon-neutral government)
• Natural Resources (Title VII: Energy Policy Act of 2005 reforms, changes in oil and gas royalties, wind energy, CCS, wildlife, oceans)
• Transportation and Infrastructure (Title VIII: public transportation, highways, shipping, public buildings)
• Energy and Commerce (Title IX: appliance, lighting, and building efficiency, smart grid, renewable fuel infrastructure, plug-in hybrids)
• Armed Services (it’s unclear which components are under its jurisdiction)

All amendments to HR 3221 must be introduced by Wednesday afternoon. The Rules Committee will convene Thursday at 3 PM to establish the debate rules and timetable.

After the amendment process and ratification, the package will then go into conference to be reconciled with the Senate energy bill, SA 1502, passed mid-June.

From CQ.com: Broader Policy Overhaul May Be in Store as Senate Takes Up Farm Bill.

Summary:

• Senate will take up bill after August recess; making the September 30 deadline unlikely
• Sen. Harkin, Ag Committee chair, plans much higher land-conservation program funding than in House bill (HR 2419)
• Harkin and Grassley (R-Iowa) plan to cap annual payments to $250,000 from current cap of $360,000; HR 2419 has no cap
• Sen. Lugar (R-Ind.) supports FARM21, Ron Kind’s proposal (H.AMDT 700)
• Sens. Durbin (D-Ill.) and Brown (D-Ohio) introduced the Farm Safety Net Improvement Act last week, which ties “counter-cyclical” payments (aka crop subsidy payments) to revenue (price times yield) instead of the target price (see the American Farmland Trust page)
• Nutrition advocates are looking for better than the $4 billion increase in the House bill
• Tax provisions to pay for the Senate bill will generate Republican resistance

Full text below the fold.

Last week, Sen. Mary Landrieu (D-La.) presented the Containing and Managing Climate Change Costs Efficiently Act (S. 1874), a piece of legislation authored by Joe Lieberman’s former environmental advisor, Timothy Profeta, who now heads the Nicholas Institute for Environmental Policy Solutions at Duke University.

The proposal would establish the Carbon Market Efficiency Board which would oversee the emissions trading market established by cap-and-trade legislation. The board would operate much like the Federal Reserve Board, providing information on price and low-emission technology investment trends to Congress and the public, and it would adjust the price of emissions permits when a “market correction” is needed. The first measure is to expand companies’ ability to “bank” permits, or borrow permits against future year reductions. The second measure, to be used if high prices are not relieved by the first measure, is to add a slightly larger number of permits to the market. This temporary increase would be compensated for by reducing available permits in a later year, when more options have been developed.

Profeta testified about the proposal in last week’s hearing. His white paper goes into further detail.

The bill is intended to be folded into the Lieberman-Warner package to be presented as a discussion draft at the end of the week.

John Warner (R-Va.), Lindsey Graham (R-S.C.), and Blanche Lincoln (D-Ark.) are cosponsoring the bill, in a bipartisan show of strength by pro-business Senators. [The League of Conservation Voters/Chamber of Commerce scores for the senators are: Warner 14%/100%, Graham 29%/92%, Landrieu 43%/75%, Lincoln 43%/67%. By way of comparison, Lieberman is 71%/44%.]