Bridges Trade BioRes • Volume 10 • Number 9 • 14th May 2010

Graham Absent as US Senators Unveil Climate Bill

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United States Senators John Kerry and Joe Lieberman introduced new draft climate legislation on Wednesday, ten months after the House of Representatives passed its own bill to cut US emissions of greenhouse gases.

Senators Kerry (a Democrat) and Lieberman (an Independent) are the chief sponsors of the nearly 1,000-page piece of legislation, which aims to bolster the US contribution to addressing climate change while spurring economic growth and creating jobs at home. The bill is in line with the United States’ official international position to cut its carbon dioxide emissions by 17 percent below 2005 levels by 2020.

The bill lays out an offsetting programme that allows polluters to receive credit for emissions reductions. The bill would make as much as two billion tons in offsets available each year, with 75 percent aimed at domestic programmes and 25 percent reserved for international environmental efforts.

Senator Lindsey Graham, a Republican and an initial sponsor of the bill, had worked closely with Kerry and Lieberman to craft legislation that would appeal across party lines. But Graham split with the other two senators last month after Congressional Democrats announced that immigration reform would take priority over new climate legislation (see Bridges Trade BioRes, 30 April 2010). His withdrawal delayed the bill’s release, which was initially scheduled for 26 April.

Still, despite Graham’s absence, Lieberman told reporters he believes the Republican will vote for the bill.

Border measure language toned down

As expected, the Kerry-Lieberman bill includes language that would allow “border measures” - also known as carbon tariffs - on imports from countries that have not enacted strict regulations on emissions of greenhouse gases, but much of the strong language used to promote the bill is absent from the actual text.

“To achieve our environmental objectives in the event that no global agreement on climate change is reached, we will require imports from countries that have not taken action to limit emissions to pay a comparable amount at the border to avoid carbon leakage and achieve our environmental objectives,” reads a communiqué to US manufacturers on Kerry’s website.

However, references to “border measures” or “adjustments” in the bill have been axed in favour of an “International Reserve Allowance Program.” Reference to the Program is found under Title IV “Job Protection and Growth,” Subtitle A “Protecting American Manufacturing Jobs and Preventing Carbon Leakage.”

The bill would also allocate more emission allowances to certain “trade-exposed” industries. This measure is designed to “protect and promote manufacturing jobs in the United States and prevent carbon leakage to other countries.”

US industry generally voiced support for the bill, with the understanding that measures to protect jobs are fully implemented. “This leakage of emissions and jobs has the potential to undermine both the economic and environmental goals of energy and climate legislation,” said Leo Gerard, president of United Steelworkers - the largest union in the US. Gerard said border measures must be implemented to deal with “products from countries that do not share America’s commitment to reducing greenhouse gas emissions through effective, meaningful and comparable policies.”

Experts have speculated that in light of the stiff Republican opposition on the bill, it may not pass Congress before 2013 - after the next presidential election.

The US House of Representatives passed its own draft climate legislation last summer. That bill also included a measure that would impose a form of “carbon adjustment” at the border, although the provision would not take effect until 2014 (see Bridges Trade BioRes, 26 June 2009).

Offshore oil a sensitive issue in US

The bill contains provisions encouraging offshore drilling, but states would be permitted to invoke a 120 kilometre buffer zone along their coasts. The massive Gulf of Mexico oil leak has pushed energy issues to the fore in the United States in recent weeks, with much public outcry over a perceived lack of emergency response measures. In light of this, Graham said in a statement that in addition to the immigration issue, the timing of the bill’s release was inappropriate.

However, President Barack Obama countered that the environmental disaster highlights the need for such a bill. “The challenges we face - underscored by the immense tragedy in the Gulf - are reason to redouble our efforts to reform our nation’s energy policies,” Obama said, adding that he hopes the bill passes this year.

The bill envisions a 40 percent reduction in foreign oil imports by 2030. Reuters reports that oil refiners will be subjected to new federal requirements as energy efficiency standards are applied to vehicles. By 2030, free pollution permits provided to utilities will come to an end as they are transitioned into a payment system.

More information

An official 21-page summary of the bill is available here.
The full 987-page American Power Act (APA) is available here.
The communiqué addressing the manufacturing sector aspects of the bill (including border measures) can be found here.

ICTSD reporting; “US unveils climate bill,” STRAITS TIMES, 13 May 2010; “Global Cap And Trade Decades Off, U.S. Unveils Plan,” REUTERS, 13 May 2010; “Industry welcomes US climate bill, but fears for manufacturing jobs,” BRIGHTER ENERGY, 13 May 2010; “After long wait, Senate takes up climate,” AGENCE-FRANCE PRESSE, 12 May 2010; “Kerry, Lieberman to end the suspense with climate bill rollout today,” CLIMATEWIRE, 12 May 2010.