Senate Resolves to Address Climate Change

On Tuesday, June 28, the Senate passed comprehensive energy legislation. During debate on the bill, the Senate considered and voted on a number of climate change amendments, some of which were adopted into the bill. The outcome of these votes was: (1) approval of an amendment sponsored by Senators Hagel (R-NE) and Pryor (D-AR), which would authorize new financial incentives for clean energy technologies; (2) rejection of an amendment based on the McCain-Lieberman “Climate Stewardship Act,” which would cap U.S. greenhouse gas emissions at year 2000 levels; and (3) approval of a “Sense of the Senate” provision, which expresses a desire for Congress to enact a mandatory, comprehensive greenhouse gas reduction program so long as the program does not “significantly harm the economy.”

Hagel-Pryor Amendment. The Senate approved, by a vote of 66-29, an amendment offered by Senator Hagel (R-NE) and Senator Pryor (D-AK). The Hagel-Pryor amendment, which was based on the bills (S.883 and S.887) previously introduced by Senator Hagel, would provide of a range of financial incentives to U.S. firms for the demonstration and deployment of low-carbon-intensity technologies. The available incentives include direct loans, loan guarantees, standby default and interest coverage, and power production incentive payments. The Hagel-Pryor amendment places special emphasis on promoting the export of climate-friendly U.S. technologies to developing countries.

McCain-Lieberman Amendment. By a vote of 38-60, the Senate rejected an amendment based on the proposed Climate Stewardship Act, which was introduced by Senator McCain (R-AZ) and Senator Lieberman (D-CT). The McCain-Lieberman proposal aims to reduce U.S. greenhouse gas emissions to year 2000 levels by 2010 through an emissions trading program. When the Senate last voted on the McCain-Lieberman proposal in 2003, it was supported by 43 Senators. The 2005 version was substantially similar to the 2003 version, but it included financial subsidies for the construction of new nuclear power plants. These subsidies may have affected the support of four Democratic Senators who voted in favor of the 2003 version but voted against the 2005 version.

Sense of the Senate Resolution. After rejecting the McCain-Lieberman amendment, the Senate turned its attention to a non-binding “Sense of the Senate” resolution offered by Senator Bingaman (D-NM) with the support of Senator Domenici (R-NM), the Chairman of the Senate Energy and Natural Resources Committee. The resolution was offered after Senator Bingaman decided to withdraw his own proposed amendment for a comprehensive market-based greenhouse gas reduction program. Senator Domenici initially had indicated interest in Bingaman’s proposed regulatory program, but concluded that additional time for Senate consideration of some of the more complicated and controversial details of implementation was needed.

The sense of the Senate resolution passed by voice vote after a motion to table the amendment by Senator Inhofe (R-OK) failed by a vote of 43-54. The resolution states in part:

It is the sense of the Senate that Congress should enact a comprehensive and effective national program of mandatory, market-based limits and incentives on emissions of greenhouse gases that slow, stop, and reverse the growth of such emissions at a rate and in a manner that: (1) will not significantly harm the United States economy; and (2) will encourage comparable action by other nations that are major trading partners and key contributors to global emissions.

Kerry Resolution. After passing the Bingaman resolution, the Senate narrowly defeated, by a vote of 46-49, a resolution offered by Senator Kerry (D-MA) that would have directed the U.S. government to work more assiduously toward agreement with other countries on how to address climate change.

Energy Committee Hearings. Chairman Domenici has announced his interest in holding hearings in July on the recommendations relating to climate change from the report of the National Commission on Energy Policy (NCEP).

The hearings will consider the recommendations of the NCEP and the Bingaman legislative proposal, which is based in part on the recommendations of the Commission. The Bingaman legislative proposal would establish an economy-wide cap-and-trade program that is less stringent than the program proposed by Senators McCain and Lieberman. Starting in 2010, the program outlined in the Bingaman draft would establish declining annual caps on greenhouse gas emission “intensity.” The caps would be based on emissions per dollar gross domestic product and therefore adjusted for economic growth. In addition, the draft would provide that regulated entities could opt to pay a “safety valve” price instead of submitting allowances. Such a “safety valve” mechanism is designed to cap compliance costs. Finally, the Bingaman amendment would have regulated on an “upstream” basis, imposing allowance surrender requirements on fossil fuel suppliers instead of on sources of emissions.

Senator Domenici’s interest in holding hearings on a greenhouse gas reduction program may be complicated by jurisdictional tensions. In the past, Senator Inhofe, the Chairman of the Senate Environment and Public Works Committee and a staunch opponent of mandatory greenhouse gas reduction measures, has asserted that his committee has exclusive jurisdiction over legislation related to climate change.