Views and debates on climate change policy
Home | Panelists | Staff Blog | RSS

Post Carbon

Updated: Climate bill has new drilling protections

updated 10:11 p.m.

By Juliet Eilperin

The energy and climate bill Sens. John Kerry (D-Mass.) and Joseph I. Lieberman (I-Conn.) will unveil Wednesday will give states the right to veto offshore oil drilling in a neighboring state, according to sources briefed on the plan.

The two senators, who are going ahead and introducing the bill without their longtime ally GOP Sen. Lindsey Graham (S.C.), have tweaked the bill in a few ways to address concerns raised by the recent oil spill in the Gulf of Mexico. It requires an Interior Department study to determine which states could be economically and environmentally affected by a spill.

Those affected states would then be able to veto drilling by passing a law. Those states that are able to go ahead with drilling will retain 37 percent of the federal revenue generated by that activity.

Any state will be allowed to opt out of drilling that would occur in waters within 75 miles of its shore.

The modifications may please Democratic offshore drilling opponents such as Sens. Robert Menendez (N.J.), Frank Lautenberg (N.J.) and Bill Nelson (Fla.), but might keep some Republicans from endorsing the measure.

Overall, the plan returns more money to consumers--two-thirds of the revenue generated from auctioning carbon allowances in the utilities sector--and has more limited trading options than the House-passed climate bill.

In the utilities sector, for example, trading can only be conducted by entities that are covered under the federal carbon cap. That will curb the creation of a secondary carbon market, something that senators such as Byron Dorgan (D-N.D.), Maria Cantwell (D-Wash.) and Susan Collins (R-Maine) have argued against.

The transportation sector will not have any allowance trading, sources said. Instead, companies will have to buy quarterly carbon allowances that would be based on the average price in the previous quarter; the fee would be tacked on at a stage known in the industry as "the rack," which is after the fuel has left the refinery but before it reaches gas stations.

Many of the other elements of the plan have already been publicly reported. The legislation would establish a price collar for carbon allowances in the utilities sector, with a $12 floor that will increase annually by 3 percent plus inflation and a $25 ceiling that will increase annually by 5 percent plus inflation.

While the prospects for the bill's passage remain unclear at best, environmental advocates welcomed its upcoming introduction.

"The Kerry-Lieberman bill jump starts the Senate clean energy and global warming debate," said Daniel J. Weiss, who directs climate strategy at the Center for American Progress Action Fund. "The BP oil disaster has increased Americans' support for clean energy policies that boost investments that would reduce oil use, cut pollution and create jobs. President Obama and Senate leaders must take the reins from Kerry and Lieberman to achieve these goals."

But critics such as the Competitive Enterprise Institute's Myron Ebell, whose libertarian think tank accepts money from energy interests, said the proposal would raise costs for average Americans.

"The bill crafted by Kerry and Lieberman - and sometimes Lindsey Graham
- manages to have something to harm everyone except big business
special interests," Ebell said.


Juliet Eilperin

 |  May 11, 2010; 10:11 PM ET Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati  
Previous: Salazar to split MMS into two agencies | Next: Army Corps speeds La. barrier island permitting


Please report offensive comments below.

The best way to control the oil spill in the Gulf is to lower Robert Gibbs, Barney Frank, and Napolitano directly into the spill so these gas bags can extinguish the flow.

Posted by: nmg3rln | May 23, 2010 2:08 PM
Report Offensive Comment

The recent and ongoing horrendous environmental disaster that nobody knows how to handle, particularly BP, should be a wake-up call against offshore drilling. It demonstrates that our politicians need to stop jumping on the bandwagon to "drill, baby drill"...change your mind yet, Sarah? Even BP's practice drill for such an event just aired on TV, demonstrated that oil spill containment and reclamation was a complete failure. It seems to me that BP and others should have been required to have procedures in place that were tried and true before they began drilling anywhere offshore. I doubt we will recover from this horrific "accident" and BP needs to be held fully accountable and a cease and desist order should be issued immediately.

Posted by: poescrow | May 16, 2010 8:10 AM
Report Offensive Comment

Do you have any reliable data to substantiate your claim that we are "paying Hundreds of Billions Right Now for Health and Environmental damages caused by Oil, Coal and Livestock industries pollution"?

Posted by: snorbertzangox | May 12, 2010 4:55 PM
Report Offensive Comment

In 2009 The United States used 17 Million Barrels/day, produced 5.1 million barrels/day domestically, and imported 12.4 million barrels/day (over 60 percent), of which 6 Million Barrels/day come from the Middle East (OPEC).

Our dependence on Oil is funding Terrorist organizations and reliance on Coal is Poisoning the Communities and Water where it’s mined, transported and burned.

We currently use 25% of the world’s Oil while we have only 3% of it. No amount of domestic drilling will adjust that number even a percentage point or have any effect on the price of Oil on world markets as Gulf Coast Drillers enjoy both Public Subsidies and Tax exempt status as the Oil is sold on the Open market.

What will have the greatest effect on Reducing USA Dependence on Oil is “Using a Lot Less” of it by;

• Ending Wall Street Energy Derivative speculation;
• Improving Transportation Efficiency;
• Producing Domestic Biofuels;
• Developing Freight Rail (such as along the I-81 corridor);
• Enacting a Feed-In-Tariff for Wind, Solar, Biofuel, and Biomass;
• Enacting a strong Renewable Energy Portfolio Standard of 25% by 2025,
• Pricing Carbon from Large Scale Polluters
• Decoupling Energy Utility earnings from increased Sales

These actions provide the greatest Bang-for-the-Buck for Energy Jobs and Investment without sacrificing other Multi-Billion dollar industries and White Sand beaches.

We are all paying Hundreds of Billions Right Now for Health and Environmental damages caused by Oil, Coal and Livestock industries pollution. Make them pay Their Rightful Share for the Pollution they cause and it will Improve our both Economy and National Security.

Remember when JOBS was our biggest issue? Well it still is for Millions of Americans.

Unfortunately the Gulf Coast Oil spill Disaster means a few more Tens of Thousands from the Tourism and Commercial Fishing Industries will soon be out of work.

Posted by: liveride | May 11, 2010 3:03 PM
Report Offensive Comment

Post a Comment

RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company