Plan B

By Evan Juska, Senior Policy Manager, The Climate Group

The climate and energy bill that passed the House of Representatives last year is dead in the Senate.  So what’s “Plan B?”

For the past two years, climate and energy proposals in the US Congress have been built on several key principles:

• An economy-wide cap on emissions (because it’s the most effective way to reduce emissions),
• An undistorted carbon market (because it is the most efficient way to minimize costs),
• Compensation for regulated companies (because you need their support), and
• Strong emission reduction targets (because the point is to address climate change). 

While this approach had support from a wide range of companies, environmental organizations and civil society groups, it suffered from a fatal flaw: it could not secure support from 60 Senators. 

So what’s next?

As we speak, Senators John Kerry (D-MA), Lindsey Graham (R-SC) and Joseph Lieberman (I-CT) are working on Plan B - a new, bi-partisan climate and energy bill designed to - above all - secure 60 votes. 

To accomplish what its predecessors could not, the new model will likely break with the key principles of past legislation. 

• Instead of an economy-wide cap on emissions, it may start with a cap on only the electricity sector (to limit opposition from other sectors)
• Instead of an undistorted carbon market, it might put a price “collar” (floor and ceiling) on allowance prices (to provide more cost certainty) 
• Instead of significant compensation for regulated companies, it might give more compensation to consumers (because, in an election year, you need their support the most) 
• Instead of strong emission reduction targets, it might lessen those targets (because the point is to secure 60 votes)

And even to make this formula palatable, it will go farther than past bills on the energy side, including much more support for nuclear power, clean coal and offshore drilling for oil and natural gas.

So is Plan B enough to solve climate change? 

No, it’s not.  But it could be the start of an effort that can.  After overcoming the initial challenge of passing legislation, Plan B could be expanded in future years to become the comprehensive solution many environmental groups are looking for. 

The real problem is that the alternative option doesn’t look any better.  Unfortunately, Senators Kerry, Graham and Lieberman seem to be the only people in Washington at the moment with the courage to talk about a cap on emissions at all.  With the election of Scott Brown in Massachusetts demonstrating that no Democratic seats are safe this November, most Democrats want to avoid a cap on emissions altogether - preferring instead to take up an energy-only bill this year, and a cap on emissions later. 

Make no mistake, taking an energy-only bill first, means taking a climate-only bill never (or not soon).  If they can’t pass a cap on emissions with loads of incentives for energy, which increase energy security and create jobs, how will they pass it without them?

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