Sens. John Kerry (D., Mass) and Joe Lieberman (I., Conn.) unveiled their energy and climate change legislation today, a bill that looks more or less dead in the water with the loss of Sen. Lindsey Graham (R., S.C.) as a cosponsor.
The perversely-named “American Power Act” retains the cap on carbon emissions “credits” and a tax of at least $12 per ton on carbon produced by large emitters, while imposing broad new regulations on industrial, transportation, and energy infrastructure. It aims to reduce carbon emissions by 17 percent over ten years and 83 percent over 40 years. The tax “floor” of $12 would be indexed at inflation plus 3 percent, while the tax “ceiling” would be set at $25 and be indexed to inflation plus 5 percent. The proposed federal cap-and-tax system would eliminate existing state-run efforts, and pay off those states for lost revenue.
At the same time, the bill includes a grab-bag of costly subsidies to affected industries, including billions in cash subsidies and tax credits to the transportation industry, loan guarantees for nuclear-plant builders, and a number of exemptions from emissions caps and other protections for favored industries like steel and Big Ag. The bill also appears to contain a plethora of government-funded “pilot programs” for the green-tech sector in which so many high-profile supporters of cap-and-trade hold large financial stakes.
In light of the Gulf spill, Kerry-Lieberman makes a complete 180 on offshore drilling. While earlier drafts of the bill were aimed at expanding offshore drilling, the released version makes it more difficult — if not impossible — for the federal government to pursue such efforts, allowing states to opt out of drilling up to 75 miles off their coasts. States will also be able to veto any drilling efforts that would have a major adverse impact in the event of a drilling accident.
Reactions from usual-suspect stakeholders have been slow to come in, as their lobbying and policy arms are no doubt balancing the bevy of direct and indirect taxes against the dollar-value of the subsidies and giveaways.
UPDATE: It strikes me that I left out the “(and Tax)” part of the headline in my description of the bill. The Kerry-Lieberman legislation would have gasoline producers pay fixed-price emissions allowances from the government, outside of the cap-and-trade market. The cost of these credits would likely be borne in full by consumers in the form of increased gas prices.