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Environment • Aboriginal • Energy


May 01, 2010

US Senate will take a third crack at passing climate change legislation

Canada’s federal climate change strategy is on hold until the Americans firm up their own intentions. So you should know that U.S. Senators John Kerry and Joe Lieberman are taking a third and likely final crack at pushing greenhouse gas emission cuts, backed by a cap-and-trade system, through a fractious Senate. Released May 12, 2010, the omnibus American Power Act promises to cut CO2 emissions 17% below 2005 levels by the year 2020 and 80% by 2050.

The Bill is seen as a compromise between the American Clean Energy and Security Act (the so-called Waxman-Markey Bill), passed by the House on June 26, 2009, and President Obama’s energy proposals. However, political observers rate the chances of the Bill’s success as no better than ‘even money’.

The Bill would impose the cap-and-trade system only on major emitters, like coal-fired power plants, while exempting farmers and most small and medium-sized industry. Just those facilities that produce more than 25,000 tons of carbon pollution annually – about 7,500 factories and power plants – must comply with reduction targets. Producers and importers of refined products will not participate in the carbon market, but will purchase allowances at a fixed price from the allowance auction. The Bill would implement a “hard price collar” to bind carbon prices, which would rise at a fixed rate over inflation. An introductory floor price would be set at $(US)12 a ton, increasing at 3% over inflation annually, with a ceiling price set at $25 and increasing at 5% over inflation. Individual states would not be permitted to operate their own cap-and-trade programs for greenhouse gases; those that are, will have them shut down and will be compensated.

Two previous versions of the Kerry-Lieberman legislation failed to garner adequate support. Will the third time prove a charm? On the up side, the drafters have tried to provide something for everyone. There are loan guarantees, risk insurance and other perks for nuclear power, two billion dollars a year for clean coal and carbon storing technology, seven billion for highways and mass transit, incentives for converting trucks and heavy duty vehicles to natural gas, even relaxed rules for offshore drilling (probably a tougher sell at the present than they hoped).

On the down side, the bill is being forced to join the queue behind a major Senate debate on immigration. It might even get pushed back beyond the scheduled mid-term elections. And if the Democrats lose their tenuous control of the Senate, then all bets are off.

In any event, the U.S. Environmental Protection Agency insists that if all efforts of Congress fail, the authority will begin the regulation of greenhouse gases on its own. We will keep on top of this story and alert you to any new developments.

In the meantime, if you want to dive into the full 987-page Bill, there’s a link on Senator Kerry’s website , which has also posted a short four-page summary available online at

For more information, contact:

Paul Manning
T:(416) 862-4843