BP: The End of Cap & Trade?

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Senator Chuck Schumer, the No. 3 Senate Democrat, this morning on MSNBC’s Morning Joe said the Senate will bring up Senate Energy Committee Chairman Jeff Bingaman’s energy bill in July as the underlying legislation for energy reform as Dems grapple with how to deal legislatively with the fallout from the BP gusher in the Gulf. If true, and Schumer seems to be walking back his comments this morning, this would be the first real movement on a bill that Bingaman passed out of his committee in June with the support of four Republicans and the oil and gas industry. At the time, all efforts were focused so much on Kerry/Lieberman that Bingaman’s measure –  reviled by environmental groups as too weak — got a bit lost. Bingaman’s bill includes a renewable electricity standard — requiring that 15% of all U.S. energy is drawn from renewables by 2021; it would overhaul federal financing of renewable energy projects; update the electricity grid to include renewable sources; and increase efficiency measures. The bill would also increase offshore drilling — a measure that will likely be stripped.

Making Kerry/Lieberman the underlying bill would have a lot of obvious complications: it also includes offshore drilling incentives in addition to fairly unpopular gas taxes. But, more importantly, it includes a controversial carbon dioxide cap and trade scheme.

Bingaman’s bill does not include cap and trade, or as Republicans call it cap and tax. For years, Democrats and a dwindling number of Republicans have tried to pass cap and trade: the Lieberman/McCain bill failed 43-55 in 2003 and again in 2005 38-60 (McCain’s no longer a supporter of the bill). Lieberman/Warner failed 48-36 in 2008 (Virginia’s John Warner has since retired). Schumer’s suggestion this morning that Kerry/Lieberman be added by amendment to Bingaman’s bill — and here he really means the cap and trade program — essentially means the Democratic leadership will give it an up and down vote but they know it won’t garner the 60 votes it needs to pass. Even if Lindsey Graham, Kerry/Lieberman’s once-and-remains-to-be-seen-future GOP co-sponsor came back on board, it’s pretty clear that without offshore drilling and other sweeteners attached, he would have a hard time bringing on board many — if any — fellow Republicans.

With the RES, the grid and efficiency provisions and, mostly likely, nuclear energy incentives popular with President Obama and most Republicans, possibly loaded onto one bill, if it passes the Bingaman legislation could take with it all of the sweeteners that Dems had been attaching to cap and trade in order to see it done. In other words, if Bingaman passes it would likely be years — if not decades — before cap and trade passes the Senate. On the other hand, with the EPA coming out with greenhouse gas regulations this week, they may not have to worry about cap and trade.

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