On Wednesday, the Senate Environment and Public Works Committee will unveil a bill that aims to make deep cuts in U.S. greenhouse-gas emissions in the near and long term while setting a limit on the cost of carbon allowances, according to several sources and a close-to-final version of the bill obtained by The Washington Post.
The bill, which is still being revised, would make it easier for businesses to compensate for their carbon pollution by expanding the available pool of domestic offsets by 40 percent compared with the House-passed climate bill authored by Reps. Henry A. Waxman (D-Calif.) and Edward J. Markey (D-Mass.). It does not specify how pollution allowances would be allocated, which is sure to be a key battle as the bill moves forward.
The Senate bill, authored by Environment and Public Works Committee Chairman Barbara Boxer (D-Calif.) and Foreign Relations Committee Chairman John F. Kerry (D-Mass.), has a mix of provisions targeted at both liberals and conservatives. It calls for cutting the nation's emissions 20 percent from 2005 levels by 2020 and 83 percent by 2050 -- deeper reductions than in the House bill. It is also deficit-neutral and would make carbon offsets more affordable.
Still, environmentalists hailed the bill as an ambitious effort to address global warming while providing some reassurances to the U.S. business community. It includes provisions aimed at curbing speculation in the carbon market -- a concern of senators such as Byron Dorgan (D-N.D.) -- and would reserve some carbon allowances in a market-stability fund that would help ensure that the price of those allowances would not exceed $28 per ton. This provision, known as a "carbon collar," would not be likely to kick in for some time, since the Congressional Budget Office has predicted that the cost of carbon under a cap-and-trade system would probably be $26 per ton by 2019. That is what a company would pay to compensate for each ton of carbon pollution it emits.
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