Senators rebrand, recast climate bill as 'cap and trade' becomes politically toxic

It's an acknowledgment that the term cap and trade has itself become a political liability.

“Cap-and-trade in conservative circles is widely considered a dirty phrase, right up there with abortion on demand,” said Frank O’Donnell, president of the advocacy group Clean Air Watch.

That leaves Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) moving on two fronts: Crafting a wholly different bill than last year’s House cap-and-trade plan, and continuing a re-branding campaign to revive the fortunes of climate legislation.

Graham is quoted in Saturday’s Washington Post stating that “cap-and-trade is dead.” But what he told New York Times columnist Tom Friedman for Sunday’s column is probably closer to the mark: “Cap-and-trade as we know it is dead.”


While the Senate trio’s plan will differ radically from the sweeping “economy-wide” House cap-and-trade bill approved last year, it likely won't abandon cap-and-trade entirely.

The senators’ retreat – rhetorically complete, substantively partial – follows months of attacks on cap-and-trade by Republicans, who have labeled it “cap and tax” and said other unfriendly things.

“It's possible,” notes one activist, “that ‘cap and trade is dead’ means the phrase will not be uttered again.”

Sources on and off Capitol Hill believe the Senate plan – which remains under construction – will establish different types of controls for different parts of the economy. This includes a cap on power plant emissions, while addressing emissions from motor fuels with a tax or fee of some sort.

That cap on utilities would probably allow at least some degree of emissions permit trading, albeit with a host of restrictions, according to various lobbyists and environmentalists and a Senate aide.

“It is hard to imagine a policy which imposes a cap but does not allow trading among those that are regulated,” said Scott Segal, an attorney with the firm Bracewell & Giuliani who represents utilities, refiners and other companies.

The senators have also been talking with Sens. Maria Cantwell (D-Wash.) and Susan Collins (R-Maine) about their alternative approach called “cap and dividend,” under which emissions allowances would be auctioned off and the bulk of the proceeds returned to consumers.

Cantwell strongly opposes creation of a sprawling emissions trading market, fearing that it’s open to abuse, and doesn’t believe the controls in the House plan are adequate.

The Cantwell-Collins plan regulates “upstream” sectors that produce or import fossil fuels, like mining and oil companies. It allows limited buying and selling of what it calls “carbon shares” but freezes out Wall Street banks and other parties from the trading market.

Overall, Kerry and Graham are emphasizing the need to “put a price on carbon,” that is, make polluters pay a price for emissions as a way to incentivize reductions and boost “clean” energy. A sprawling cap-and-trade plan has fallen out of favor as the way to do it, but the same goal remains.

“Our legislation will include national targets for reducing carbon and a mechanism for pricing carbon. A number of different ways to price carbon are on the table and we're trying to find the one that works best,” said Whitney Smith, a spokeswoman for Kerry, on Saturday.