Climate & Energy Program
Policy Brief
April 2010
Summary: The emerging “tri-parti-
san” bill on climate and energy
faces a tough legislative calendar
but it remains the most viable
option on the table for the United
States to meet its Copenhagen
commitments and achieve low
carbon economic growth.
A Senate trio of a Democrat (John
Kerry), a Republican (Lindsay
Graham), and an Independent (Joe
Lieberman) is crafting a bill aimed
to appeal to a bipartisan minimum
of 60 senators, an increasingly
difficult task as the November mid-
term elections near. But, as of today,
none of the alternatives—EPA regu-
lation, an “energy only” bill without
a cap on emissions, or postponing
action to a future Congress, among
others—would deliver the U.S. com-
mitment to reduce its emissions
17 percent below 2005 levels by
2020. Meanwhile, the United States
remains dependent on imported oil,
while China and other nations gain
a competitive edge in clean energy
technologies. Stakeholders on both
sides of the Atlantic still need to
convince wavering senators that the
trio’s bill has the best chance to cap
U.S. emissions while strengthening
the U.S. economy and increasing
energy independence.
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U.S. Climate Leadership: Outlook for 2010
by Chelsea Henderson Maxwell1
Many industry stakeholders and
environmental advocates in the United
States and Europe went into 2008 with
the assumption that, regardless of who
was elected to the White House, the new
president would make enactment of a
U.S. Climate Program in the 111th
Congress not only likely, but even
inevitable. Yet in early 2010, passage of
a climate change bill has not emerged as
one of President Barack Obama’s top
priorities. While the U.S. House of
Representatives passed a climate and
energy bill in May 2009, it remains un-
clear whether the U.S. Senate can find the
right formula to pass similar legislation.
The only federal effort to cut U.S. emis-
sions that is moving forward, although
not without obstacles, is regulation by
the Environmental Protection Agency
(EPA)—an approach widely regarded as
less effective, more burdensome and more
expensive than proposals being consid-
ered by the U.S. Congress.
There is still some hope that the U.S.
Senate could pass a climate and energy
bill this year, given the strong push in the
climate and energy debate by business,
national security, and labor leaders as well
as environmentalists. But each day brings
fresh rumors to substantiate, alternative
policy options to distract attention, and,
most importantly, updated vote counts to
consider.
1
Chelsea Henderson Maxwell is a partner at The Clark Group. The views expressed here are those of the author and do not
necessarily represent the views of the German Marshall Fund of the United States (GMF). This is the first of a policy brief series that
GMF will publish throughout the year on Climate Change Policy: New Ideas for a New Decade.
In November 2009, Senators John Kerry
(D-MA) and Lindsey Graham (R-SC)
published an op-ed in the New York Times
detailing the elements of a potential
climate and energy bill with bipartisan
support, adding crucial momentum to
the U.S. climate and energy debate. Kerry
and Graham, joined by U.S. Senator Joe
Lieberman (I-CT), are working to find a
legislative path that leads to 60 votes. But
this momentum is waning as stakeholders
and lawmakers wait for the new draft bill
to be unveiled. While the senators may
have found a formula with broad appeal,
the “tri-partisan” team’s timing is of the
essence as Congress is not known for
passing comprehensive bills in a bipar-
tisan fashion during an election year.
An issue as politically charged as climate
change becomes increasingly difficult to
consider as the November mid-term elec-
tions near.
There is much at stake and little time to
waste. As the world’s largest historic emit-
ter, the United States is woefully behind
in reducing its greenhouse gas emissions.
Our current energy policies and practices
do more than harm the environment:
U.S. addiction to foreign oil (we import
nearly 70 percent, mainly from countries
that do not have our best interests at
heart) put our national security at risk.
Defense and intelligence community
leaders have identified climate change
and energy dependence as emerging
Climate & Energy Program
Policy Brief
threats to U.S. armed forces at home and abroad. Furthermore,
our delay in implementing a cap on carbon also leaves us eco-
nomically vulnerable, as other nations race to win a competitive
edge in clean energy technologies. In the end, the United States
could find itself trading an expensive reliance on foreign oil for
a dependence on clean energy technology manufactured abroad.
The reality is simple—each day that passes without a U.S. cap
on carbon, China invests around $270 million in the clean
energy economy—not for environmental reasons but because it
recognizes that it will contribute to sustained national economic
growth and new jobs.
U.S. policymakers long ago ceded a leadership role on global
climate change when they side-stepped mandatory emissions
caps in favor of voluntary actions by industry—an approach that
has failed to deliver substantial cuts in U.S. emissions. The ques-
tion now is not so much whether the United States should lead,
but rather whether it can, at a minimum, meet its Copenhagen
commitment to reduce emissions 17 percent below 2005 levels
by 2020. The answer hinges on enacting a comprehensive climate
change and energy bill, and as of today the only viable proposal
that comes close to achieving this target is the one under devel-
opment by Kerry, Graham, and Lieberman.
Running out of time and options?
Further delay only makes it harder and more expensive for the
United States to meet the interim targets that the world’s leading
scientists say are required to prevent catastrophic climate change.
The EPA’s new and broadly supported “car rule,” which will
increase Corporate Average Fuel Economy (CAFE) standards
for cars and light trucks, is an important step toward lowering
greenhouse gas emissions. But unfortunately, the EPA regulatory
process alone cannot deliver the promised 17 percent cut in U.S.
emissions by 2020. And even if it could, the EPA-only approach
is so unpopular politically that it has sparked numerous efforts
on Capitol Hill to limit the extent to which EPA can use its au-
thority under the Clean Air Act to combat climate change.
To win support, Kerry, Graham, and Lieberman have shifted
from the comprehensive economy-wide approach of the House
bill to a sector-by-sector approach to cutting emissions. Under
the trio’s plan, only the power sector would face an emissions
cap at first; manufacturing would be phased in at a later date.
A fee on fuel refining and processing would slow transport
emissions. By including incentives for nuclear power and more
domestic drilling, as well as robust measures to limit costs, the
Senate trio hopes to appeal to conservative Democrats and
moderate Republicans fearful of energy price hikes during a
recession.
Details of the draft bill are expected by late April, but there are
real concerns that this could be too close to the mid-term elec-
tions in November. Talk of “Plan B” among Washington insiders
is rampant, even before the fate of Plan A is sealed. But big ques-
tions remain: Are there other viable legislative proposals on the
table or is the Kerry-Graham-Lieberman “Plan A” the only real
option for 2010? And if there are workable alternatives to Plan A
is there even time to consider them this year?
Cap and dividend
One alternative to the Kerry-Graham-Lieberman approach is the
“Cap and Dividend” proposal by Senators Maria Cantwell (D-
WA) and Susan Collins (R-ME). Cantwell and Collins market
their bill—the “Carbon Limits and Energy for America’s Re-
newal” (CLEAR) Act—as a simpler alternative to cap and trade
that would rebate proceeds directly to American residents rather
than establishing a new market for carbon. But the proposed
bill is not without critics. Its near-term emissions targets are
seen by many as too weak and questions remain about how the
revenues from selling emissions allowances to companies would
be distributed to Americans. In addition, the bill does not set
aside any of these revenues to help developing countries cope
with the consequences of climate change. In other words, the bill
would neither achieve the U.S. commitment to cut emissions by
17 percent nor support its pledge to help raise $100 billion in
climate financing for developing countries by 2020. While the
CLEAR Act is imperfect, Kerry, Graham, and Lieberman could
tip the scales in their favor by incorporating its most appealing
elements—dividends to the public and strong market regula-
tion—into their bill.
“Energy only”
There is a small coalition of senators mainly from the Energy
and Natural Resource Committee who want to shelve compre-
hensive climate legislation this year. In its place, they urge the
Senate to focus on what they view as in the realm of the pos-
sible—an energy-only bill drafted by Senators Jeff Bingaman
(D-NM) and Barbara Murkowski (R-AK) and passed by the
committee last year. But the version of the bill endorsed by the
Committee may not be environmentally strong enough to appeal
to progressive Democrats. For example, the Bingaman Renew-
able Electricity Standard only requires that 15 percent of U.S.
electricity come from renewable energy sources by 2021, and
2
Climate & Energy Program
Policy Brief
25 percent of that target can be met through energy efficiency.
This standard is weaker than most renewable energy standards
already adopted by a number of U.S. states. In addition, the
energy-only approach may “give away” too many of the nuclear
and drilling incentives that Kerry-Graham-Lieberman plan to
use to bring fence-sitting members on board with a comprehen-
sive climate bill. Finally, lacking mandatory emissions reduction
targets, the energy-only approach would not bring U.S. emis-
sions in line with its Copenhagen Accord commitments.
Power sector only
Some senators support a cap on the power sector only (an
element of Kerry-Graham-Lieberman approach) and want to
exclude manufacturing and transportation emission limits.
But this approach is not popular among power companies as
it would place a heavier burden on electricity generators than
alternative approaches. Furthermore, lawmakers would not
begin negotiating a power sector–only bill unless it was clear that
the Kerry-Graham-Lieberman approach had failed. By then, the
window to build support for this approach and strike a compro-
mise before the end of the 111th Congress could be closed.
If Plan A fails in 2010
If the Senate fails to pass the Kerry-Graham-Lieberman bill in
2010, the chances of the U.S. Congress enacting a climate and
energy bill in the near future are slim. If Democrats, particu-
larly a number of the conservative or freshman House members
who voted “yes” on the Waxman-Markey bill, lose seats in the
2010 elections, that chamber may be unwilling to “go first” on
climate and energy legislation in the next Congress. The politi-
cal calculus in the Senate does not look much rosier next year;
proponents of climate and energy legislation cannot afford to
lose a single vote.
In 2011, the United States enters the presidential election cycle.
Partisan cooperation has been abysmal during the last two years,
and prospects for improvement are dim as Congress is notori-
ously uncooperative in the run-up to a presidential election.
President Obama is “damned if he does, damned if he doesn’t”
drive climate and energy legislation. Even if he makes it his top
priority, Republicans may work to block climate legislation to
punish Democrats for what they perceive as unfair tactics used
to pass health care reform. In addition, Republicans are wary
of helping the president secure another victory in an election
year. But the challenges President Obama faces are not from the
opposition party alone. Fearful of job losses and higher energy
bills, conservative Democrats from traditionally red states are
reluctant to vote for climate and energy legislation before their
reelection.
Some Washington pragmatists think that if 2010 is not the year
for passing U.S. climate change policy, the next best opportunity
for enacting a bill is 2013, since 2011 and 2012 will be consumed
by the presidential election. Even the 2013 timeline assumes a
pro-environment president in White House.
Given what is at stake, it is no wonder that environmental
advocates are on edge. There is no easy or adequate Plan B that
is likely to emerge in time in 2010 and the prospect of delaying
U.S. climate action for several more years is real. There is great
pressure but also great promise for success as Kerry, Graham,
and Lieberman work to build support for their bill. But progress
is only possible if environmental advocates and industry stake-
holders work closely with the Senate trio to win over uncommit-
ted senators.
Senators get elected to solve difficult national problems and,
sometimes, to make tough decisions and cast uncomfortable
votes. With an uncertain economic future, an unacceptable
dependence on foreign oil, unpredictable energy prices, and an
obligation to curb U.S. carbon emissions, it is intolerable for U.S.
lawmakers to ignore complex issues like climate change be-
cause it is an election year. If anything, now is when our nation
needs its leaders more than ever to come to the table and make
progress toward a better climate and energy future, a future
that under a climate program that places a cap on carbon—and
thus a market signal to spur investments in renewable energies
and clean energy technologies—could include a resurgence of
manufacturing jobs, sustained economic growth, and renewed
U.S. leadership in the clean energy economy.
Maintaining momentum in 2010
Despite the obstacles, climate stakeholders remain hopeful that a
bill will emerge from the Kerry-Graham-Lieberman process this
spring. President Obama and European policymakers and stake-
holders can help to maintain momentum in the 2010 debate and
increase the chances that the Senate trio’s bill will pass.
In the last month, President Obama has proposed creating
incentives to develop more nuclear power and open some U.S.
waters to more offshore drilling. These announcements were
meant to demonstrate to moderate Democrats and Republicans
that he is serious about boosting domestic energy production
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Climate & Energy Program
Policy Brief
to improve U.S. energy security. Some environmental groups
are willing to accept such concessions in exchange for a cap on
greenhouse gas emissions and were surprised that Obama
offered these incentives without a carbon cap. If the Obama
administration wants to tackle climate change this year, the
president needs to use the nuclear and offshore drilling incen-
tives as the carrots to garner support for enactment of a cap on
greenhouse gas emissions.
Another critical step is to demonstrate to the American public
that climate policies can and will make the United States a stron-
ger nation. Opponents of climate legislation have unfortunately
done their job well. They’ve convinced the American public
that cap and trade—which offers emitters flexibility and uses
market forces to reduce emissions at the lowest possible cost—is
something they should fear. Opponents have also misled the U.S.
public into believing that the European Emissions Trading Sys-
tem has been a failure, when in fact by 2012 it will have helped
reduce emissions by 7.4 percent for the 15 EU members that
signed up to the Kyoto Protocol at a lower cost than originally
anticipated. Europe can help dispel the myth that a mandatory
greenhouse gas reduction program is an economy killer by dem-
onstrating to U.S. policymakers that it has implemented strong
climate and energy policies while gaining a competitive lead in
clean energy technologies and improving its energy security.
Europe can also make the case that climate policy is critical to
minimize international security risks related to climate impacts,
such as natural disasters, conflicts over scarcer resources, and
impacts on migration and regional instability.
A U.S. climate and energy bill will pass when the American pub-
lic demands that the president and Congress enact a program to
cut emissions because it will strengthen the U.S. economy and
increase U.S. energy independence. The challenge is for propo-
nents of climate action on both sides of the Atlantic to make this
happen sooner rather than later.
Chelsea Henderson Maxwell, Partner, The Clark Group
Chelsea Henderson Maxwell is a partner at The Clark Group. Working
out of the Washington, DC office, Ms. Maxwell provides strategic
advice and lobbying services for a number of clients regarding global
climate change, energy, transportation, and water resources policy.
Prior to her current position, Ms. Maxwell served as senior policy
advisor for U.S. Senator John Warner (R-VA), where she co-authored
the Lieberman-Warner Climate Security Act and helped finalize the
conference report to the Water Resources Development Act of 2007.
Prior to joining Senator Warner’s office, Ms. Maxwell had ten years
experience working on environment and energy issues, both on and
off the Hill. She holds a master’s degree in education and a bachelor’s
degree in international relations from Boston University.
About Policy Brief Series
GMF’s Climate & Energy Program has published a new series of policy
briefs on Climate Change Policy: New Ideas for a New Decade. These
briefs are intended to offer fresh thinking and policy recommenda-
tions to help clarify the post-Copenhagen policy landscape and offer
ideas to policymakers in the United States, Europe, and around the
globe on how to tackle climate change.
About GMF
The German Marshall Fund of the United States (GMF) is a
nonpartisan American public policy and grantmaking institution
dedicated to promoting greater cooperation and understanding
between North America and Europe. GMF does this by supporting
individuals and institutions working on transatlantic issues, by
convening leaders to discuss the most pressing transatlantic themes,
and by examining ways in which transatlantic cooperation can
address a variety of global policy challenges. In addition, GMF sup-
ports a number of initiatives to strengthen democracies. Founded
in 1972 through a gift from Germany on the 25th anniversary of the
Marshall Plan as a permanent memorial to Marshall Plan assistance,
GMF maintains a strong presence on both sides of the Atlantic. In ad-
dition to its headquarters in Washington, DC, GMF has seven offices
in Europe: Berlin, Bratislava, Paris, Brussels, Belgrade, Ankara, and
Bucharest.