As President Obama and Congressional Democrats brace for what looks like a tough midterm cycle from their perspective, the prospect for comprehensive energy and climate legislation passing in Senate still looks unlikely, despite movement on an array of proposals that include utility-only emmisions caps legislation. With several bills currently being hotly debated, Garten Rothkopf analyzes the potential ways forward with regard to emissions, renewable portfolio standards and oil and gas regulations.

Attention this week in Washington – at least when people were not focused on White House Press Secretary Robert Gibbs’ comments that the Republicans could take back the House of Representatives – focused on news of Majority Leader Sen. Harry Reid 's (D-NV) announcement that the Senate will take up energy legislation before the August recess.  It is highly unlikely, however, that the legislation will include anything resembling full-fledged “cap-and-trade”, and may actually reveal just how elusive the goal of economy-wide limits on carbon remain.  The best case scenario for moving the legislation is probably e a utility sector-only carbon cap, plus a renewable energy standard, as well as a host of incentives for renewable energy production.  The real headline, though, is that economy-wide carbon pricing, the preferred legislative strategy for more than a decade, appears to be dead; even the most ambitious of the plans represent far less than what was anticipated early last year.  With slow growth and weak job numbers, it’s fair to ask whether an economy-wide carbon price argument can succeed politically, given the persistent perception that pricing carbon, even via a limited, utility-sector only cap, will act as a drag on economic growth for the foreseeable future. The upshot is that climate regulation is likely to be punted back to the EPA, considering some Democrats, including the President, want to show they can do something about the climate before run up to the general election, and potentially big Republican midterm gains would place yet another hurdle in front of climate legislation.

Reid’s Plans Focus on Utility-Only, Not Economy-Wide Cap

Senate Majority Leader Harry Reid announced Wednesday that he is drafting legislation (to be brought to the Senate floor this month) that would limit carbon emissions from power plants.  Reid will include the “utilities-only” provision in a broader energy bill, which will tighten offshore drilling rules as well as create clean energy incentives and jobs.The goal is to cap greenhouse gas emissions from power plants, but leave the manufacturing and transportation sectors out of the equation, at least for now.

See full article here.