By a vote of 11-8, the Senate Environment and Public Works Committee this evening reported to the full Senate the Lieberman/Warner climate change bill (S. 2191), with Sen. John Warner (R-VA) joining all committee Democrats and Senators Joe Lieberman (I-CT) and Bernie Sanders (I-VT) in voting for the bill.

Chairman Barbara Boxer (D-CA) characterized the bill as a strong first step toward reducing carbon emissions while creating new economic opportunities in energy technology. Ranking Member James Inhofe (R-OK) and other Republican Committee members expressed concern about the economic impacts of the bill and contended that the Committee should not have acted on the bill until the Environmental Protection Agency and Energy Information Administration had conducted an economic assessment of the legislation.

During the markup, the Committee considered, in lieu of the original text of S. 2191, a substitute amendment that Chairman Boxer proposed. Among the few changes to the original legislation, the Boxer substitute shifts from 2031 to 2036 the timeline for phase-out of the free allocation of emissions credits provided under the bill; increases the percentage of auctioned credits; establishes a new limit on hydrofluourocarbon emissions; and institutes an 80 percent cap on emissions from natural gas distributors. The substitute also directs EPA to report to Congress by 2013 on whether tighter emissions limits are needed for mercury, sulfur dioxide, and nitrogen oxide. Sen. Tom Carper (D-DE) introduced but withdrew an amendment to require mandatory caps on such emissions, but said he would re-visit the issue when the full Senate considers the bill.

Amendments considered during the mark-up are summarized after the break.

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Starting today, the Senate Environment and Public Works Committee will mark up S.2191, America’s Climate Security Act of 2007, sponsored by Sen. Joe Lieberman (I-CT) and Sen. John Warner (R-VA).

The bill establishes an economy-wide cap-and-trade system for carbon emissions in the U.S. applicable to all business sectors.

Though many parts of the bill are still not firmly set — more than 180 amendments have been filed for possible consideration during what is expected to be a multi-day markup — there appears to be sufficient support on the Committee to report the bill to the full Senate, which would be the first major action on climate regulation in the 110th Congress.

More to follow as the mark up continues …

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This week, I will be posting updates on the United Nations Conference on Climate Change discussions being held in Bali, Indonesia.

A major theme of discussions over the past two days was the Clean Development Mechanism (CDM) process, which is a financial mechanism under Kyoto allowing Annex 1 countries to invest in emission reductions projects in developing countries.

The Executive Board of the CDM shared recent statistics on projects, estimating that:

• The current project pipeline is expected to generate +2.5 billion Certified Emissions Reductions (CERs) by the end of the first Kyoto commitment period (2012);
• These CERs will result from more than 2,600 project activities;
• About 150 projects enter the pipeline each month, and no reduction is expected in this trend.

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China stepped up its energy conservation drive with a law that makes officials’ career prospects dependent in part on their energy-saving efforts, according to Xinhua News Agency, the official press agency of the People’s Republic of China.

The amendments to China’s Energy-Saving Law, which almost doubled the size of the original legislation, will take effect on April 1, 2008.

Among the new provisions is one that requires the performance reviews for local government officials’ — vital for advancement in the Communist Party — to include an assessment of their energy-saving efforts.

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This week, I will be posting updates on the United Nations Conference on Climate Change discussions being held in Bali, Indonesia.

The 13^th Conference on Climate Change kicked off with enthusiasm, but little fanfare. The highlight of the day was Australia’s new Prime Minister, Kevin Rudd, formally announcing his country’s ratification of the Kyoto Protocol.  The announcement leaves the U.S. as the only developed country to not agree to adopt the Protocol.

In his opening remarks, UNFCCC Executive Secretary Yvo de Boer outlined the main issues for delegates to act on during the meetings. Mr. de Boer emphasized the need for practical action on the issues of adaptation and reducing emissions from deforestation and called for support for developing countries, including through a framework for an Adaptation Fund that could be worth “$300 million annually from 2008 to 2012,” according to Reuters.

Mr. de Boer encouraged delegates to work towards the goal of adopting “a formal negotiating agenda.” Four important keys to the success of the talks, he said, are: leadership from industrialized countries; technology access and incentives for developing countries; recognition of our collective responsibility to use fossil fuels without destroying our environment; and a “focus on creating opportunities rather than being paralyzed by threats” by prioritizing adaptation.

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Energy Bill: The House will take up compromise energy legislation (H.R. 3221) later this week. The legislation is expected to increase auto efficiency by 40% by 2020, create a Renewable Portfolio Standard for energy production, and create a Renewable Fuel Standard for gasoline. The Senate has yet to schedule a vote; as of this writing it could be either late this week or early next

Lieberman-Warner Bill: The Senate Environment and Public Works Committee will hold a mark up of the Lieberman-Warner cap and trade bill (America’s Climate Security Act of 2007, S. 2191) on Wednesday.

National Climate Program Act amendment: The Senate Commerce Committee holds a mark-up of S. 2355 to amend the National Climate Program Act to enhance the ability of the United States to develop and implement climate change adaptation programs and policies.

For further information about this topic, please contact Akin Gump.