Today is the 40^th anniversary of Earth Day and there’s a bipartisan gift to the planet in the works.  As Steven Pearlstein wrote in this op-ed, hopes for a bipartisan climate/energy bill getting passed have been resurrected from the dead in the past several weeks.  With a 60 vote hurdle in the Senate and fossil fuel energy producers located in both red and blue states, this has to be a bipartisan effort.  Although the bill has not been released, the sponsors of the bill – Senators Kerry (D-MA), Graham (R-SC), and Lieberman (I-CT) – have been making the necessary compromises to build a broad coalition of support.

Pearlstein describes here the rough outlines of what the bill will likely entail:

Although the Senate bill retains the cap-and-trade structure of the House bill, it would apply, at least initially, only to electric power producers, with other manufacturers coming under the regime after 2016. The oil and gas industry would be handled under a separate regime that requires refiners to buy emissions permits for all the carbon contained in the gasoline or other fuels they sell — in effect, a fee or tax on carbon. The amount of the fee would be determined by the price at which carbon emissions allowances are bought or sold by utilities on open exchanges. And while the fee would almost certainly be passed on to consumers in the form of higher fuel prices, most of it would be rebated through payroll and other tax credits. By paying more for energy and less for taxes, the idea is that Americans will use less energy and wind up with roughly the same amount of money to spend on everything else.

For some on the left, the compromises made to achieve bipartisan support will be too much.  Yes, it will be a weaker than many environmentalists would hope.  The cap and trade mechanism will not apply to the oil and gas industry.  However, the alternative proposed could be an important step forward and a real improvement over the status quo.  According to Pearlstein, it does provide for what will ultimately be a tax on carbon, which is an approach that I think is preferable to cap and trade.  I know that many on the right will cry foul at the idea of any new tax.  The important component of this tax or fee (whatever you want to call it) is that it will be refunded to consumers in the form of payroll tax reductions.  That’s good news for business because, as many on the right argue, employment taxes discourage work.  It’s also good news for lower income Americans because payroll taxes are regressive, putting a greater burden on them.

If designed appropriately, this approach could encourage employment and reduce carbon consumption.  Yes, there will be winners and losers, but the goal should be that the average American at the end of the day comes out whole.  Government does not gain a windfall.  It just alters the incentive structure that already exists.  Right now the current system simply encourages more consumption of foreign oil, and no one thinks that is a good thing.

There will likely also be compromises made that will increase nuclear power and offshore drilling.  On one hand, offshore drilling may be one component of a short term remedy to our energy needs and reduces our dependence on foreign oil producers who use our money to undermine American interests.  On the other hand, investments in offshore drilling simply delay the transition to non fossil fuels that we must ultimately make.  It also continues to exacerbate our climate change problems.  Nevertheless, this is a compromise that I think could provide an acceptable tradeoff.

One of the keys to this effort is whether or not there is at least some industry buy-in.  It seems that this bill might be able to do that.  It won’t get all of the environmentalists on board nor all of industry, but that’s what a compromise looks like.  Purists on the environmental side will question any bill that has the approval of industry and business may also question any bill that has the seal of approval of environmentalists.  It’s time for both sides to get beyond the old paradigms and see if there can be some compromises that we could all live with.

Lindsay Graham captured it well in this quote:

A moderate Democrat or a Republican won’t be able to get on board I don’t think unless you have some business interests speaking out who have never spoken out before. Environmentalists are going to have to be comfortable enough to support the process. Not all of them, but some of them. We’re trying to create a safety net to get to 60 votes.

According to a New York Times analysis there are about 27 fence sitter – Democrats and Republicans – right now who haven’t made up their mind on climate change legislation.  19 of them need to be convinced to support this legislation.  The time is right to put the vitriolic health care debate behind us and come together for the common good.  Politicians on both side of the aisle are going to have to make some uncomfortable compromises.  On the 40^th anniversary of Earth Day and I can think of no better birthday present than a true bipartisan effort to put aside differences for the good of the planet.

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