Kerry: Introducing the American Power Act: on the strategy and substance

Introducing the American Power Act: on the strategy and substance

by Senator John Kerry

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First, the Senate dynamic - the politics of this place. I want to be candid about this, and I do so with a record on this issue that I think earned me the spurs to say this. We've been at this a long time. Al Gore and I held the Senate's first climate change hearings in the Commerce Committee way back in 1988. Since then, precious little progress has been made and ground has been lost internationally, all while the science has grown more compelling. I can barely even count any more the number of international summits I've attended, or press conferences we've held after losing climate change votes in the Senate where our message was: “next year, we can get this done -- don't give up on the United States or the Senate.” Two Congresses ago, we had 38 votes for a bill. Last Congress, we had 54 votes for cloture out of 60 needed -- and we said then -- me, Joe, Barbara Boxer -- that this Congress we could get to 60 and pass a bill.

So what have we done? A lot of meeting and listening -- between me, Joe Lieberman, and Lindsey Graham, hundreds of meetings one on one with our colleagues to find out what they needed to support a bill. And I absolutely believe we're closer than ever to getting across the finish line -- but make no mistake, it remains difficult, even with President Obama in the White House, and even with the House of Representatives having passed their bill by the slimmest of margins last summer. But we're going full steam ahead because, in my judgment, this may be the last and certainly the best chance for the Senate to act, especially with the fact that I think the next Senate -- given a 2012 presidential campaign added to the dynamic and a lot of new Senators is going to be less likely than this one to find a path to the 60 votes needed for passage. So we've got to get it done this year.

Hear me out on this one -- you know where I've been and continue to be on all the major environmental fights since even before I became a Senator. As a Lieutenant Governor, I focused on acid rain and we laid the groundwork for the successful fight on the Clean Air Act in 1990, with the support of the first President Bush and bi-partisan support from Congress. In stark contrast to that effort to find a bi-partisan way forward, I lead the successful filibuster -- against the urging of many in our Democratic caucus -- to defeat the second President Bush's plan to drill in and destroy the Arctic National Wildlife Refuge. I point to these twin examples because I think they're evidence that I know when to dig in and fight, and I also know when and how to find the path to getting something done across the aisle.

And here's what I can tell you, a comprehensive climate bill written purely for you and me -- true believers -- can't pass the Senate no matter how hard or passionate I fight on it. No, it's got to be an effort that makes my colleagues -- and that has to include Republicans so we can get to 60 -- comfortable about the jobs we're going to create and the protection for consumers and the national security benefits -- and it has to address those pieces on their terms. The good news -- I think we got that balance right.

So, the straight scoop on the details -- the real down in the weed details:

First and foremost, this bill creates a major -- mandatory -- pollution reduction program that sends the needed price signal on carbon, with carbon allowances auctioned in a heavily regulated market that doesn't allow any speculators access. Only corporations that need the pollution allowances can buy them, period. No bank can swoop in and start speculating. These corporations that buy the allowances can trade them among themselves, but again, no outside entities are allowed, with the minor exception of a few heavily regulated “liquidity providers” who are there to make sure there are always buyers and sellers at any one time. The actions of these providers, however, are tightly controlled, and their profits are extremely limited by the law. There's no Wild West of speculation possible here, just a strict market only open to those who need it.

It will also be a stable market. The American Power Act creates a hard price collar for the sale of carbon allowances. This will cut down on the volatility of the market, especially in the early days, and give investors a clear signal on future prices. We don't let this affect the environmental integrity or jeopardize the pollution reductions we're going for, though. Instead, we hold back a strategic reserve of allowances that we release if the market gets too high to bring down the cost without adding new carbon to our pollution targets.

And, look, creating this pollution reduction market is incredibly important to do. We absolutely have to send a price signal to move to a new energy economy. Every business leader I talk to confirms this -- nothing else will get the job done. Without it, we won't get the certainty we need in our economy that drives the innovation and investment in the clean energy economy. And without that, we won't be able to get a real international agreement, with teeth, to confront the crisis of climate change.

Now, we can't leave American workers exposed, waiting for others to join us in the effort to price pollution forever because that would force them to compete against countries that have no greenhouse gas emissions limits. That would just shift pollution abroad rather than reduce it and in the process, it would cost us jobs. So we've included a robust, WTO-consistent border adjustment mechanism into the bill. It's pretty simple: imports from countries that aren't doing what we're doing will need to pay a fee at the border or we will give our producers the resources they would need to keep from having their production shifted overseas to avoid the cost of polluting. This will prevent the “carbon leakage” of companies moving production offshore, and it allows American manufacturers to compete on a level playing field with those overseas. And I guarantee that on a level playing field, nobody beats the American worker.

We also want Americans to share in the benefits of this legislation, so the American Power Act -- inspired in part by the great work of Senators Cantwell and Collins -- sends the bulk of the proceeds from the sale of the pollution allowances back to the American people directly in the form of rebates. None of it stays with or grows government. Those rebates rise over time until it all goes straight back to Americans.

That's the heart of the bill. I realize there's been a lot of discussion about some other aspects of it, so here are some of the other parts of the bill:

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