Sens. Joe Lieberman (I-Conn.) — does this make him an icon? — and John Warner (R-Va.) unveiled their long-awaited climate plan. It looks pretty good to me because:

  • It is bipartisan — indeed, it follows the strategy recommended by moderate senators, such as Mary Landrieu (D-La.), Lindsey Graham (R-S.C.), Blanche Lincoln (D-Ark.)
  • It starts quickly — by 2012 we must return to 2005 levels.
  • It has a credible 2050 target — and requires regular reports from the National Academy of Sciences on the “extent to which the emissions reductions achieved under the Act no, together with actual steps taken by other nations, stabilize atmospheric greenhouse gas concentrations at a level adequate to forestall catastrophic impacts of climate change.”
  • It does not have a safety valve, but instead has banking and borrowing.

This plan will be the starting point for legislation from Sen. Boxer (D-CA). Here is a detailed summary from Greenwire (subs. req’d):

Under the draft proposal, electric utilities, major industrial manufacturers and petroleum refiners and importers would be required to limit their emissions to 2005 levels beginning in 2012. Those sources must then cut their greenhouse gases 10 percent by 2020, with an end target of a 70 percent reduction in 2050.

Senior Senate Democrats and some environmental groups welcomed the proposal to the already-brewing debate on Capitol Hill. “This proposal has taken good ideas from a variety of bills and will be an excellent starting point for the committee,” said Sen. Barbara Boxer (D-Calif.), chairwoman of the Senate Environment and Public Works Committee.

Boxer said she planned to move a climate bill through her committee before the end of the year.

Allowances and auctions

As in many other proposals before them, industries covered under Lieberman and Warner’s new U.S. carbon market would be able to purchase credits for compliance through a cap-and-trade program. More than half of the annual pollution credits — likely worth at least tens of billions of dollars — would be distributed for free to the power companies and manufacturers most directly confronted with new requirements.

A newly created Climate Change Credit Corporation also would oversee an auction for the distribution of 24 percent of the credits.

In the program’s opening year, coal fired power plants would receive 20 percent of their allowances for free based on the amount of their historic energy use. Load-serving entities that provide electricity to households across the country also would receive 10 percent of the allowances for free as a way to help offset costs of increased energy on low and middle-income consumers.

Manufacturers would receive 20 percent of their allowances for free too, a method that one Lieberman aide said would help them compete with overseas competitors not under the same regulatory burdens.

Over time, the free allowances for the electric utility industry would be slowly phased out. By 2035, power companies would have to purchase their credits through an auction.

Auction revenue every year would go toward a variety of efforts, including 20 percent to a public-private partnership working on the commercialization of low and zero-greenhouse gas electricity sources. Another 20 percent would go solely to the deployment of a power plant that can capture and store carbon dioxide underground in deep geologic formations.

New transportation technologies would also benefit through the auction revenues, with 20 percent set aside for new efforts to move Americans around with low or zero greenhouse gases. Reducing vehicle miles traveled also would qualify for the auction revenue.

The auction revenue also would be distributed — 10 percent each — to help wildlife and water bodies adapt to climate change, for the deployment of conventional air pollution technologies, for states and local government adaptation practices and for international relief measures.

Other sticking points

The Lieberman-Warner proposal pulls from several senators’ earlier ideas, including a bill from Sen. Amy Klobuchar (D-Minn.) that would set up a mandatory greenhouse gas registry. Under Lieberman-Warner, U.S. EPA must set up an emissions monitoring system for the regulated industries within two years of the bill’s enactment into law.

To control the costs of the new program, the proposal would set up a seven-member Carbon Market Efficiency Board with a task for tracking the cap-and-trade system much like the Federal Reserve monitors the U.S. economy. The board would track prices for carbon dioxide in the emerging U.S. market and allows industry a flexible option if compliance prices stay too high for too long. Warner and Sens. Mary Landrieu (D-La.), Blanche Lincoln (D-Ark.) and Lindsey Graham (R-S.C.) introduced the cost-containment proposal last week.

Also attached is a plan from Sens. Jeff Bingaman (D-N.M.) and Arlen Specter (R-Pa.) that seeks to bring along some of the world’s fastest growing economies, such as China and India. Under the Lieberman-Warner plan, U.S. trading partners must purchase pollution credits for their carbon-intensive exports if they do not have sufficient global warming policies in place. The president of the United States would have to impose the trade restrictions without eight years of the start of the U.S. program.

On another key point, the Lieberman-Warner plan allows industry to meet up to 15 percent of its emission requirements through the purchase of carbon offsets, such as sound farming and forestry practices and methane capture. The formal legislation, the senators said, would include “detailed, rigorous requirements” to make sure the offsets represent “real, additional, verifiable and permanent emissions reductions.”

Lieberman and Warner do not address the sticking point of what to do about the growing suite of state laws and policies on global warming. Many industry groups and even some lawmakers have called for federal pre-emption if a new U.S. policy goes into place. But aides to the two senators said they stayed silent on the issue for now and would expect to hear about the issue over the coming weeks.

Mixed reaction

The Lieberman-Warner plan doesn’t satisfy everyone.

U.S. PIRG’s Emily Figdor issued a statement calling the proposal “an encouraging starting point” for the Senate’s global warming debate. But she cautioned that it doesn’t go far enough because it would regulate only about 80 percent of the nation’s overall emissions.

Sen. Bernie Sanders (I-Vt.) echoed PIRG’s comments. “As good as it is, I hope we can do better,” Sanders said. Scott Segal, an attorney that represents electric utilities and manufacturers, said he was just beginning a review of the proposal. “Conceptually, the preliminary documents reflect some potentially useful innovations,” he said. “However, as with most complicated issues, the devil will be in the legislative details.”

This post was created for ClimateProgress.org, a project of the Center for American Progress Action Fund.