Carbon Pricing Sticks Out as Senate Climate Bill's Main Obstacle

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http://www.nytimes.com/cwire/2010/02/24/24climatewire-carbon-pricing-sticks-out-as-senate-climate-17764.html

Carbon Pricing Sticks Out as Senate Climate Bill's Main Obstacle

By DARREN SAMUELSOHN of ClimateWire
Published: February 24, 2010

Senate advocates of comprehensive global warming and energy legislation are stuck on a fundamental question: How should they structure the first-ever price on greenhouse gas emissions?

"What's the mechanism for pricing carbon is the real key here," Sen. John Kerry (D-Mass.), a lead author of the nascent bill, said yesterday. "That's what we're trying to figure out, is how we do that in the most effective way."

The search includes a cap-and-trade system like the one in the House-passed climate bill, which divided up valuable emission credits among constituents representing more than three-quarters of the U.S. economy. They are also looking at how to mesh other popular approaches, including a cap-and-dividend system that auctions off pollution permits with the revenue sent back to the public to compensate for higher costs on energy bills and consumer goods.

Kerry and Sens. Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) are also weighing a plan to phase in emission limits for different industrial sectors, beginning with power plants and large stationary sources, and placing the nation's transportation fuels under a carbon tax that rises based on the compliance costs faced by the other major emitters.

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