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CONGRESS

Parsing The Grand Energy Bargain

John Kerry and Lisa Murkowski discuss how Republicans might be persuaded to support climate-change legislation.

ENERGY BRIEFINGDems May Pull Carrots If GOP Won't BiteNationalJournal.com provides coverage and video of the event.

With only four weeks left before the international climate-change conference begins on December 7 in Copenhagen, Sens. John Kerry, D-Mass., and Lisa Murkowski, R-Alaska, discussed the prospects for a "grand bargain" on energy legislation in their chamber with Atlantic Media Political Director Ronald Brownstein at a November 4 National Journal breakfast. Kerry, chairman of the Senate Foreign Relations Committee, has co-authored the cap-and-trade bill proceeding through the Senate. Murkowski, who is considered a swing vote on the bill, is the ranking member on the Senate Energy and Natural Resources Committee. An edited transcript follows.

NJ: Senator Kerry, you have stirred a tremendous amount of interest with a recent New York Times op-ed you wrote with Sen. Lindsey Graham, R-S.C., that talked about an "all of the above" strategy for dealing with climate change and energy independence. How are you trying to convert those ideas into legislation in the Senate?

 

Kerry: We're literally going to be meeting every single day. We have asked the administration to be present in this process because we can't do this without them negotiating at the table. And [Senate Majority Leader] Harry Reid is working with the chairs to make sure [they are involved]. The pricing of carbon is imperative. We also want to recognize there's no one silver bullet. We want to create as fair a playing field as we can. We're not picking winners and losers -- the marketplace is going to decide ultimately what works and what doesn't.

NJ: How important is nuclear power?

Kerry: Nuclear is a part of the mix. The reason that Wall Street has not been willing to support [nuclear energy is] because of the price. And part of the price is wrapped up in the permitting process and the length of time [that process takes]. We need to streamline that.

 

NJ: Will direct government assistance or subsidies be required to boost nuclear power?

Kerry: It's possible. We're open to the idea that there may be some loan possibilities. But that's commensurate with certain other responsibilities [for the industry], with respect to waste management and other kinds of issues.

NJ: Another area that your op-ed mentioned was enhanced onshore and offshore oil exploration. Some people have said, "Wait a minute, our goal here is to reduce our dependence on fossil fuels. Why are we talking about increasing production?"

Kerry: Because there's a gap here. It takes a certain amount of time to bring some of these new [energy] technologies to market. It pays for us to increase the offshore piece, where you don't run into inappropriate risks in terms of currents and spills. Our technology is much better. You can't put your head in the sand like an ostrich. You have to acknowledge advances in technology, capacity, safety, and skill. It absolutely pays for the United States to do that in our waters, where the revenues come to our states, where the jobs are created here, and we're not sending $400 billion a year to the Middle East or somewhere else.

 

NJ: Does creating incentives for nuclear energy and enhancing domestic oil production only make sense if Republicans are willing to accept the underlying premise of capping carbon emissions?

Kerry: There will be less appetite [among Democrats] to do as much as broad-ly if we're not gaining something for it. There are many people who believe that the future is going to be defined more by some of the alternatives and renewables than it is going to be by some of these other [energy options].

NJ: How many Senate Republicans might be interested in an all-of-the-above approach?

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Kerry: If there is a pricing of carbon, there are some people that are just not going to come along. I don't think there's an enormous universe [of potential GOP supporters]. But it's enough to get the job done.

NJ: Is President Obama open to the grand bargain you have been sketching out with Senator Graham?

Kerry: Very much so, absolutely.

NJ: What are you expecting out of the Copenhagen meeting?

Kerry: We're now four weeks away. We don't have time in these four weeks to flesh out every crossed "t" and dotted "i" of the treaty. What I would look for is a binding and real political agreement... that will embrace finance mechanisms, adaptation, the targeting levels [for emissions]. So you will have the framework of the treaty. And then you set either a June or July [2010] date or the Mexico date in December of next year [for completing] your treaty particulars. You work on the language during the year. Meanwhile, the countries live by what they accept as a matter of executive agreement, and you start moving in that direction. I think that'd be a huge success.

NJ: Under that framework, does the United States need to finish its work in order for the international process to be completed?

Kerry: Yes, absolutely.

NJ: What plausibly should we ask China?

Kerry: Our expectation should be that they will come up with a fixed goal [of reductions] that they commit to achieve. It can be energy intensity or emissions. There has to be a mechanism by which people are in fact measured on their accomplishment. If that happens, I believe we can go to colleagues in the Senate and our constituents, look them in the eye, and say to them, "We're not setting up an unfair equation here. We're setting up an equation where everybody is going to be part of the solution, and we're all going to be moving in a measurable way down this road."

NJ: If legislation stalls, can regulation of carbon emissions by the Environmental Protection Agency provide an alternative approach?

Kerry: Well, EPA is poised to move. Everybody needs to understand that. I'm going to make this as clear as I can: I don't think anybody is going to wind up [blocking] EPA, because there's filibuster-proof capacity to prevent that from happening. I'll personally stand on the Senate floor, day and night, to prevent that from happening. Therefore, success in this is not defined by stopping a Senate bill. The reason is, EPA will then regulate without assistance to coal, without allocation of allowances that help companies to make the transition. And then you're out there on your own. So the game in town, folks, is here. It's in the Congress, where we have the ability to mitigate the transitional costs and to be reasonable in the process. That's something people really need to focus on.

NJ: Senator Murkowski, is Senator Kerry right when he says that blocking legislation will lead EPA to begin a regulatory process that will have less flexibility?

Murkowski: He's absolutely right, and I think that this is one area where Republicans and Democrats do have to agree. But I'm also not one of those who are going to say, "Well, just because EPA has its hammer out there we're going to pass something that's bad for this country." It is a threat, and we recognize that, but you don't do something bad just because you don't like what's hanging over you.

NJ: Do you believe that even if Congress does not block EPA, the regulations would be tied up in the courts for quite some time?

Murkowski: I think it is an absolute given.

NJ: Do you believe that Congress needs to pass comprehensive climate-change legislation before the 2010 election?

Murkowski: If it's good. We haven't gotten anything out there that in my opinion meaningfully reduces our level of emissions while at the same time making sure that we haven't kicked the economy in the head.

NJ: Although the Kerry-Graham op-ed has drawn a lot of attention, your posture on its suggestions for promoting nuclear power and domestic oil production seems to be, "Show me the money."

Murkowski: Well, it does have to be a true commitment. I have said this can't just be window dressing. You've got to allow for a support of domestic oil and gas production within this country, basically turning the ship on this. Because right now, if you look at the policies coming out of this administration, they are less than supportive.

NJ: How many Republicans might be willing to accept something like cap-and-trade if serious efforts are made on these other fronts?

Murkowski: I'm not just saying that if you get a good nuclear piece you're going to have Republicans on [a bill]. You're going to have to have a cap-and-trade piece that goes back to my two principles, that you're actually reducing your emissions while at the same time you're ensuring that the economy remains strong and competitive.

This article appears in the November 7, 2009 edition of National Journal Magazine.

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